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	<title>Comments on: SaaS and the Elusive Path to Profitability</title>
	<link>http://www.esourcingforum.com/archives/2008/04/28/saas-and-the-elusive-path-to-profitability/</link>
	<description>The source of information and best practices in strategic sourcing.</description>
	<pubDate>Fri, 22 Aug 2008 03:42:25 +0000</pubDate>
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		<title>By: Eric Strovink</title>
		<link>http://www.esourcingforum.com/archives/2008/04/28/saas-and-the-elusive-path-to-profitability/#comment-11216</link>
		<dc:creator>Eric Strovink</dc:creator>
		<pubDate>Mon, 28 Apr 2008 14:56:15 +0000</pubDate>
		<guid>http://www.esourcingforum.com/archives/2008/04/28/saas-and-the-elusive-path-to-profitability/#comment-11216</guid>
		<description>Last time I checked, the point of running a business is to make money.  Very few have done so in this space, and relying on up-sell to make a profit some time in the distant future is a fragile strategy indeed.

One of the ways that buying organizations can stay afloat, even if software vendors go under, is to ensure that vendors provide user-accessible flat-file data dump capability in all modules.   I'm not talking about the ability to dump mysterious XML files or useless binary data files -- I'm talking about dumping well-documented and human-readable CSV files containing every piece of data that's ever been entered into the system (if it's relational data, multiple CSV files and a well-documented schema).

For example, suppose that your contracts management system is suddenly shut off (a very real possibility in an SaaS environment).  If you had taken flat-file backups of the contracts data on a regular basis, not much will be lost.  That backup data can be loaded into an Access database in about 5 minutes, restoring your ability to view it and index it  (without the pretty user interface, but you can live without the pretty UI while you find another product).

One of our customers pointed this out to me a while back.  He said, "When you buy software, make sure there's an exit path if the software vendor shuts down, or if you want to change horses.  You need to be able to extract your data at all times, in a useful format."</description>
		<content:encoded><![CDATA[<p>Last time I checked, the point of running a business is to make money.  Very few have done so in this space, and relying on up-sell to make a profit some time in the distant future is a fragile strategy indeed.</p>
<p>One of the ways that buying organizations can stay afloat, even if software vendors go under, is to ensure that vendors provide user-accessible flat-file data dump capability in all modules.   I&#8217;m not talking about the ability to dump mysterious XML files or useless binary data files &#8212; I&#8217;m talking about dumping well-documented and human-readable CSV files containing every piece of data that&#8217;s ever been entered into the system (if it&#8217;s relational data, multiple CSV files and a well-documented schema).</p>
<p>For example, suppose that your contracts management system is suddenly shut off (a very real possibility in an SaaS environment).  If you had taken flat-file backups of the contracts data on a regular basis, not much will be lost.  That backup data can be loaded into an Access database in about 5 minutes, restoring your ability to view it and index it  (without the pretty user interface, but you can live without the pretty UI while you find another product).</p>
<p>One of our customers pointed this out to me a while back.  He said, &#8220;When you buy software, make sure there&#8217;s an exit path if the software vendor shuts down, or if you want to change horses.  You need to be able to extract your data at all times, in a useful format.&#8221;</p>
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		<title>By: Charles Dominick, SPSM</title>
		<link>http://www.esourcingforum.com/archives/2008/04/28/saas-and-the-elusive-path-to-profitability/#comment-11215</link>
		<dc:creator>Charles Dominick, SPSM</dc:creator>
		<pubDate>Mon, 28 Apr 2008 12:38:37 +0000</pubDate>
		<guid>http://www.esourcingforum.com/archives/2008/04/28/saas-and-the-elusive-path-to-profitability/#comment-11215</guid>
		<description>I agree that it is important for buyers to understand the profit strategy of their vendors.  It does amaze me that stockholders can make good money on unprofitable companies that are later sold or, at least at some point significant amounts of stock are divested for personal profit.  FreeMarkets was the prime example.  Great technology and vision.  But they never made a penny in profit as a public company.  However, the founders made an absolute fortune via their IPO.  It obviously takes intelligence to start a company and make it profitable.  But I guess it also takes (perhaps even more?) intelligence to find a way to make a fortune for oneself in spite of the fact that the founders can't lead the company to profitability.</description>
		<content:encoded><![CDATA[<p>I agree that it is important for buyers to understand the profit strategy of their vendors.  It does amaze me that stockholders can make good money on unprofitable companies that are later sold or, at least at some point significant amounts of stock are divested for personal profit.  FreeMarkets was the prime example.  Great technology and vision.  But they never made a penny in profit as a public company.  However, the founders made an absolute fortune via their IPO.  It obviously takes intelligence to start a company and make it profitable.  But I guess it also takes (perhaps even more?) intelligence to find a way to make a fortune for oneself in spite of the fact that the founders can&#8217;t lead the company to profitability.</p>
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