TELLUS International

You might think you know everything about the SaaS business, as SaaS has been a major software delivery method for years. Salesforce.com was founded on March 8, 1999, with Marc Benioff and his co-founders' goal of creating a software-as-a-service (SaaS) platform to revolutionize how businesses manage customer relationships. That was 25 years ago. So the question that you might have is: What new is there to learn today, as the SaaS business model has been around for such a long time? Dan Martell et al. have collected the best practices for growing a SaaS business based on their experiences building companies and learning from hundreds of organizations when working with founders. We live in a society where we get information from all directions, and when we run our lives and businesses, we need help to stop and think about whether we are doing the right things in the right manner. The book "Software as a Science—Unlock Limitless Recurring Revenue Without Losing Control" by Dan Martell et al. is a great resource for revisiting the fundamentals of SaaS business and ensuring that you are not missing anything that the industry is now doing and what is working and what is not working. The book is relevant for various audiences, and I have listed the ones I feel get the most out of it in my article. #TELLUSInt #bookreview #bookreviews #drsalonenbookreview #entreprenourship #continuouslearning #businessgrowth #businesscoaching #SaaS #saasbusiness #businessscaling #softwarebusiness #leadershipdevelopment #recurringrevenue #businessmodel #entrepreneurialmindset TELLUS International https://lnkd.in/gKXfpHUk

I have written numerous articles on the pace of innovation that is happening amongst software vendors and the pressures that many software vendors have concerning the pricing and monetization models. The rules of pricing for SaaS are changing, and the question of whether the traditional subscription-based model is valid is an ongoing topic within the industry. Pricing per user will not work in the agent-driven software world. AI-based solutions can't necessarily be priced based on a user as the solution might adapt to the user with different user needs. The pricing needs to reflect these "self-configuring" solutions. Tien Tzuo, Founder and CEO of Zuora, introduces the concept of "Total Monetization," which reflects how organizations should view their monetization models more holistically, being strong, value-driven, and deep in their understanding of the customer relationship. When we add AI to the monetization discussion, a new concept for many software organizations, I expect the topic to be hot for years to come. Yours, Dr. Petri I. Salonen #subscriptioneconomy #Zuora #SaaSpricing #customervalue #pricingstrategy #subscriptionfatigue #softwareindustrytrends #businesstransformation #monetizationmodels #AIpricing #TELLUSInt #TELLUSWorkshops #ISVs #totalmonetization TELLUS International, Inc https://lnkd.in/gSMYCKhs

How many times have you heard the concept "time is money?" How many times have you spent time and recognized later that it was a "waste of time" and something you should not focus on? The book Buy Back Your Time: Get Unstuck, Reclaim Your Freedom, and Build Your Empire" by Dan Martell is a great resource for any business owner/entrepreneur who wants to build a sustainable business without burnout and to focus on high-impact activities. I admit that there are tasks that I do that I really should not, and I have them either outsourced or have somebody else do for me while focusing on tasks that bring growth, such as "time is money." Every minute, hour/day/month/year you spend on things that don't take you where you should get is wasted, and you can't get back the time. Every minute is gone, and you are wasted on things you should not be focused on. The book brings several interesting frameworks you should review and reflect on if they would be something to consider. #TELLUSInt #bookreview #bookreviews #drsalonenbookreview #entreprenourship #continuouslearning #lifechoices #timemanagement #timeoptimization #businessgrowth #outsourcing #worklifebalance #productivity #delegation #taskprioritization #businesssystems #businessautomation #businesscoaching #leadershipdevelopment #entrepreneurialmindset TELLUS International https://lnkd.in/gZg5xYJG

Cybersecurity and security concerns should be top of the list for every software vendor. Cyber incidents have accelerated, and even the most skilled organizations have had issues securing solutions. The US federal government is heightening its warnings about dangerous software development practices. The U.S. Cybersecurity and Infrastructure Security Agency (CISA) and the Federal Bureau of Investigation (FBI) are issuing stark warnings about basic security failures that continue to plague critical infrastructure. CISA and FBI want software vendors to discontinue using C/C++ in new product development of critical infrastructure or national critical functions (NCFs) in a memory-unsafe language (e.g., C or C++) by 2026. This should be a sign for software vendors to evaluate how and with what language solutions are built and also put more emphasis on secure software development, as what Microsoft has done with its Secure Future Initiative (SFI) and the core principles that Microsoft has defined as part of SFI (Secure by Design, Secure by Default, Secure Operations). #isv #cybersecurity #securebydesign #CISA #programminglanguage #TELLUSInt TELLUS International https://lnkd.in/gHZktSgX

I was inspired to share some thoughts on Tony Robbins's question, "What business are you in?" This is a question that each organization should ask themselves regularly. If you are in a product business, there is a tendency to fall in love with the product and not necessarily with the customer. I ask a key question in our?TELLUS International?workshops: "What does your optimal customer look like?" Where have you found most of your success if you have a product? These are key questions, but when we get busy running our daily business, we tend to forget and stop to ask these questions. The questions that you should be able to respond to are: ??What business are you in? ??What business are you really in? ??What business do you need to be in? They seem such simple questions, but they really are not. #businessmodels #marketsegment #gotomarket #envisioning #TELLUSInt #tellusworkshops #discovery #entreprenourship #innovation https://lnkd.in/gB2nUUDp

I am sure you have heard the concept "garbage in, garbage out" regarding data warehousing, business intelligence, and reporting. I spent half of my career working on such solutions. The same concept is now apparent in the era of AI. An organization can't ignore its data strategy and invest in a solid data architectural model. Data governance applies not only to numerical information but also to document management solutions where metadata and associated data security rules are elevated to another level when an organization wants to deploy Microsoft 365 Copilot. A strong architectural model for SharePoint with a solid use of metadata and security posture is important for an organization deploying Microsoft 365 Copilot. We can't escape thinking about data structures and models, and with emerging technologies such as AI, organizations can't continue the discussion of data governance. #datagovernance #ai #GenAI #datastrategy #Office365 #Microsoft365Copilot #Copilot #TELLUSInt #data #governance #datamodel #etl #integration #dataquality https://lnkd.in/gg7PGqQu

We are all used to paying for software based on the number of users. This will change with the evolution of AI, where AI agents will perform tasks that we are used to taking care of. Salesforce.com has introduced AI agent-based pricing, where the base price is $2 per conversation. In addition, Salesforce will offer standard volume discounts. What this means for the industry is that software organizations (ISVs) will have to evaluate what it means for them from a revenue perspective. Will they have to compensate for diminishing user seats with AI agents, and if so, what will the balance be in these cases? Moving to pure consumption-based pricing is challenging for software vendors as it leads to unpredictability in revenues. The question is, however, whether end organizations will force software organizations to move more towards consumption-based models and less based on fixed subscriptions. That remains to be seen. As I have written in numerous articles, AI is bringing lots of questions on the monetization front. #businessmodel #isv #tellusint #TELLUSworkshop #softwarepricingandpackaging #saas #aipricing #consumptionpricing #salesforce #markbenioff #agentforce #pricingstrategy #aiagents #valuebasedpricing #softwareindustry #generativeai #usagebasedpricing #pricingmodel #aiinnovation #softwarepricing #hybridpricing #aimonetization TELLUS International https://lnkd.in/gbcvbJ8h

I am a framework believer. I learned that from my professor when working on my doctoral dissertation. Frameworks bring structure to your work and can facilitate a repeatable process with a start and an end. I have facilitated workshop sessions for some incumbent software companies, where each product line used its own methods and frameworks, and none of them were compatible with each other. How can an organization compare progress in such situations? They can’t. In this article (part 2), I summarize the work by Lenny Rachitsky and Palle Broe. They studied 44 incumbent technology companies, their AI offerings, and their packaging strategies. The article explains the framework that can be used to define AI features in three categories: add-on, standalone, and included in the plan. All three categories are compared with the existing offering and what additional value these AI features will bring. We at TELLUS International have delivered numerous software pricing/packaging workshops using similar frameworks. In an upcoming article, I will describe the process and the additional frameworks that help product management and development teams construct the packaging for solutions. The process is fascinating, and I have been lucky to witness several cases where the teams have innovated packaging based on the assumed customer value. Software vendors must emphasize their AI pricing approach, especially as new LLM models are being commercialized, are heavily based on consumption, and will directly impact ISVs and their cost models. Building a pricing model without having stopgaps for customer consumption of the solution could quickly lead to the software vendor losing money. #LLM #TELLUSInt #businessmodel #pricing #packagingandpricing #monetization #AImonetization #GenAI #TELLUSworkshops #frameworks #softwareresearch TELLUS International https://lnkd.in/dKcaksCh

Every time new technology is introduced, it is important to track the market and follow industry research to ensure you are up to date with the latest advancements. As a business owner, that has been one of my key objectives throughout the 19 years that TELLUS International has offered services for enterprises, independent software vendors, and system integrators/managed service providers. AI has taken many organizations by surprise. The pace of advancement has just been too much for many organizations, and I don’t see the pace slowing down anytime soon. In the TELLUS International business model, I realized real quickly that I had to embed AI into TELLUS offerings in one way or another when the first ChatGPT offering came out. AI has been around for decades, but what made a big difference was that AI was brought to everybody’s desktop and mobile phones. It got democratized. Suddenly, everybody was talking about AI, and senior leadership teams in organizations were scrambling to make up for it. We are in the face of development, and some organizations are already too late due to competition. Some have dabbled in what AI means, and some have built brand-new business models around AI. I believe many organizations will be built around AI concepts and ideas, and many will burn down without building a value proposition that resonates with the target market segment. In this article (part 1), I summarize a study by Lenny Rachitsky and Palle Broe, reviewing 44 incumbent well-known technology companies to see what kind of AI packaging model they had applied (add-on, standalone, included in the plan). Each of these models has its own characteristics. Based on my experience facilitating numerous software pricing/packaging workshops, each organization has its own DNA and is in a different phase in the solution lifecycle, so what could work for one does not necessarily work for another. #LLM #TELLUSInt #businessmodel #pricing #packagingandpricing #monetization #AImonetization #GenAI #TELLUSworkshops #frameworks #strategyframeworks #softwareresearch TELLUS International https://lnkd.in/gmQWRsbE

Software vendors are rushing to identify new AI use cases, especially regarding Generative AI. VC money has flooded the market, and new software vendors with different ideas are popping up like mushrooms in the forest. Cloud providers such as Microsoft, Google, AWS, and others are introducing new features and functionality almost daily, and software vendors need help keeping up with the development. A big question that many software vendors (ISVs) are struggling with is how to price their AI-featured software solutions. Kyle Polar and Palle Broe conducted an interesting study, researching 40 native AI companies and reviewing them in the following dimensions: used pricing model, used value metrics, packaging, whether the company offered a free version and transparency with its pricing. The results are interesting, and there is a clear sign that new-generation companies with solution categories that did not exist before might introduce new innovative pricing models that the first-generation AI companies have yet to use or think of. The current AI companies are using pricing models that are very similar to those of some more traditional SaaS companies, and the article will list the potential reasons for this. The monetization of solution solutions for independent software vendors (ISVs) is a hot topic and of interest to every cloud vendor as they want to ensure that the ISVs make money with the solutions they build. It is known that the gross margins for GenAI solutions are lower than for more traditional SaaS solutions, so monetization and packaging are of great importance for ISVs. I expect the topic to be on top of ISV leadership teams for an extended period, as some incumbent vendors are adding AI features to their solutions. These need to be priced, and you will have new startups that don’t have the legacy burden of pricing and can be more innovative in how they enter the markets. It would be interesting to hear what you think about this topic and if you have experienced or seen the same questions surface among ISV teams. #LLM #TELLUSInt #businessmodel #pricing #packagingandpricing #monetization #AImonetization #GenAI #TELLUSworkshops #softwareresearch TELLUS International, Inc https://lnkd.in/gTix2QRy