The next biggest change in the SaaS evolution is from software services being a displacer to a disruptor. Revolutionary technologies compete with current experts on the same buying parameters. Disruptive companies change the way a buyer thinks about solving their need. Most SaaS products today are displacers.
Less than a decade ago, SaaS companies and products were somewhat considered to be inferior or rather cheaper products to their clients. This scenario is no longer relevant today. In today’s digital world, SaaS companies generate more than 15% of the total software revenues and are consistently overthrowing their older competitors.
Most of that revenue, though, is displacement revenue. Whether it is related to modifying an existing creation like a CRM system or pen and paper – modern software companies still compete on the same buying parameters. For example, the extent to which a CRM can be customized based on the integrations required to attract a buyer cocoon ventures, Investment Firm.
The easiest way to divide the software world is system of record vs workflow application. Systems of record are the single source of data about a particular department or company. A CRM is the recognized source of sales data; the ERP system is the recognized source of a company’s financial information. Systems of record is considered for its ability to generate reports and insight of the company’s management team, however, is less known for its user-friendliness.
On the other hand, workflow applications enable workers to do work. The products that appeal to salespeople, sales development reps, marketing associates, customers support reps are the most successful.
Most of the SaaS companies leverage the distribution advantage of the web browser to pursue bottoms up customer acquisition. In order to win a user using this bottoms up strategy, these software companies pursued workflow value proposition. There are exceptions: Salesforce, NetSuite, Workday. However, some companies make the transition from workflow application to system of record. Zendesk is a classic example of this. This transition occurred as it moved up the market from serving small to medium businesses to midmarket to enterprise system of record for customer service requirements.But all of these examples are still about displacement software. The strictures of decision-making yet remains the same.
The next big change in SaaS will see startups influence the workflow roots into disrupting systems of record by changing the entire buying process. The data they will accumulate from this usage will provide unique insights that precedes the current record system.
For example: can today’s CRM technology tell a CEO exactly how much time a company spending is spending to close an account and support that account over time? And ultimately whether or not the client is a profitable client?
Being a workflow product is a fundamental strategic advantage for a SaaS company, because it provides the business a vantage point invisible to incumbents. We haven’t yet seen many workflow applications unseat system of record incumbents, but by leveraging this strategic advantage and changing the buying process, new SaaS companies will evolve from displacement to disruption.
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