Intuit Partner Platform + Windows Azure = Win for Small Businesses

Super-excited to be announcing the relationship between Intuit and Microsoft to bring great apps to Small Business.  This is a huge step for IPP and real validation of our strategy and the effort our team has put in the past two years.  Can’t wait for what happens next!

Federated Applications on Intuit Partner Platform

Today, we are pleased to announce the release of “Federated Applications” on the Intuit Partner Platform. It’s been a blast to work with our Rock-Star team to deliver this and I want to personally welcome our five new developers, VerticalResponse, DimDim, Rypple, Setster, and ExpenseWare, that have gone through federation already.  It’s always scary going first, but these folks have been great partners and I look forward to their awesome success!  

Here is some more information on the details of federation and how you as a developer can get started.

(Originally posted)

Are we screwing up Software-as-a-Service (SaaS)? How to increase adoption of SaaS Apps

I was at a Small Business conference in September looking to learn from owners of SMB’s.  At lunch, the conversation came around to who was using software as a service (SaaS) to run parts of their business.  I leaned forward, eager to hear how SaaS had revolutionized each of these companies, only to be completely blown away with disappointment.  Not only had SaaS offerings not taken over the front and back office of each of these small businesses, but the conversation actually turned to a comparison between SaaS and Betamax – yes – software-as-a-service was being called a “fad.” 

So I started asking questions – trying to unlock the secrets that could help us gain an advantage in the SaaS and PaaS game and create massive adoption.  But other than security fears, there were no real concrete dissentions.  They loved the pay as you go subscription of most SaaS offerings, they loved the enhanced collaboration and the lower IT & infrastructure costs.  They were very excited about the constant upgrades and 24/7 reliability.  In fact, they loved most everything we think about when we think about SaaS – BUT – there was minimal adoption. 

Then one of the Small Business owners blurted out, “It may be silly, but mentally, it’s just weird to think about running my customer service program from the same thing I check ESPN.com on.”  BINGO – That’s when it hit me – What if we’ve been doing SaaS wrong this whole time?  What if all of us early adopters who like the thrill of going from 0 to 100 in 3.2 seconds and enjoy the risk of catastrophic failure, forgot to look back and pave the road for the real people who matter – the businesses who generate real revenue and employ real people and can’t afford catastrophic failure? 

When Benioff championed “No Software,” I think we screwed up a little.  What he should have said was “Better Software”.  Software isn’t the problem – we just interpreted the steps to the future poorly.  What we really needed to develop was “connected software.”  Applications running within the browser are awesome – but maybe they’re SaaS 2.0 – In our excitement, we forgot to deliver SaaS 1.0 – Desktop applications that are connected to the web and are sold as a service. 

Most businesses use desktop apps today.  They’re comfortable with the UI and the installation process and even the registration process.  What if we built the next generation of SaaS apps as  “desktop connected” apps with tools like Adobe Air, that people can click on and run locally, but still leverage the benefits of “the cloud”?  I’m betting we’ll see more rapid adoption of “SaaS” offerings and pave that road to browser based apps.  Consumer apps like Facebook will lead the mental charge towards the browser, but we need that suite of desktop connected apps that moves businesses into the SaaS/service/cloud mindset and away from traditional software.  

I’d like to eliminate the installed app too – but maybe we need to walk before we can zoom.  If we don’t bring the masses along with us, it’s going to be pretty lonely up in the clouds.

Is SaaS Broken? Fixing the Rising Costs of SaaS Sales

There have been a couple of articles recently bemoaning the increasing COGS of SaaS solutions and questioning if this is the downfall of SaaS. Evangelos Simoudis of Trident Capital warns against rising sales costs and a move to field sales and Jeff Kaplan of ThinkIT Services, warns against VC’s getting cold feet.

So, is the SaaS model too good to be true?  Sort of!  

Software as a service is a phenomenal business model, but it’s not foolproof.  Luckily, it’s not rocket science either.  Why are COGS increasing?  For the same reason they increase in traditional ISV’s – there’s an imbalance between Sales & Marketing – that MUST be corrected.  Look at the breakdown:

 Traditional ISV’s: Marketing buys targeted lists and generates leads through targeted campaigns (trade shows, Direct mail, etc.)  Sales is broken into two segments: 1) inside sales: low cost “churn & burn” team dedicated to qualifying out the targeted list and passing the “qualified leads” to the outside team.  2) Expensive outside team dedicated to closing business.  

Successful ISV sales & marketing teams are well oiled machines.  They know ahead of time when they need to open the funnel and they know when the quality of the leads are going down.  Each step of the pipeline is measured and monitored and has an OWNER that is accountable to a number. 

Early SaaS Players: Simple apps with simple concepts that can be adopted at low costs by early adopters – i.e. Constant Contact or Vertical Response.  The concept of e-mail marketing (as an example) is pretty simple and the apps are very simple and very powerful, so getting up and running is easy.  Customers can see value within hours of “trying” – a sales team is not nearly as important as good customer support.  Marketing’s job is to drive as many targeted eyeballs at the lowest cost possible.  Easy and fun Saas model that makes VC’s silly happy. 

New SaaS Players:  Here, the apps are getting more expensive and more complex.  There is a need for a “solution sales expert” to help explain the value proposition – and here is where the model breaks down.  Marketing drives leads via SEM with “targeted keywords.”  Inside sales is inundated with huge quantities of “targeted” leads that are not really targeted and not really qualified.  The sales teams struggle to qualify the leads because the old rules don’t apply anymore.  Everyone can afford a free trial and most people can afford the monthly rate (at least for a little while), so no one gets qualified out.  Everyone is a potential customer!  With no focus for sales or marketing, conversion rates plummet and companies have to start discounting deeply to drive sales.  

The move to an outside sales team is not going to solve this.  SaaS solutions can be sold very well with a high quality inside sales team, but they have to be ruthless about qualification.  And marketing has to be held accountable for lead quality – i.e. just because they clicked on your generic keywords does not make them a good lead! 

The Solution:  Two trends that will lower COGS for SaaS players and bring profitability to new SaaS players: 

1)      Enterprise sales: High quality marketing & inside sales teams re-learning how to qualify leads in a SaaS world.  Expect more content before registration to whet your appetite and a more onerous process once you’ve decided to “try”.  (i.e. lengthy signup forms, credit card before “free trial”, phone call activation, etc.)  SaaS vendors have to become ruthless qualifiers to figure out who to spend time with to raise conversion %. 

2)      Small & Medium businesses: Expect consolidation of marketing platforms.  It’s just too expensive to try and reach a fragmented audience via SEM, so we will see an emergence of app marketplaces (i.e. what we’re building at Intuit).  The SaaS offerings themselves will need to be drop dead easy to get up and running, but if the vendor can dramatically cut marketing costs, they can focus on conversion and customer support.

5 “sure thing” Technology Predictions for 2009 (sure to be wrong!)

1)      Massive consolidation of technology startups, acquisitions galore – VC funding becomes incredibly selective and lots of solid technology startups, with no paying customers and revenue streams, turn to acquisition as an exit strategy.  Similar to mid-1999, some of the big players, go on a shopping spree – unlike ’99, the valuation are quite reasonable. 

2)      Twitter explodes…in a good way – Twitter is on the verge of insane growth.  Personal blogging slows considerably as people meld blogging and social networking  and simply turn to Twitter.  They break 50 million users in 2009 and become THE place for corporate brands to maintain their reputations.  Funds get pulled out of Second-life (and banner ads too) as companies staff “twitter-watchers” to make sure they are on top of any feedback (positive or negative).  The race for the best twitter apps continue.

 3)      The mobile industry is going to be boring – Not that stuff won’t happen, but nothing “major” is going to rock the industry (i.e. iPhone).  There will be good advances in technology and finally a shakedown towards development standards.  There will be more cool iphone apps but for the most part, the iphone won’t take over the world and app developers can’t monetize other business mobile apps, so 2009 will be more about foundation building than breathtaking announcements.

 4)      Adobe Air apps rock the world – Tweetdeck is just the start.  As people get used to “conveniently connected” desktop apps, developers will take Air to the next level and build some really stunning and highly distributed apps. 

5)      Traditional Small Businesses move to SaaS in droves – The typical small business is still pretty old-school – Running their business on some combination of E-mail, QuickBooks and spreadsheets.  But SaaS costs are coming down and the technology is getting much more interesting.  2009 holds employees demanding on-line payroll, customers who are on twitter and need a response, vendors who don’t want to fax you documents – there’s nowhere to hide.  This is the year the average small business jumps two feet into technology and developers will be there to respond – integrated data, drop-dead simple apps, solid value…We’re going to see SMB SaaS adoption skyrocket.

Thoughts?  What else is SURE to happen in 2009?

What’s wrong with SaaS apps built in Flex?

Since we chose a Flex Framework to integrate with the Intuit Partner Platform, I’ve heard from a handful of developers and end-users that Flex-based apps can’t be successful.  Apps built in Flex are uncomfortable, too non-conformist, too blurry, etc etc, for some users.  Jane McCarty just posted saying:

“My opinion…if one is going to use flash, it should be in small elements around a framework of web standards such as HTML & CSS. Fast, clean, simple and effective.”  

I kind of like apps built in Flex.  I agree that they don’t look like a traditional “HTML” web apps, but that works for me in certain situations.  To me, they’re sexy and fast and work like a real app should – they feel like an app, not just a browser…And the more I play with AIR apps such as TweetDeck and our upcoming AIR communication app from Intuit, the more I really like both Flex and Air. What are the best examples of all-Flex apps that you use?

Data on The Longtail

We have a running conversation around the office on the shape and size of “the long-tail” for SMB RIA applications.  We know that small businesses want right-for-my-business applications, but how long is that tail before a company should really just go to a custom built app (like on QuickBase)?  There’s a big market for our Intuit Partner Platform developers to provide vertical SaaS apps, but there still needs to be enough customers in each vertical to actually make money.

So I don’t have the app answer (yet) but I found this article from Dustin Woodward on the Hitwise blog pretty interesting.  It shows the longtail dynamic for internet search terms.  The big shock for me is that the “Top 10,000 terms = 18.5% of the all search traffic”. 

What does that tell me?

1) People search for all sorts of stuff

2) Developers trying to sell their app to a vertical, could spend a TON on SEO and still have a hard time driving traffic to their product.

3) Search is a divider more than an aggregator – Marketplace’s (like Amazon or Intuit Marketplace still have tremendous opportunity to be an aggregator of “like” products and the single place to allow customers to find what their looking for.