Unlocking the Power of SaaS: Training Clients and Teams for Success

Hello everyone and welcome to Metrics Data's presentation of Unlock the power of SaaS today. So today we're going to be talking about SaaS applications and you know, when we talk about power, we're going to talk a little bit about why they're so prevalent in the market, why they've become so successful, not just from a client's adoption of SaaS products, but also from software publishers perspective of why they developed SaaS models. And we're going to talk about some ways that you can make these implementations cost effective and some of the gotchas and some of the things that you can watch for. And so you know, who am I? I'm Mike Austin. I worked at Microsoft in licensing for just shy of 10 years. I've been helping organizations negotiate, you know, software contracts, have negotiated well over $2 billion of contracts. And I'm really focused on focus and passionate about helping organizations sort of drive cost out of their software contracts and their cloud contracts. And this is why we're being talked about, talking about SaaS today. And so this is actually an internal training that I'm doing for my team to help them, you know, kind of identify opportunities to help our clients. And we thought, let's invite, you know, clients and other people in to sit in on this conversation that we're going to have internally today about what to go look for, what, what's going on in the marketplace, that sort of stuff. So we want this to be interactive. You're probably going to hear my team pop on and ask questions. If anybody's got questions and they're on the team's version of this, please feel free to, you know, drop your questions in the chat or put up your hand and if you want to go on and, and have a little bit of a conversation, the only thing that we ask is if you are asking questions that are specific to your, to yourself as a company, that you keep your company name and anything that could be considered confidential to sort of let's talk in generalities so that we don't have to worry about confidentiality clauses or anything to that nature. So let's dive into it here. I first thought I'd start with what is sas? And I just did a Google search and said, okay, what is sas? And ironically indeed, which is a job board, had a pretty good definition of it. So I'm not going to read this Pervadium, but there's a lot of confusion sometimes about the difference between SAS and Cloud. And so if you look at infrastructure as a service, so SAS obviously stands for software as a service. And there is some confusion because some people try and lump in cloud services, which is infrastructure or platform as a service. And the difference really is, if you think about. I'm going to really simplify this. If you think about SaaS and if you think about cloud services, the difference is cloud services are things that you host at say Amazon or Google Cloud or Azure versus purchasing an application and using that application in the cloud. So SaaS apps are really things that you access, you know, applications that your users are going to typically access straight through the cloud. Now there are some exceptions where there might be, you know, things that get loaded on desktops or, you know, laptops or cell phones in order to access those or to make the access to them easier. What do I mean by that? I'm going to use an example of Dropbox. Dropbox is a SaaS application. It's storage in the cloud. And I can drop my files up there and save them. I could just go to Dropbox.com, log in, drag and drop and put them up there. Or I can load the application on my laptop or my computer and use that to move files up into the cloud to be stored. There's a very simple SAS A scenario, right? And the key thing here is the service is provided in the cloud. I don't have to install a Dropbox, you know, server on my servers in my data center and utilize those. I'm dropping, you know, files up in the cloud and using it there. And a lot of the times that's done straight through a web browser, right? But sometimes there's these clients or things that make access to that a little bit, little bit easier. Okay? So a lot of the times will be asked like, who are the big, who are the big SaaS? Who are the big SaaS providers? And you know, what sorts of companies are we talking about? There's tons of them, right? There's probably, you know, I kind of half heartedly say about a trillion others here. But you know, the ones that really started this probably were salesforce.com they think about it, their CRM at the time, they would have been competing with Siebel. Siebel was a massive implementation and saw these servers and then Salesforce came along and said, hey, just access. Just log in through the browser and get access to CRM. But these are things like Dropbox and Box.com and Microsoft 365 and Zoom and GoToMeeting. And all of these are examples of SaaS based applications. You can get into ServiceNow is a SaaS based application. Workday is a SaaS based application. They're really these centralized applications that are sold only through subscription. That's a key point. And you're accessing them in somebody else's data centers and you don't have to worry about that sort of stuff. Okay, and so why did software companies move to SaaS? Right, and I'm going to use Microsoft as a little bit of a case study here. So let's look at what happened with Microsoft and why did they move to SaaS? So let's talk about what Microsoft's big SaaS application is, which is Office 365 or Office 365 itself is not an application, but the products within Exchange Online, SharePoint Online, Teams Online, et cetera. Why did Microsoft move and have such a massive push to O365, their SaaS product? Right. And if we go back to 2010, if you look at Office as a product, what's really changed in Office, right? You know, fast forward to Office 2023 and go back and look at Office 2010 has much changed in it. It's still Word, PowerPoint, Excel, it still does the things. Microsoft puts new features in it, but 95% of the users don't use those new features. So what's really changed? And so what started to happen in 2010 actually started before this, but where companies started to really ask is it worth 500 bucks a license to upgrade? So I know you had software, so I'm not going to get into the details, but was it really worth it to stay on these maintenance streams to upgrade? Right. So if you think about every enterprise on the planet had office in their EAs. 90 some odd percent of the big companies had office in EAs and there were billions of dollars and they were starting to say office 2010 is good enough. I don't need 2013 or you know, 2016, I'll just run 2010 for as long as I can. And that really started with Windows XP, right? Because if you think about Windows XP, it was deployed in so many organizations for 10 plus years. You know, they companies skipped Vista altogether. We want to talk about the disaster that was Vista, but companies skipped it altogether. And so if you think about then and go look at back into the enterprise agreements with Microsoft and all the revenue that was associated in there, you had, you know, so much revenue in there. And if I'm looking at it going what the value of having the OS in my enterprise agreement, there was none. And people were dropping out because they're like, I'm not going to Vista, I'm going to stay on XP, right? And so. Or Windows 7 even, right. You know, so if you kind of think about those two products, right? And then you look at the servers that were included in EAs through the Client Access Licenses, you had Exchange and SharePoint Windows servers. And Microsoft's model was, with software assurance, was in order to break even, you needed to upgrade every four years. And they would have release cycles about every three years to try and keep it so that people would have a reason to upgrade. Right? But most large organ enterprises were running and willing to run versions of Exchange and SharePoint and Windows servers for eight plus years, right? So if you looked at the value proposition of upgrading every four years, they weren't upgrading every four years, they're upgrading eight plus years and just running that technology for lots of reasons. We won't get into the reasons why, but you know, there were lots of reasons that they were doing this. Not, you know, some of it was, was there really enough new functionality in the product to do upgrades? But let's assume there was. It's just these projects were huge. They didn't want to be taking them on all the time. It wasn't as simple, hey, let's move from exchange 2010 to 2013. Those were big projects that cost lots of money, that they had other priorities that were more important within the IT organizations. And so if you think about it, companies that had perpetual license rights could just walk away from the maintenance. And Microsoft's revenue growth started to dry up. Right? And this was what was happening in 2010. And so back then, SaaS was still just starting to come out. And so you got Salesforce out there that's coming, very successful and are kind of one of the first ones that model. And Microsoft's looking at this going, our revenue is starting to decrease because people aren't renewing and they own these perpetual licenses and they're not upgrading. In fact, at that time, Microsoft was internally probably thinking that their biggest competitor was themselves, right? So if you went to the Office product team and said, who's your biggest competitor? Their biggest competitor in 2013 with Office 2013 was Office 2010. Right. Or Office 2007. We're still. And that probably was more the case. It was probably 2007 more so than 2010. Right. So if you take a look at SAS and how it rescued Microsoft, this says it all, right? In June 28, 2011, that's when Microsoft officially launched Office 365. Now they had Some increments of this. Before this, they had a program, if anybody was around back then called BPOs, which was kind of their earlier version of it. And it was kind of like the pilots, as they were trying to figure it out. And they probably had those, you know, three years before that. Three, four years before the. Before this. But officially, June 28, 2011 is when Microsoft launched Office 365. On that day, their share price was $24.23. Today I think it's $340. You know, it's going to be in between. It's popping up and down a little bit, but today it's $340. Now, is all of that due to Office 365? No, because they got big components of Azure that have driven that growth as well. But you can see what SaaS and Cloud has done for Microsoft. Now if I went back and looked at the price of Microsoft stock in, let's say June of 2000, it was probably 100 and some odd dollars. And in June of 2011 it was $24. So prior to this, they were doing this, they moved to a SaaS model and they start doing this. Right. How did, how did this help? How did this drive this? Right. So if you think about it, there's no more perpetual licenses so that I own it. I don't need to be stuck on your software assurance or maintenance train has gone away. Right. Let's just put this in perspective. Why is Office a subscription? Why would you even call it a SaaS product if you're Microsoft? Because it's still not, it's not centrally deployed. Now I know they have the Office web apps and it's sort of kind of getting there. But most of the, most of the use of Office is open up Word, Excel, PowerPoint on my desktop, create it, save it, send it an email to somebody else to edit it and things like that. Why would they move that? Because of what was happening in 2010 where people were dropping software assurance. So now if I make it a subscription and bundle it in with what would be Microsoft's true SaaS products, Exchange Online, SharePoint Online, etc. I'm moving those to subscriptions. Right. What was their biggest competitor? It was themselves. Office 2010, Exchange 2010, SharePoint 2010. Right. So now if I move to SaaS, I don't have to have this problem of people not upgrading because I'm going to control the upgrades, you know, the upgrade cycles on the back end. Right. They also had price control. There's no downward pressure anymore, Right? Because if you want to keep that maintenance stream and people own things and they're not upgrading in the freer time frames to justify this stuff, you're going to get pressure on your price, right? They were getting a lot of pressure in 2010 on price of Office and Core CALs and Windows OS and things like that. Now all of a sudden when it goes to subscription and people don't own it, they've taken away that price pressure. In fact, what they've been able to do more frequently than they ever did in their history is have increases in prices. There's been multiple increases of prices on Office 365 since 2011. I believe there's been three of them. And if you look at Office from Office 97 to Office 2010, I think there was one price increase in there, right? So now they're able to increase the price more frequently. The other thing that they did is they locked in any competitors from really entering the market. And they did that because now they took their, installed, their on premise installed base of these products and moved them into, move them into the cloud, into these SaaS models, right? So you know, why do I use this as an example? Because what other companies are doing are avoiding the problem that Microsoft had by just coming out and taking all the advantages that Microsoft got out of moving to SaaS and starting there, right? So if I want to buy Dropbox, I can't buy an instance of Dropbox to install on my servers. It's just SaaS. If I want to buy teamwork, I can't buy an instance of teamwork to put on. It's just SaaS, right? So they've taken out those barriers of entry, they've taken out the challenges that Microsoft had all that tremendous growth into in their early years to the big downturn that they went through where they were stale for 10 years and massive decrease in stock price to writing it again, right? So everybody wants to follow this model and you're.