Between the Lines: SaaS Business Model Execution from Top to Bottom
One veteran CEO shares best practices for on-demand success based on his company's experiences.
By Michael Gregoire, Taleo
Dec. 03, 2007
The Software-as-a-Service (SaaS) model of software delivery has grown rapidly because it's a revolutionary way to deliver business solutions. Gartner reports that "by 2011, 25 percent of new business software will be delivered as SaaS". IDC estimates that "by 2011, this opportunity will reach $14.8 billion, representing a compound annual growth rate (CAGR) of 32%."
In spite of this market potential, many SaaS vendors have struggled to balance growth with profitability. Salesforce.com, arguably the most well known on demand company in the world, has only recently achieved consistent profitability. Many other SaaS companies have racked up significant losses in search of profitability. Successful evolution from start-up mode to a profitable public company requires relentless focus on execution at all levels to fuel top line growth while delivering bottom line results.
Balancing Growth with Profitability
The "next big thing" usually starts with a great product, but that's not enough to build it into a profitable business.
Long-term business success necessitates skilled discipline to refine the SaaS model so that it can be a vehicle for dynamic revenue growth while operating at a profit. Taleo has been able to balance rapid growth with profitability, but it did not come easily.
Taleo learned from the "growth at all costs" mentality that ultimately led to the dotcom bust, and has institutionalized a financial model designed to drive profitability and return value to shareholders. The SaaS model has granted Taleo the unique opportunity to design every aspect of the business on economies of scale and incremental profits. Taleo's growth experiences, combined with disciplined leadership, have provided advantages that have directly impacted the company's financial performance in four key areas:
A Scalable, Reliable and Cost Effective On-Demand Platform
Taleo was designed to serve the most demanding companies and now serves 35 of the Fortune 100. These large global enterprises require solutions that scale to tens of thousands of users, are available 24x7, and can be deployed worldwide. Taleo is among the few SaaS vendors to have successfully penetrated this market because of a scalable and cost effective platform in a multi-tenant environment. SaaS company performance, operating reliability, and growth all rely on the architecture of the on demand platform.
When a SaaS company looks to expand product capabilities to meet market demand for a complete talent management solution, it has a strategic choice; build or buy? That often-asked question and the resulting decisions can also impede the path toward profitability. If not done properly, acquisitions can be expensive, hard to integrate, and fail more times than not.
In spite of this market potential, many SaaS vendors have struggled to balance growth with profitability. Salesforce.com, arguably the most well known on demand company in the world, has only recently achieved consistent profitability. Many other SaaS companies have racked up significant losses in search of profitability. Successful evolution from start-up mode to a profitable public company requires relentless focus on execution at all levels to fuel top line growth while delivering bottom line results.
Balancing Growth with Profitability
The "next big thing" usually starts with a great product, but that's not enough to build it into a profitable business.
Long-term business success necessitates skilled discipline to refine the SaaS model so that it can be a vehicle for dynamic revenue growth while operating at a profit. Taleo has been able to balance rapid growth with profitability, but it did not come easily.
Taleo learned from the "growth at all costs" mentality that ultimately led to the dotcom bust, and has institutionalized a financial model designed to drive profitability and return value to shareholders. The SaaS model has granted Taleo the unique opportunity to design every aspect of the business on economies of scale and incremental profits. Taleo's growth experiences, combined with disciplined leadership, have provided advantages that have directly impacted the company's financial performance in four key areas:
- Scalable, Reliable and Cost Effective On Demand Platform
- Highly Predictive Business Model
- Services That Drive Customer Satisfaction
- Efficient and Disciplined Marketing
A Scalable, Reliable and Cost Effective On-Demand Platform
Taleo was designed to serve the most demanding companies and now serves 35 of the Fortune 100. These large global enterprises require solutions that scale to tens of thousands of users, are available 24x7, and can be deployed worldwide. Taleo is among the few SaaS vendors to have successfully penetrated this market because of a scalable and cost effective platform in a multi-tenant environment. SaaS company performance, operating reliability, and growth all rely on the architecture of the on demand platform.
When a SaaS company looks to expand product capabilities to meet market demand for a complete talent management solution, it has a strategic choice; build or buy? That often-asked question and the resulting decisions can also impede the path toward profitability. If not done properly, acquisitions can be expensive, hard to integrate, and fail more times than not.
