The software industry has been transformed over the past 20 years. Gone are the days when businesses ordered boxes of software that came on disks and CDs with software manuals at a high initial purchase price. Some of this software was never implemented properly and in some cases never even used at all, but the purchase was a sunk cost and too many software suppliers checked out when the sale was banked.
Instead, we’ve seen the rise of Software as a Service. Businesses now buy software on subscription, paying for it as they use it. This approach was pioneered by companies like Salesforce.com but has now become so widely adopted that almost all software is sold this way today.
For the customer, this is a great model. Costs of software are spread over time and if you no longer need some software, you simply stop paying for it. And as most of this software is delivered over the internet as cloud technology, it can be updated automatically, often for no additional charge.
And for software businesses, it’s a great model too. A great subscription business generates predictable income month after month and year after year. To make a Software as a Service (Saas) business work relies on three things:
- A great product that meets the needs of customers
- Great marketing and sales to let potential customers know about the product
- Great customer service to make sure customers are happy, stay happy and want to renew.
Now, this is also a great model for a social business.
As a social business, we are interested in delivering brilliant products and services to achieve high social impact for low cost to customers who don’t have much money. Often in the social sector, we do this by subsidising our costs through grants and donations. But grants have a limited lifespan, typically of a few years, and customers need products and services for the long-term. And so we need sustainable social businesses.
Predictable long-term revenue is one of the keys to achieving this. And the SaaS model is not only a great way of delivering this but also helps us achieve our mission by staying close to our customers. If they aren’t happy they won’t renew their subscriptions. But more importantly, if they aren’t truly happy, they won’t recommend it to their friends and colleagues. Trust and word of mouth are important in all sectors, but possibly even more so in the social sector which aims for more collaboration instead of competition.
So, we’ve decided to build Singlify as a SaaS business. This means that most of our income will come from annual subscriptions to our software applications. We will seek to minimise the upfront costs of buying a Singlify application. And we will invest the majority of our income from customers in providing them with exceptional support and in improving our products.