I just came back from the Software Business Transformation Summit in Las Vegas and I have to say the Tier 1 and 451 Group folks did a fantastic job. We had two days of in depth discussions about how SaaS will impact the software industry. The big boys (Salesforce, IBM, Sun, and Oracle) were all present but it was the large attendance from software firms in the midst of the conversion that made it truly valuable.

Most of the audience questions to panelists focused around the impact on margins, how to deal with running infrastructure, whether new sales commission models are needed, and how to convert customers. I find one thing missing in all these questions, though. Greed.

That comes accross harsh, but let me explain. IMHO there are only two possible reasons for a software firm to make the conversion to SaaS, fear or greed. The fear, of course, is of being left behind by the competition. All of the questions I listed above are based on fear.

Greed, on the other hand, is what I believe should be motivating the move. A CEO shifting the company to SaaS because of greed is looking to capture an order of magnitude larger market. What makes that possible is eliminating the barrier to adoption customers face in having to operate the software. All that presupposes the company can figure out the right business model.

A greed based shift generates different questions than the ones I heard. Questions that need to be asked before you can formulate a new business model. For instance, how do I identify the value of my solution to smaller customers? Do I need to maintain seperate support and pricing models? How will I reach this new audience effectively? Will these new customers have the same certification requirements as my existing customers? How long is the sales cycle? What’s the churn rate?

The Tier 1 and 451 folks tried to press these issues when they were on panels. Opsource was there, and Treb Ryan also pushed a couple of these buttons. On the whole, though, fear ruled the day.

btw: if you get a chance to go next year, I highly recommend the event.