Most leaders of SaaS providers understand the importance of minimizing Churn and maximizing account enrichment, but few fully appreciate how vital to those goals is a good pricing and licensing strategy. My newly published report Pricing Strategies For Software-As-A-Service is a must read for any business software company that sells or is thinking of selling via a subscription model. Here is a quick overview for anyone who isn't yet a Forrester client.
Some industry experts talk about the "magic ratio" of lifetime customer value to acquisition cost. Aligning the price you charge each customer more closely with the value they are likely to receive from your product is vital to increasing the former and reducing the latter. Simplistic pricing undermines lifetime value by undercharging those customers who get the most benefit from your product. Don't think you can fix this error later if you get it wrong at the start - I've seen many start-up vendors limit their growth potential in this way. Flat rate pricing helped them get traction early on, but then when they wanted to accelerate revenue growth they found it impossible to persuade those early adopters to switch to a variable pricing structure.
As soon as the news of the Brexit vote in the UK came out, the Forrester team began revising our UK and European tech market forecast to take into account the economic implications and uncertainties of the voters’decision that the UK should leave the EU. Based on this revised analysis, we predict the UK tech market will grow by just 1% (pounds sterling) in 2016 with zero growth in 2017, compared with our prior forecast of 5% in both years.
Europe as a whole, will post no growth in 2016 (euros), and just 1% growth in 2017 — two percentage points slower than our earlier forecast. With the plummeting pound and enervated euro, European tech market measured in US dollars will be similarly weak with 0.2% growth in 2016 and 1.1% in 2017.
The slowing of UK and European tech market growth results from multiple uncertainties created by the Brexit vote coming on top of what was already a weak and shaky European economy. As a result:
The UK economy, which had been outperforming most of the Eurozone countries, will take a hit. The Belgian, Dutch, French, German, Italian, and Swiss economies, which are growing by 1-1/2% or less, are vulnerable to declines, with Italy especially exposed due to a looming banking crisis.
Greece and Portugal are struggling once again, with threats of renewed recessions leading to declines in tech spending.
The only countries with decent economic growth and above average tech market growth are Ireland and Spain in the Eurozone, and Sweden, Poland, and other Central European countries outside it.
After more than a decade of keeping its published pricing largely unchanged, Salesforce today announced new pricing and packaging for its core products.
What you need to know:
Pricing will go up for core editions. New Sales and Service Cloud Lightning Editions will come in three flavors: Professional Edition (PE) -- $75; Enterprise Edition (EE) -- $150; Unlimited Edition (UE) -- $300. The pricing will now be identical for Sales and Service subscriptions. (Previously, Sales Cloud was cheaper than Service Cloud and was a subset of the functionality that came with Service Cloud. More on the functionality implications below.)
The new "Lightning" packaging comes with enhanced functionality. PE adds Workflow, Console Light, Profiles, Record Types, Unlimited Apps & Tabs. EE adds Full Console, more Sandboxes, two-factor mobile identity, Unlimited Apps & Tabs. UE has more Sandboxes than before. You can see the announced pricing and packaging for all editions in the graphics below.
The “Russian doll” model will go away. In the past, Salesforce packaging was analogous to Russian dolls: Service Cloud encapsulated Sales Cloud, which encapsulated Force, which encapsulated Chatter. The new packaging breaks this model and means that a Service Cloud buyer will no longer get full access to Sales Cloud. Instead, there will be a bundled price for customers who choose to buy Sales and Service Cloud seats together. Both Sales and Service Cloud will still come with Force and Chatter.
Cloud is becoming the new norm for enterprises. More and more companies across the globe are using a combination of two or more private, hosted, or public cloud services – applying different technology stacks to different business scenarios. Hybrid cloud management is now an important priority that enterprise architecture (EA) professionals should consider to support their organizations on the journey toward becoming a digital business.
I’ve recently published tworeports focusing on how to manage the complexity of hybrid cloud. These reports analyze the key dimensions to consider for hybrid cloud management and present four steps to help move your firm further along the path to hybrid maturity. To unleash the power of digital business, analyze the strategic hybrid cloud management practices of visionary Chinese firms on their digital transformation journey. Some of the key takeaways:
Align hybrid cloud management capabilities with your level of maturity . Hybrid cloud maturity is a journey of digital transformationcovering four steps: initial acceptance, strategic adoption, hybrid operationalization, and hybrid autonomy; maturity is measured by familiarity with, experience with, and knowledge of how to operate cloud. EA pros should build their management capabilities step by step, aiming to unify and automate cloud managed services by understanding technical dependencies and business priorities.
To successfully grow in Asia Pacific (AP), you must excel at understanding customers’ needs, wants, and behaviors and have the capabilities necessary to transform this insight into improved customer engagement. But that’s true everywhere. What sets the AP region apart are the continued vast differences between markets. Appreciating these market differences, and the impact they have on customers’ expectations, is critical when sourcing enterprise marketing capabilities.
We just published my latest research, the Forrester Wave: SaaS Web Content Security, Q2 2015. Forrester categorizes web gateways/forward proxies into this web content security category. I did something different with this evaluation, instead of looking at on-premise appliances; I only evaluated the SaaS deployment model. If a vendor didn't have a SaaS delivery model, we didn't include them in the Wave.
The decision to focus this wave on the SaaS model, wasn't popular with some of the vendors we evaluated. The majority of vendors who sell web proxies lead with the on-premises delivery model and relegate SaaS to a niche deployment option. As users, their endpoints, and their applications move outside the perimeter and into the cloud, the traditional web gateway model is being disrupted; yet many vendors are still very attached to their appliances. Instead of evaluating a very mature on-premise market, I wanted to focus this Wave on the future.
Consumers and enterprises alike are increasingly shying away from buying digital content, services, and software outright. Instead, these businesses are embracing alternative business models where they lease or rent access to digital products and services. The disruption to traditional business models is widespread and accelerating across all verticals of digital product distribution, with high profile digital disruptors like Adobe, Netflix, and Salesforce driving changes in the way consumers and enterprises pay for, and engage with, digital products.
Today we see that:
Business model changes are accelerating in the digital goods marketplace. Today's digitally connected consumer is increasingly eschewing the traditional ownership model of buy, download, install, and use. Consumers want access to digital content and services across their connected devices, anytime, anywhere — and are embracing virtual ownership models that provide access to vast libraries of content, services, and products under subscription, usage, and other emerging ownership models.
A different set of features and services are fundamental for digital goods sellers. Many of the features and capabilities found in enterprise eCommerce platforms are directly transferrable to selling digital goods or online services. However, most of these retail-focused solutions lack the unique features and services needed to sell digital products and services online, including flexible cross selling and bundling, asset protection, subscription management and entitlements among other features.
This is a guest post by Fraser Tibbetts, Researcher on the AD&D team covering sales force automation software.
Oracle’s first ever Modern CX Conference in Las Vegas last week, with roughly 3,000 attendees, focused on Oracle’s vision for the CX Cloud suite of products. Instead of the usual focus on technology, executives focused on products that recognize how the customer has more power than ever. This aligns with Forrester's age of the customer research. It is encouraging to hear that same message from Oracle’s CEO, Mark Hurd, and from the Oracle product team leads.
Clients tell us they are turning to SaaS not so much for cost savings but primarily for greater business results: greater business agility and improved collaboration inside and outside the enterprise. But, what can SaaS applications provide that traditional, single tenant applications cannot?
At last week’s Workday Technology Summit, we heard firsthand from some major brands about the unique benefits they are achieving from using a SaaS solution:
1.Continuous innovation. Workday customers talked about two components to this benefit: 1) seamless, frequent, automatic upgrades and 2) ability to deploy changes quickly into your live environment.