Come Diventare un SaaS Provider

Become a
SaaS Provider
MILAN, March 2019
MARCO LUCARELLI
Deloitte Consulting

Agenda
B E C O M E A S A A S P R O V I D E R
Market outlook
The evolution toward the SaaS Provider
The impacts of SaaS on the Business Model
The impacts on the organizational model
SaaS Sales & Pricing Strategy

3 | Copyright © 2019 Deloitte Consulting S.r.l.. All rights reserved.
Market outlook

The market analysts show an exponential growth in the
adoption of Cloud solution in the next year
A few apps in the
cloud
Some apps in the
cloud
Most apps in the
cloud
How many apps are already in the Cloud in 2018?
55%
31%
14%
%ofrespondents
A few apps in the
cloud
Some apps in the
cloud
Most apps in the
cloud
How many apps planned in the Cloud in 2020?
4%
21%
75%
%ofrespondents
According to the “Deloitte DNA Cloud Market Survey”, 75% of firms will migrate in Cloud at least
40% of their system by 2020
% of apps in cloud % of apps in cloud

The SaaS is progressively becoming the reference solution
for the Sw Vendors
$63 $63 $59
$24
$50
$96
2011 2014 2017
(*) Source: Forrester’s SaaS implementation services market sizing
(**) Source: Gartner Forecast: Public Cloud Services
Global expenses on Sw licensing on-premise vs.
SaaS*
+282%
442 €
595 €
733 €
867 €
994 €
1.127 €
1.267 €
2016 2017 2018 (e) 2019 (e) 2020 (e) 2021 (e) 2022 (e)
Saas market value in Italy**
In $ Billion +186%In $ Billion
The transaction from traditional model to the SaaS is progressively becoming necessity more
than an ambition

FortuneFuture50 - Top 10 Most Vital Company
1. WORKDAY
2. WEIBO
3. SERVICENOW
4. CTRIP.COM
5. VIPSHOP HOLDINGS
6. NAVER CORPORATION
7. VERTEX PHARMACEUTICAL
8. NETFLIX
9. S.F HOLDING CO.
10.SALESFORCE.COM

SaaS solution are much more «agile»
Software On-premise SaaS
A SaaS solution guarantees
adoption time much
faster, with a time-to-
market much more
competivive than
traditional solutions.
Sw Selection
Purchase Decision
HW and SW installation
Customization
Roll-out
Sw Selection + Trial / Pilot
Purchase Decision
Month 1
Month 2
Month 3
Month 4
Month 5
Month 6
Month 7
Month 8

The evolution toward
the SaaS Provider

For the ISV are present consistent benefits but also risks
associated with the lack of Saas Solutions
B U S I N E S S B E N E F I T S N O T A D O P T I O N R I S K S
Access to new market segment Concrete replacement risk from the
clients side
Perception of being a «legacy» provider
Competitive Advantage and new
revenue stream
The aggregation of usage data to
facilitate product improvements
Limit the adoption of agile operative
model
Reduction of support and assistance
costs
Limit the development of capabilities
for the adoption of new technolgies (ex.
AI, IoT,)

Which are the key elements of a SaaS Provider?
SAAS PROVIDER
Global
perspective
Partner
Ecosystem
Pay-per-use /
subscription
revenue model
24/7 Operations &
Support
Advanced
Certification and
Training
Multi-tenant Sw
Cloud Platform

Which are the main challenges of a SaaS Provider?
Optimize the Cash Flow
Refocus the Platform Support
Improve the Sales Velocity and the Customer
Satisfaction
Take advantage of the Sw and existing architectures
Guarantee the uptime of the global customer base
the environment security

Starting point: set goals
The increasing adoption of SaaS entails
a reduction of entry barriers for the
new SW Vendors
The creation of a SaaS offer can be an
effective counteroffensive in the new
competitive scenario
Possibility to expand the customer
base in the market by going beyond the
current target segments
Opportunity to enter new markets,
riding the wave of SaaS to succeed in a
new business area
Defend yourself from
SaaS competitors
Increase your business
with SaaS

The impacts of SaaS
on the Business Model

Which are the Business Model changes?
Traditional ISV SaaS Provider
Offer of solutions with
specific functions that can
be customized according to
customer requirements and
deployable on customer-
owned infrastructures
Offer of standardized end-to-
end solutions with faster time
to market, better scalability,
reliability and standardization
Trial version offer testable
directly by customers
Customer
Relationship
4 9
Revenue
Key
Activities
2
Value
Proposition
1
Customer
Segment
3
Key
Resources
6
Channels
7
Cost
Structures
8
Key
Partners
5

Traditional ISV
Maintenance and platform upgrade
with long development cycles
Continue maintenance and upgrade of the
piattaforma for the client
Post-selling support
Evolution of Customer Care, Operations,
Security and reliability 24x7
Hw / Sw compatibility
certification processes Research, Development & Innovation
Direct sales Try & Buy & Partnership development
SaaS Provider
Customer
Relationship
4 9
Revenue
Key
Activities
2
Value
Proposition
1
Customer
Segment
3
Key
Resources
6
Channels
7
Cost
Structures
8
Key
Partners
5

Target customers based on
the features offered by the
Sw
Extension of the segments served
Extension to customers who don’t
have IT support or internal IT
resources
Extension to a global customer
target
Customer
Relationship
4 9
Revenue
Key
Activities
2
Value
Proposition
1
Customer
Segment
3
Key
Resources
6
Channels
7
Cost
Structures
8
Key
Partners
5

Focus on the IT user
Strong relationship in the presale
phase and sales through account
managers
On-demand contact with the
customer in case of request for
professional services or support
Support off-line
Focus on the business user
Partnership relationship with customers
through customer success manager
Take advantage of information on the
use of SaaS to anticipate issues and
improve satisfaction
Evolution of customer care
(capacity and multi-language)
Customer
Relationship
4 9
Revenue
Key
Activities
2
Value
Proposition
1
Customer
Segment
3
Key
Resources
6
Channels
7
Cost
Structures
8
Key
Partners
5

System Integrators
Resellers
Infrastructural Cloud Providers
Third parties developers /
communities
Expansion of possible partners to
Consulting and Strategy Company
Customer
Relationship
4 9
Revenue
Key
Activities
2
Value
Proposition
1
Customer
Segment
3
Key
Resources
6
Channels
7
Cost
Structures
8
Key
Partners
5


Account Manager e
pre-sales
Quality Assurance Staff Cloud Infrastructure
Cloud Advanced capabilities &
services (exploit the services supplied
by cloud providers)
DevOps professionals
Customer
Relationship
4 9
Revenue
Key
Activities
2
Value
Proposition
1
Customer
Segment
3
Key
Resources
6
Channels
7
Cost
Structures
8
Key
Partners
5

Direct Sales
Reseller & system
integrator
Channel Sales through a Partner
network (Potentially Global)
Website e Market Place
(Potentially Global)
Customer
Relationship
4 9
Key
Activities
2
Value
Proposition
1
Customer
Segment
3
Key
Resources
6
Channels
7
Cost
Structures
8
Key
Partners
5
Revenue

Staff Costs (dev &
sales)
Application certification
and maintenance costs
Facilities e Datacenter
Research & Development costs for
the evolution of the platform
Running cost of IT operations
Cloud costs
Customer
Relationship
4 9
Key
Activities
2
Value
Proposition
1
Customer
Segment
3
Key
Resources
6
Channels
7
Cost
Structures
8
Key
Partners
5
Revenue

License fees +
Maintenance Sw
Professional services
Switching to the pay-per-use
model
New revenues from
partnerships and training
Revenue anticipation for
elimination of lead-time delivery
High Upfront
Monthly Recurring Revenue
Customer
Relationship
4 9
Key
Activities
2
Value
Proposition
1
Customer
Segment
3
Key
Resources
6
Channels
7
Cost
Structures
8
Key
Partners
5
Revenue

The impacts on the
organizational model

Which are the organizational changes ?
Internal SaaS maintaining the
organizational structure:
- Minimum change
- Simple approach but
complex maintenance
- Difficulties in business
development both On
premise and SaaS
SaaS
Creation of a SaaS group
within the company:
- Creation of processes and
metrics entirely dedicated to
SaaS
- Possible tensions between
the staff of the SaaS group
and the rest of the
organization
SaaS
Creation of a spin-off totally
dedicated to SaaS:
- Similar to the creation of a
SaaS start-up
- Internal stress reduction
- Option that requires the
greatest change
SaaS

SaaS Sales & Pricing
Strategy

Key Decision: Which is the correct market segment?
The first step in defining the pricing strategy is to identify who our potential customers are within the overall market
• Pricing model with scale-
down for entry-level
customers
• Simple and efficient sales
• Instant service delivery
• Freemium versions can be a
winner solution
B2b
(Business-to-small-business)
• Easier purchasing
processes of the B2E
• Flexible contractual forms
• Transparency of metrics
and billing
B2B
(Business-to-business)
• Land-and-expand strategy
• Progressive up / cross-
selling
• Investments in the
customer success mgmt.
• Extra value added services
for large customers
B2E
(Business-to-enterprise)

SaaS benchmark: contracts % of growth in each segment
Source: 2018 Private SaaS Company Survey, Forenterpreuners.com
49% 55%
30%
0%
10%
20%
30%
40%
50%
60%
Small firm Medium firm Big firm
%CrescitaARR
Median Annual Contract Value (ACV)
B2b
(Business-to-small-business)
B2B
(Business-to-business)
B2E
(Business-to-enterprise)

Tre step per una buona progettazione del pricing
Una corretta progettazione del pricing massimizza i deal e abilita l’upselling.
PACKAGING
• Defines how the SW is organized
into products in the price list
• Defines the list of deployable or
usable features
Used to separate basic
functionality from optional
extras and to offer some products
in the "Premium" version
1
LICENSING
• Defines the units of
measurement used for the sale
of SaaS products
• Defines the restrictions imposed
It must be flexible enough to
ensure that the customer pays for
the actual use of the SW,
depending on the value provided.
2
PRICING
• Defines the method to
quantifying the payment for the
use of SaaS
Combination of product price
list and adjustment factors (eg
discounts on volumes, countries,
etc.)
3

Packaging Definition
1 2 3
Feature analysis of
the Sw
Identification of
customer use cases
Benchmark analysis
& reference market
Packaging Definition

Possible SaaS Licensing Model: Pros and Cons
Fixed rate (eg total
employer or sites)
• Simplify the purchase and sale
transaction.
• Upselling difficulties.
Per user
• Discourage widespread use.
• User count is complicated with
integrated systems.
• Simplify the billing modulation.
Modules or features
• Linked to the value provided to
the customer.
• Costs and revenues may not be
aligned.
Use or Transactions
• Allows alignment between costs
and revenues.
• Difficulty for the customer to
understand the actual cost.
Compound rate • Can guarantee more revenue.
• Can lead to understanding and
forecasting difficulties.
1 2 3

SaaS benchmark: main pricing metrics
41%
26%
16%
10%
7%
Per user
Use or transactions
Total employees o # siti
Modules or features
Compound rate
Source: 2018 Private SaaS Company Survey, Forenterpreuners.com
1 2 3
% of use of the pricing metric

Pricing in SaaS models
Competition
level?
Market-oriented
approach
Cost-oriented
approach
Customer
perceived value
pricing
Competitor
based pricing
Contribution
pricing
Mark-up pricing
High Low
1 2 3
Perception by
the customer of
the correct price
of the SaaS,
through market
research.
Establishes the
positioning of
the prices based
on the prices
applied by the
competitors.
Establishes the
price that will
cover the cost of
production, plus
the target profit
from sales.
Establishes the
fixed percentage
of profit from the
sale of 1 unit of
product.

Best Practice for the SaaS pricing strategy
Establish a
compromise on
accuracy to contain
the number of
dimensions to be
measured
•
DO NOT define a
price flat (eg per
user) without
considering the use of
SaaS modules
Balance simplicity and
fairness
Identify how to
measure customers'
size and complexity,
in relation to the SaaS
proposal
•
DO NOT use metrics
that measure
results, rather than
value drivers
Align licensing with
value drivers
Allow sales teams to
find the optimal
price for a specific
agreement,
•
DO NOT try to win
every deal at all
costs
DO NOT apply rigid
prices
Balance analytical and
"subjective" approaches to
discounts
Implement a
continuous process
of listening to
customers and
improving
Offer entreprise
deals to strategic
customers
Maximize
the Next Practices

Key Contacts
Lorenzo Cerulli
Equity Partner
Deloitte Italy
EMEA Tech Strategy &
Architecture Leader
Cloud Leader
lcerulli@deloitte.it
Giuseppe Castiello
Senior Manager
Deloitte Italy
Cloud Architecture
gcastiello@deloitte.it
Marco Lucarelli
Manager
Deloitte Italy
Cloud Strategy
mlucarelli@deloitte.it

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