One of the biggest differences between the conventional enterprise software business and on-demand is the selling mechanism. That's coming over loud and strong from the CEO panel at SIIA's OnDemand Summit in San Jose this morning, where I'm blogging from.
John Dillon of Navis raised a laugh when he recounted this remembered conversation to characterize the traditional enterprise software sales model: "The reason Siebel needs an expensive sales force is to persuade a smart prospect like you to do something stupid." The traditional model for selling high-end business software is very inefficient, and is based on investing huge sums of money in sending out sales people to find and persuade prospects to buy the software.
In contrast, said WebEx's Subrah Iyar, "[SaaS] is an inbound business versus an outbound sales business." What that means is that prospects come to the vendor, via the Web. Mark Hoffman of Everdream gave a perfect example having just had a 30-day try-before-you-buy trial go live on his company's website on Monday. By early afternoon on that day, already 30 prospects had signed up.
Treb Ryan of OpSource reinforced the message: "The companies that have success in this space think of themselves as Web companies not as software companies. They develop more like Web developers, how they market is people come and sign up on their site, and even the types of products really leverage the Web."
Later in the day I met a vendor that succinctly illustrates this principle. Expensewatch.com helps companies control day-to-day operating expenditure. Its CEO Bill Vergantino proudly told me that, "We have 9000 active users in 112 customer accounts — and we never once left the building to sell it, demonstrate it, implement or support it."