Can incumbents challenge disrupters in SaaS?

When considering whom to favour in the SaaS arena, it’s the classic fighting videogame face-off: a fast and agile opponent whose solution initially lacks punch or the heavy boss who moves slowly but packs a wallop? Nowhere is this challenge more evident than in the battle royale between Google and Microsoft.

Many resellers stick with who they know, reasoning the vendor will catch up and offer a cloud service to migrate customers with a minimum of fuss.

But customers are also under the pump and if they’re not demanding cloud solutions – at a deep discount – they soon will. Smart partners will keep alternatives in their back pocket.

“There’s two things that define or distinguish companies such as Saasu, Xero or pure cloud players from traditional desktop software company or incumbents,” says Rhys Taylor, chief marketing provider for Saasu. 

“The first thing is we developed with a different mindset. [Saasu] doesn’t have a sales team; our business was built on the social web, by word of mouth and we identified there’s a different way to sell. 

“Online products enable collaboration and as a result you get exposure to contractors who were added to Saasu, so we get that viral effect and that differentiates SaaS business models,” adds Taylor.

Application programming interfaces (APIs) are also critical to the success of cloud software – and offer opportunities for partners to coordinate workflows or add their own custom software.

Xero and Saasu have in-house API developers, while the other big SaaS accounting provider, NetSuite, bases its own SuiteScript on JavaScript.

“An API opens up the entire Saasu platform so we can plug in best-of-breed add-ons,” says Taylor. “That gives us a selling edge over desktop software but it also gives the business owner greater bang for buck because these products work really harmoniously with each other.”

MYOB’s James Scollay says the familiar interface attracts existing customers.

“We have a very large client base and we can offer them a seamless experience in shifting from desktop product to the cloud.”

The marketing and enablement budget is another advantage an incumbent has, Scollay says. For instance, MYOB is spending big this year to update its partners, especially those in the bush. Such activities as roadshows and training may be beyond the typical start-up cloud provider.