From On-Premise to the Cloud: Building the Sales Capabilities for High Performance in Software as a Service

Software as a service (SaaS) is a potentially huge market for traditional software vendors—but to be successful, most will need to redesign their sales approaches. Accenture makes seven recommendations to help them make this transition.

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The rise of cloud computing is enabling new business models, among them software as a service (SaaS), the business of providing hosted software applications that customers access remotely and pay for on a subscription basis.

Research indicates that SaaS growth will continue strong, with a compound annual growth rate of 23 percent from 2010 through 2015.

However, building a successful SaaS business is challenging and requires a business model that differs from the traditional software business. Accenture builds on its previous paper, Where the cloud meets reality: Scaling to succeed in new business models, to look specifically at the sales capabilities—and their interface to service and support capabilities—required for SaaS.

As on-premise software companies begin offering SaaS options, there are many dimensions of sales to rethink and redesign, from the sales model and incentives to sales process, tools, channel strategies, and pre/post-sales support. Based on our research and years of client experience, we identified seven recommendations for on-premise software companies as they rethink and redesign their sales capabilities to win in the world of SaaS.

Redesigning the on-premise sales model to capture a fair share of the software-as-a-service market can be a significant undertaking. To create the sales engine to successfully serve both offerings, technology companies need a clear understanding of the differing requirements and a coherent design. This report aims to help technology providers address this challenge.

Recognizing the growing SaaS market, traditional software companies are making “big bets”, either by building their own SaaS offerings or by acquiring SaaS companies. SAP, Oracle, and Microsoft are just three of the largest software companies aggressively moving to SaaS.

However, it is clear that the new pure-play SaaS vendors are rapidly gaining market share. Their success can be attributed to the extensive changes to virtually every part of the business model that SaaS requires. In fact, Accenture believes that the go-to-market strategies of traditional software vendors are ill-equipped to serve both SaaS and on-premise models effectively.

One significant difference is the cost of sales: pure-plays tend to spend around double what traditional software companies do on sales and marketing. Unlike a traditional software business driven by upfront licensing, the SaaS subscription model depends on a sales organization that continually nurtures customers and incrementally adds and protects revenue over time through seat licensing. Therefore, as traditional on-premise companies expand their way into the SaaS market through acquiring other SaaS companies or building their own SaaS products, they will need to carefully and intentionally adjust their sales model and scale up their initial investment in sales and marketing to be able to drive sustainable growth for the business.

Through research and years of client experience, Accenture has identified seven recommendations to help on-premise software companies rethink and redesign their sales capabilities for SaaS.

• Segment your SaaS customers. Leverage analytics and market research to segment customers based on their readiness and desire for SaaS product.

• Agree on a sales model. Decide whether to leverage the existing sales model or design a new model for your SaaS business. Each model has its own implications that need to be carefully addressed.

• Align sales talent. Hire and re-train talent to adapt to the fast and frequent changes in the sales cycle (including pre/post sales).

• Align sales incentives. Design an incentive model that is based on subscription revenue, renewals and customer retention.

• Update sales processes and tools. Re-design sales processes and supporting tools to allow for flexibility that is required by the varying process and sales cycle (mostly driven by customer’s current state and desired state) in the SaaS business model.

• Design a comprehensive channel strategy. Design an optimized multi-channel approach that is inclusive of SaaS products and includes a value proposition for the partner ecosystem in the new SaaS business model.

• Make customer experience an important responsibility of the sales force. Update sales process to be inclusive of the support phase, so the seller is involved throughout the lifecycle of the SaaS product and takes accountability for nurturing the customer for growth.

Todd Wagner is a client service group managing director for Accenture’s Management Consulting group in the Communications, Media, and Technology industry segment. He has more than 20 years of experience in helping telecommunication and high technology companies define and implement strategies to improve marketing, sales, and customer service performance. He is based in Minneapolis, Minnesota.

Sanaz Namdar is a senior manager in Accenture’s Management Consulting, Customer Relationship Management group in the Communications, Media, and Technology industry segment. She has over eight years of experience in design, development and execution of transformational sales initiatives helping clients achieve business results and objectives. She is based in Seattle, Washington.