
What Comes After SaaS? - transitorykris
https://hackernoon.com/what-comes-after-saas-1f71ec40de45
======
ozim
"In other words, the ability to write and deploy code is no longer a core
value driver" \- I do not think it ever was, it is always what that code
solves for customer. Ability to write and deliver code is just a way how you
can get money out of core value.

Nitpicking, how SaaS stocks could plunge?

I think the good point is: "The monthly contract value is often far less than
the customer acquisition costs (mostly sales and integration)"

You do not price your SaaS based on hosting costs, if yes then those SaaS
solutions will simply run out of money. You cannot run growing SaaS on 1/10
slashed price, you have to fix bugs, add new features and evolve. I can build
clone of some SaaS and run it on Linode with 1/10 of costs but I am not sales
person, and not marketing guy. I would not have money to evolve and it is not
fire and forget running on cheap hardware.

So article is not worth reading, nothing exciting.

~~~
F_J_H
The article seemed to be worth reading for you as it prompted you to solidify
and articulate your thoughts, and to share a good tidbit on SaaS pricing. ;-)

In the same way, it may trigger thoughts/ideas for others, regardless of
whether the agree with it or not. I'm glad I read it, as well as the comments.

*edit - missed a word.

~~~
ykler
As Don Quixote should have said to the guy who said there is no book so bad it
doesn't have something good in it, opportunity costs are huge these days.

------
corysama
I don't remember where I read this, but it stuck with me:

A bag of coffee beans from the grocery might cost you 10c a cup. That's a
Product.

A cup of coffee at a greasy spoon diner might cost you $1. That's a Service.

A latte at a fancy cafe might cost you $4. That's because you are paying for
the whole Experience of the fancy cafe.

So, what comes after SAS? SAE.

~~~
nostrademons
That's a consumer metaphor. The original article is talking about B2B
startups.

Consumers and businesses are very different as customers. Every consumer
product/service is fundamentally an experience; even the design of Apple's
packaging is carefully engineered so that you _feel_ a certain way as you open
the box. That's because consumers are buying your product (or sitting through
your advertisements, or giving you their personal data) because you gratify
some emotional need they have; why else would they use it?

Businesses have only two fundamental needs: save money or make money (where
time=money, if you can point to a wage rate). Every B2B business model is
based around those. Many failed entrepreneurs have looked at the sucky user-
experience of most enterprise software, said "I can do better than that",
promptly done better than that...and found out that they didn't make any
money, because the person doing the purchasing didn't give a damn what the
"experience" is like, the whole reason they pay their employees is so that
they'll sit through tasks that they hate. If you can't frame your B2B
company's value propositions as "This will save $X" or "This will make $X",
you won't sell.

~~~
abraae
That certainly used to be the way.

But these days the employees who work in HR, finance, accounts receivable
spend their downtime locked into very sophisticated, mobile-friendly apps with
user interfaces we could only dream of in past - even while slumped in front
of the TV.

They know what good software looks like.

Yes, sometimes the suits making the decisions will just go from form and
mandate SAP.

But I can assure you that much of the time, turning up to demo your product
will go badly for you if it looks like a drab table-based web site from the
90s.

Conversely a single magnificent d3 animation will move you straight to the
short list.

------
mbesto
It's incredible how myopic this article is towards web development SaaS
products.

There are a whole slew of SaaS products for business applications that have
nothing to do with what the author is talking about (think SalesForce,
Workday, ServiceNow, etc) that totally eclipse the Segment, mParticle, etc's
of the world, in terms of size, complexity and

The "what comes next in SaaS" is predicated on what become before SaaS, which
was license software that businesses had to maintain. The next evolution of
SaaS, IMHO, is one which requires zero consulting/integration/implementation.
I dare say "AI" will change that, but this is the biggest friction to new
software production adoption.

~~~
F_J_H
Salesforce has evolved beyond a simple SaaS based CRM - it is now effectively
a low-code application development platform.

At any rate, I think the article rings true for many of the SaaS players in
the "long tail".

~~~
mbesto
> "SaaS based CRM"

SaaS isn't a type of software or solution, it's a delivery model. You don't
use "SaaS" for sales, you use a CRM that is accessed to you through a SaaS
delivery model. So it's "low-code application development platform" is still
delivered to you via a SaaS model.

------
vasinov
> SaaS is dying. Here’s why.

I'm not sure I agree with the listed reasons. From what I understood, the
author tries to prove that "SaaS is eating SaaS" and SaaS abundance/switching
costs are prohibitive to new SaaS ventures. This doesn't seem like a very good
argument for "SaaS is dying." May be, it's better suited for "it's becoming
more difficult to enter the SaaS game."

~~~
brightball
Sounds like SaaS is falling under standard business rules. You have a core
product and you have differentiators. A single, great core product was fine
for a long time. As more players enter the market, the differentiators matter
more.

Think AWS vs Digital Ocean as an extreme example.

------
michaelbuckbee
Much of the value of a SAAS/Cloud service is that the operational costs are so
reduced. We talk a lot here about the explosion in complexity in tech (front
end stacks, different OSs, security, mobile+desktop etc.) but rarely about how
to really manage them.

SAAS services are typically wildly, crazily cheaper than hiring people to
either do the services or to support an internally setup and managed
application to do the same.

~~~
cormacrelf
You're so right. Especially at the small-scale end, it's much cheaper to build
a buggy and fragile product with a database you can access any time and fix
stuff for your users. Instead of hiring a bigger team with the QA discipline
to send nearly-perfect releases out into the wild, the hacked-together SaaS
can be built with 10x fewer developers and one DBA. That's been true since at
least 2005.

------
lowkeyokay
A lot of points in this article resonated well with me. Especially this:

> Companies that focus too much on technology without putting it in context of
> a customer problem will be caught between a rock and a hard place — or as I
> like to say, “between open source and a cloud place.”

I'm in the second year of a SaaS selling to entreprises. We are doing ok but
all of our customers are nearly identical (it's in the public sector). We
would love to have lots of different types of customers but we seem to be
stuck. Our customers are probably buying our knowledge as much as our product.

I would say unless your tech is groundbreaking and not easy to copy, domain
knowledge will likely be your differentiator. But that's harder to scale.

------
dizzystar
I think the hole in many SAAS products is the assumption that the end-user has
a development team, or that every other SAAS company is going to integrate
with their API.

At the end of the day, a small business has much larger fish to fry than
trying to figure out how to plug product A into product B, though it is a
massive problem for every small business. This isn't solved by hiring
programmers, but by downloading data and inserting into macro-enabled Excel
sheets. You can hire 5 Excel gurus for the same price as you can a Jr
Developer (a typical SMB isn't able to figure out if said dev is worth
anything).

The fact is, the end-user really doesn't give a care about "who" but "does it
work?" Integrating all the pieces and parts is a very complicated and time-
consuming thing for small businesses to deal with.

What comes post-SAAS? A fully integrated suite of products that does what the
end-user wants. SMBs would be super stoked to have a product that does
inventory, label-printing, CRM, market analysis, sales channels, etc, and pay
that to one company. I think that there ought to be an in-between layer. If a
some companies could offer a solution that integrate all of the SAAS products
needed to run a business, packaged in one place, entire industries would end
up toppling. The price differential wouldn't even have to be that high. The
company would save the end-user months of research and time-wasting
presentations.

~~~
untangle
I just did a SaaS company serving SMB. We were an all-in-one security play.
Well-regarded product.

One of the things that we encountered was a vice between "can you add this
filter" and "but I don't need this, only that filter."

In a more general sense, my research suggests that "IT in a box for SMB" is a
deadly place to operate. They make sense on many levels, but they don't sell.

I believe that SMBs favor point solutions because they are pain-avoiders. If
they've been phished, they want a remedy. Firewall? Content filter" Maybe
later...

~~~
dizzystar
I see a lot of problems here. You are selling to technophobes, for the most
part. They don't care one iota what the difference is between a firewall or
content filter is. If you have fraud-prevention, ie, making sure they don't
get screwed out of money, you are talking their level.

There shouldn't be an vice between option A and option B. You are selling
security, not options. They are paying you money for your expertise, which
includes both your programming an your knowledge, which mainly means they have
to get things done and don't have the time the learn about this stuff, which
is why they are paying you.

That repeats my initial point. The end-user really doesn't care at all about
the product, who you integrate with, what you use, etc. They feel like they
are paying experts to make these decisions. Asking them is friction, which is
nothing but wasting their time.

------
polskibus
In my opinion, SaaS is being eaten by largest PaaS providers : GOOG, AMZN and
MSFT. They built so many free or cheap services that killed a lot of
independent service and product providers. You can't compete with them because
they own the platform you're on, they can always clone you and make the clone
cheaper and more integrated with their platform.

~~~
Danihan
If not now, then within ten years certainly.

------
RangerScience
I think I see what he's saying.

In some places, there's a gap between open-source libraries that I can find,
and services that Do One Thing.

Recently, I dived into the available options for online document signing.

I needed one thing (document signing) done well, with a few variations based
on the few different integration situations I had.

Almost everyone had the same offering, which wasn't programmatic or flexible,
but _was_ drop-in (iframes). I could only do what they'd though to make
possible.

On the other hand, I have trouble imaging what, say, a ruby gem for this would
look like. Seems like it'd be pretty involved.

Compare this to, say, SendGrid, and other email providers. I get a lot of
flexible functionality around one thing (sending emails), but the interaction
is very much on my terms (via their API) rather than theirs (dropping in an
iframe).

The only exception I found in the document signing world was HelloSign, which
has a lot more in common with SendGrid than, say, DocuSign or RightSignature.

I don't think this is quite what he's talking about, but I do think it's
indicative of the direction and forces in play.

~~~
fonesca00
For electronic signatures, try my solution at
[https://bulksign.com](https://bulksign.com) . I'd love to hear what types of
integration situations you had.

~~~
RangerScience
I took a look. What level of critique do you want?

I think with a decent amount of effort, you can out-compete (as a product) all
existing solutions except HelloSign. However, I would expect to run into
serious issues convincing companies to switch. You would probably want to
_specifically_ target the new company / tech-savvy startup market, which I
think are very underserved by the painfully antiquated leaders (DocuSign,
RightSignature), who are targeted towards people who feel more comfortable
with "enterprise"-style solutions.

Our major issues were: \- We needed to provide our own styling, etc, for
integration on a responsive website. Existing iframe solutions used the
provider's styling, and did not work well on mobile. \- We expect to send out
many more documents than get signed; thus, HelloSign's per-API cost would be
to expensive for us.

------
garysieling
The metered, utility like pricing that Amazon does seems like it'd be
compelling for a lot of SaaS products.

~~~
sparrish
Many of our SaaS customers hate the utility pricing. It's hard to calculate
costs and budget when things change every month. Our flat-rate pricing is what
attracts many.

~~~
F_J_H
This is is a very important point, especially for larger organizations where
budgeting (and closely following budgets) is extremely important.

I co-founded and sold a company that did SaaS/outsourced natural gas and
electricity billing for energy retailers in deregulated markets, and cost
consistency was a major reason why corporations signed fixed price energy
contracts. Even though they might pay more than simply taking the spot market
price, having known costs was preferable.

~~~
FLUX-YOU
I don't get how flat fee is sustainable long-term if the company is cost-
sensitive (which I guess is different than simply wanting a convenient and
predictable budget item, which may or may not be the same thing you're talking
about)

If I offer a service for a flat fee, I should keep my price higher than if you
were to accept a variable budget item. If you start going over the flat fee,
I'm eventually going to be taking a loss on the electricity/hardware. So
naturally I might have to raise the price more quickly since I'm not likely to
be a massive electricity/natural gas company. The price for SaaS/Cloud would
not be as sticky as gas/electric and so the contracts would be for a shorter
length.

Where-as, had you done some napkin math for cloud costs and tried your best to
overestimate, you can add some additional overhead and see if you run
over/under that year and adjust. You still treat it like a flat fee, but
there's just a re-adjustment if you're over/under at the end of the term.

~~~
inopinatus
It isn't necessarily good business, but it looks good from the point of view
of a decision maker with a limited budget.

------
shubhamjain
> Peter was annoyed. An energetic young fellow — he faced a pretty serious
> problem: people weren’t even willing to try his company’s analytics product.
> Even though it was (in 2012) a very immature market — and the current
> offerings lacked a lot of what customers wanted. Why? ... So Peter and his
> team build middleware to make it easy to switch between SaaS providers
> (maybe then people might try his system).

This is a gross misrepresentation of the whole situation. It reads as if Peter
was a biz guy who was having trouble selling the analytics software because of
the involved "switching costs". Peter and his team, in their own admission,
were trying too hard to build a product without a focus on what they were
solving. Analytics space is too broad and complex to be attacked all at once.
It's not wise to build a GA competitor but several analytics companies with a
clear focus have succeeded in the past.

Segment wasn't trying to build a "middleware to switch between companies". The
product was almost an accident of a building a small library for themselves to
avoid mantaining code for multiple APIs.

------
agumonkey
SaaSaS. Finally, people will work on their regex skills.

~~~
TeMPOraL
Software as a Something after Service? ;).

------
rocky1138
Hosting federated apps as extensions in your browser (Mastadon, etc.)

------
noodle
Is the core argument here is that SaaS enables the success of software
companies that have little value and that "post-SaaS" means that those
companies die?

That doesn't really ring true to me. That already happens, doesn't it? SaaS as
a pricing model or platform strategy in and of itself won't do shit for you if
you have a terrible idea, right?

Or is the author trying to argue that SaaS will eventually become a race to
the bottom and that the market should shift towards value-based pricing?

------
laktek
I also took a similar stab at next-gen of SaaS few months back:

[http://www.laktek.com/2017/01/11/end-of-the-first-wave-of-
sa...](http://www.laktek.com/2017/01/11/end-of-the-first-wave-of-saas/)

[http://www.laktek.com/2017/01/12/next-wave-of-
saas/](http://www.laktek.com/2017/01/12/next-wave-of-saas/)

~~~
untangle
Lots of parallels between your take and that of this author.

I'm more skeptical than you guys about the Saas/cloud "plumbing" space.
There's lots of open-source software out there and I think that value
extraction – largely from PMs and devs – will be tough.

BTW, good call on Slack becoming a unicorn. ;)

------
throwawaylalala
Software should be priced on value added, not cost to provide.

~~~
tonyedgecombe
On the other hand competition tends to drive prices down towards their
marginal cost.

------
ajankovic
An interesting read but this kind of predictions don't work "in advance".
Usually it's needed for some market player that is still unknown to show up
first. That player will then serve as an example and solidify the argument. To
know/feel what SaaS 2.0 is, in advance, would mean that you are the one
driving it. SaaS 2.0 is not here yet.

------
cjhanks
Maybe hardware as a service? Perhaps specialized chips constructed by software
is the next evolution in efficiency?

You could have a data center, chip designer, fabricator, and software
service.. all in one. Unlikely, maybe... but the question is pie in the sky
anyways.

~~~
redwood
That's pretty much AWS

------
madamelic
AI as a Service is what is next.

No UI is the next step, in my opinion.

------
joeblau
DAaaS - Decentralized Applications as a Service

------
cperciva
Lexicographically, "SaaSa". Software as a Service architecture?

------
amelius
> Companies that focus too much on technology without putting it in context of
> a customer problem will be caught between a rock and a hard place — or as I
> like to say, “between open source and a cloud place.”

Comparing a cloud to a rock, the author needs to work on their metaphors.

~~~
avarun
Actually he compared open source to a rock.

~~~
clarky07
but still compared cloud to a hard place

------
pinaceae
Utterly disagree.

Workday (WDAY) and Veeva (VEEV) as great examples of just recently rallied
SaaS stocks.

The true value of SaaS is just unfolding, not being stuck on old versions is
just now sinking in. The above companies have customers go beyond the 5 year,
sometimes 10 year mark - but they're not on some outdated version, figuring
out how to patch that shit up. This is a revolution in enterprise that has not
fully sunken in, there are still a lot of companies out there only dipping
their toes into going SaaS.

Vertical clouds such as Veeva, as in going deep into one specific target
industry, are a pretty good model to follow. Customer acquisition costs are
super low, there is data out there to confirm this. All a reference sell, as
CIOs talk to each other in a specific industry. Build a positive reputation,
the sale follows. Product leads the way, not marketing.

The moat here being super deep industry expertise and data accumulation that
gets harder and harder to compete with.

There will be something after SaaS, but it will take a while and it is utterly
unclear what it will be.

Mainframes - Client/Server - SaaS - ??

~~~
abraae
Since the article referenced "Louie"building out his product in a 3 months
Ramen-fuelled binge, I don't think he's talking about SaaS like Workday, which
is basically a gigantic ERP, just delivered via the interweb.

------
vnchr
TbbT

