After publishing our updated SaaS Business Architecture and Seven SaaS Revenue Streams slide decks, people have asked if those principals apply to other cloud services or just SaaS? The answer is, of course they do. Some clarification is required on what "cloud" is in this context:
Cloud Computing is most often comprised of three as-a-Service acronyms:
- SaaS - Software-as-a-Service
- PaaS - Platform-as-a-Service
- IaaS - Infrastructure-as-a-Service
There are others that have tried to leverage the "as-a-Service" moniker (Storage, Identity, etc.) but ultimately they fall into one of those three categories.
The definition of the SaaS Business Architecture, in case you missed it before, is:
...a Network-Centric commingling of Marketing, Intellectual Property, Technology, and Business Model.
One key element of this definition of SaaS is found in the Technology portion of the Business Architecture: Multi-Tenancy. The inclusion of Multi-Tenancy is why this definition is specifically SaaS and not "cloud." It could, however, just as easily be the PaaS Business Architecture or the IaaS Business Architecture.
Unfortunately, cloud is too broad and includes elements that are *not* multi-tenant (including private clouds, ASP, virtual appliances, etc.). Network-centricity without Multi-tenancy is not a scalable business architecture and the number of ways to monetize is reduced dramatically.
Its easy to see how the Seven Revenue Streams can be available to a SaaS vendor, because the context is easy to see. SaaS offerings can be very specific to a niche or vertical, they have a well-defined GUI making it easier to understand the value to the market, etc. As you move away from what we think of as SaaS applications and go "down the stack" a bit, the opportunities for additional revenue streams becomes a bit harder to discern. This is not only due to the lack of a presentation layer, but also by the widening horizontal nature of the offering.
Of particular interest to me due to my Supply Chain Management background are companies that have an offering that sits somewhere between PaaS and SaaS; pure ecosystem or proxy plays like:
- System Integration
- API proxies
- Data Aggregation
- EDI/EC
These are vendors who have a single-instance, network-centric, multi-tenant, web-native environment, but because they don't have a substantial UI, its harder to see (actually visualize) the opportunities. Yet, these plays have some of the best Ecosystem and Network Effect revenue model options of any vendors out there.
As you move down the stack to PaaS and IaaS offerings, the revenue streams are just as relevant, but even less obvious. With SaaS, for example, the data that can be aggregated anonymously and leveraged in the form of reports or benchmarking is a bit more obvious. How a PaaS or IaaS vendor can leverage these revenue opportunities ultimately depends upon where in the stack they sit and what the underlying architecture of the offering supports. For instance, a PaaS with shared data fields where a tenant application is really just an extension of the core application will have more context at the Network Effect Data level than a PaaS that is a more of an abstraction layer of the underlying infrastructure for host applications.
At the lower levels of the stack, the information that is relevant between tenants will be less coherent, but it will be there; the opportunities will present themselves when you look with the right context. Perhaps that data cannot be monetized directly, but it can certainly be leveraged to drive other revenue-generating initiatives, better customer service, etc.
Regardless of whether you are SaaS, PaaS, IaaS, or somewhere in between, if you need help with your revenue modeling or business architecture, give us a call at (972) 200-9317 or use our contact form.
Author: Lincoln Murphy (You should follow me on Twitter!)