August 26th, 2008
What is the current state of the market for on-demand software?
dancerceo asked:
I am writing a marketing plan for class based on an on-demand software offering (think Salesforce.com, NetSuite, Basecamp). How much is the market worth? How fast is it growing? How many consumers or small businesses are involved? etc…
I am writing a marketing plan for class based on an on-demand software offering (think Salesforce.com, NetSuite, Basecamp). How much is the market worth? How fast is it growing? How many consumers or small businesses are involved? etc…
If you liked this post, subscribe to Wpdesigner's RSS feed.
Filed under: Other - Business & Finance
It’s an idea. It is not being caught up like wild fire in business communities, especially the low tech ones. Although high-tech, government or big business IT seems to be more receptive to it. If you go to more production, manufacturing oriented business, people will usually ask you “Hah??” when you mention on-demand software. I have the (dis)pleasure of developing software applications for transportation, chemical manufacturing and newspaper industries for the last 10+ years. And this is just my observation when asking around about on-demand software in some “classic” not so high-tech oriented businesses.
On Demand Software (ODS) is much more popular than people think, simply because the concept of on demand software has been ill defined and is generally concieved ad limited to “Net Licensing” Here are a couple of recommendations to round out your research paper.
1) Start by breaking the mold: Define ODS in it´s full conception. On Demand is a service definition not a product spec. The whole idea behind On demand, is to have your service when you need it. Bluntly put, almost all net transactions and particularly all DOWNLOADS are delivered on demand. so the biggest consumer of ODS is really the home end user, and the real market is in the “Upgrade and fringe bennefit” segment of ODS rather than the “Full Service application”
The best example of this (other than the all powerfull i Tunes) is probably the MS Office Clipart gallery, absolutely on demand, but dellivering only a fraction of all the suite’s functionalities.
2) Proove the market assumptions before you measure the market. as the old saying states, “to assume is to make an A** out of U and ME” so before you bring out your calculator and start adding customers Proove the real motivation behind each consumer and service segments.
Some less looked at segments may be “Patches”, “Demos” “Add ons”, “Advertising on Demand (Which actually acounts for most of the profit of web based e’mail)”
Then there is the classics “WEB MAIL” as the king of the ODS software services, which led to “CONTACT MANAGEMENT” and “SCHEDULING” “MEETING MANAGEMENT and MESSAGING” Services, then and only then consider SUITE Services and ERPs which are at the pinnacle of complexity and thus have a smaller segment.
If you can make a case for each relevant service segment you will see that your customer count is high, composed of many interdependent market response surfaces.
3) Round out by explaining some of the unique attributes of the ODS business model such as. . .
A) the money is in the service not just the license fee. . explain how service creates and audience and the audience creates a media profit (Once again the case of web based e’mail)
B) A different service calls for different measures. . the importance of measuring transactions and consumers, badwidth and feature richness.
C) Data management builds uncontested loyalty. (ask how much you value your information, thats how much you will want to stay once you decide on an ODS service provider.)
4) Last measure the size of the market according to simple facts. If your cost to run is $1,000,000/mo and your profit margin per account user is $10/mo Than your real market is the top 100,000 consumer over the total response surface of the features in your ODS platform.