The SaaS Opportunity: Enterprise Content Management
We are all looking for new markets and opportunities. Here is one for you to grab that is untapped so far by any major players, at least not seriously.
Enterprise Content Management (ECM) is becoming more and more important for companies of all sizes. First it is more important due to regulations enforcing a better documentation for a longer duration and secondly as an opportunity to streamline processes and to get cost benefits. Not wanting to dive deep into ECM and its benefits let me point you to some resources:
- Free book on ECM (in German only), also in English (thanks Maria)
- And many more – start at Wikipedia but do not stop there (-;
ECM is part of a bigger information management concept. If you look at it, the majority of ECM solutions consist of software and consulting. The reason is that the ECM companies claim to create individual processes and adjust the software to these processes. Sounds like ERP, doesn’t it? Were we not all forced to customize our ERP so much that upgrading and switching to a competitive product become literally impossible? Apart from that annoying fact it also closed the door on many small- and medium-sized companies which just were not able to pay the price for that much consultancy. The other issue with ECM for small and medium companies (larger have the same issue but better economies of scale) is the ever-growing need for space. There is more and more content being created each and every day. While ECM helps to cut down the amount of storage needed for archiving by introducing processes to identify which data must not be archived, the issue itself remains.
This is how a SaaS offering might help the customers and how it is a great sales opportunity:
1. Opening up the door for small- and medium-sized businesses
By offering a service that is paid on a consumption base and avoids investments into software and hardware in advance business can start using the service small and grow over time. The enforced standardization of a SaaS offering might be a blocker for large enterprises but a welcome thought for the smaller companies.
2. Revenue structure change
It changes the revenue stream of the ECM company software maintenance and consulting towards a continuous service fee. Rather than one-off projects with a huge impact on the revenue line but also a high risk on forecasting, a services company will have a constant revenue stream. The revenue stream is not only another one in structure but also a new one as it taps a market so far untouched. So this is a real growth opportunity.
3. Enrich the SaaS Collaboration offerings of Google, Microsoft, Salesforce.com, etc.
There are offerings in the market that deliver collaboration services like e.g. email, team collaboration and instant messaging. While these cloud offerings do bring enterprise class services into the small and medium business market already they all miss out on the need for ECM. You often do find reduced interfaces and features compared to on premise products or the lack of these completely. If you can create your ECM SaaS offering and manage to get it certified / running on e.g. Office 365 you will not only have a great market opportunity but also will get a whole new number of sellers, the partners of Microsoft, as well. This could be the fast track to growth and success.
4. Use the cloud to lower your investment cost
What is the roadblock to existing ECM software companies to enter the SaaS market? First of all it is the lack of infrastructure and employees to build and run such a service on a large scale. The result is that you do see some companies claiming they do offer cloud services but in reality work with hosting partners that do create individual environments per customer and operate these. An interesting first step but far away from the SaaS idea as proclaimed here.
Here is my suggested solution. Build your SaaS offering on existing PaaS solutions by e.g. Force.com, Amazon or Microsoft. You can take your software and build it out on these elastic services and start there. You even can start by giving some of your developers an environment and let them play with it. You should though have an eye on which languages and standards are supported to minimize the effort to port your software as well as giving customers an easy route to your on premise software. By doing so you do avoid investments:
- Data Center
- Software (OS, DB, etc.)
You can grow the environment on the fly and massively reduce your risk. Also you do enhance your chances of getting certified for O365 if you run your service on Azure, or any other combination if available.
5. Use the cloud to address privacy concerns
Another roadblock is the data privacy discussion. Remember that ECM is all about managing information so data privacy is a core component of an offering. Depending on the country the customers could by very aware if not frightened to use such a service. The effort to comply with data privacy requirements could be quite high and add up to the investment roadblock. On the other hand if you do build your service on already existing cloud services that do fulfill the local requirements you can easily create a safe, secure and legal service not only for you to offer but also for the customers to purchase.
6. Application marketplaces can help customers and providers alike
A key question that remains is sales. First of all I believe the first true SaaS ECM offering will get a lot of buzz in the community as well as press coverage. Being the first here gives you a real advantage. Secondly the announced market places for cloud solutions based on PaaS will be an additional platform for customers to evaluate and for providers to sell. You can even use the application market places for smart phone apps by creating client applications (which you should do anyhow) for these platforms.
So what is needed to transform an ECM software company into a service provider for SaaS ECM?
- A management with a vision and a decision to get wheels in motion
- A change agent for your sales. The transformation from selling software and consultancy to service is huge. Look at Microsoft and their long journey with MMS, BPOS and O365. As an ECM software company you do have one advantage though. You sales already focuses on the CxO level.
- A development effort to port your software to the cloud
- Relationships (if not existing you need to create them) to Google, Microsoft and so on.
Or in other terms you do need a business development manager that helps you to create the vision and takes the accountability to make it real.
Some additional remarks on things you need to be aware of:
- Be clear in which markets you want to start, countries, verticals, company sizes, privacy regulations
- Focus on one platform first (suggestion: O365 and Azure)
- If you are not sure yet whether you are all in, give some developers the freedom to start playing with the PaaS platform
- Identify customers among your existing base that would qualify as long hanging fruits and would be great references
- Have an eye on new ways of collaboration. Any of these will open additional opportunities to broaden the customer base, e.g. ECM for Yammer or Salesforce.com Chatter