Service, software, support — What’s the difference in SaaS? Does it matter?

Service is an over-used and misunderstood term in SaaS circles. Many startups equate service with customer support (CS). While CS is a key aspect of Service in SaaS business models, it goes far beyond that. In B2B SaaS, I find the best way to think about service is in terms of workloads. Ask yourself — what tasks & workloads [related to the core offering] can we fulfil for the customer which they will value, be willing to pay more for and which we can provide better/faster/cheaper? This customer centric approach should guide the development of your SaaS business model, service strategy and technology roadmap.

Services can be delivered using technology, people or a combination thereof. In business model design it is important to think through this decision carefully — what kind of overall customer experience do you want to create? Business, especially B2B is very much people-oriented — while a fully digital experience sounds cool and is possibly cost-effective also, it is usually not what most customers want or need. A sensitive B2B customer such as a bank or healthcare provider will be willing to pay additionally for on-demand services such as a dedicated on-call service engineer when it comes to a critical infrastructure service, even as routine monitoring & management is taken care of via the software platform. In contrast, for low sensitivity customers or low-risk workloads, a delivery model with a higher tech-to-people ratio could work. Finding the right balance of tech-to-people and applying it at the right touch points in the customer journey is key.

Seven ways in which B2B SaaS companies can build powerful service propositions

1. Core workloads refer to the core functions being delivered by your SaaS offering including administrative tasks. For an EdTech company delivering B2C tutoring services, core functions would include student registration, scheduling, payments, session management and learning analytics. Unless it’s a completely new solution area/market, customers usually have established requirements w.r.t. core workloads which translate into standardized solution features & functionality that set the benchmark for what a SaaS solution is expected to deliver. To create incremental value or differentiation, go deeper into delivering more relevant core functionality. To expand to new customer segments, adapt the core functionality as per new customer requirements. In the above example, expanding from B2C to B2B, an EdTech tutoring provider would need to redesign registration, scheduling, and payments to onboard schools (instead of students), support group sessions (instead of individual students) and B2B payment options (instead of B2C only).
2. IT services can encompass a variety of technical and operational services including IT implementation, change management, design & build and consulting services that ensure a successful onboarding of the new customer. In SaaS, the focus is always on recurring revenue generated through the software platform. One-off revenue such as onboarding services can be sizeable depending on the customer segment and are an excellent way to inject incremental cashflow into the business, build new monetizable service capabilities and establish that critical direct relationship with the customer. Delivering these services via a partner network is another strategic option to consider.
3. Training is a high-growth, profitable, and standalone proposition that can reinforce your SaaS offering. Similar to onboarding services, it can also be developed in-house or delivered through partners. Many SaaS startups default to B2C-like tactics by providing self-service tools & user information on their website, missing out on a monetizable opportunity. A blended training delivery model, using digital and in-person modes, not only creates recurring opportunities to up-sell and cross-sell, but also builds customer relationships and improves user adoption, both of which are crucial at renewal stage.
4. Certification & professional development (CPD). The hottest technology jobs today — software developers, data analysts, cloud engineers — and many other white- and blue-collar jobs — doctors, lawyers, machine operators and health & safety personnel — require specific technical skills and qualifications. Skill development and certification is a huge B2C and B2B trend, and represents an attractive and recurring service revenue opportunity for SaaS providers. Not only big tech, but also rising stars such as Hubspot (CRM), niche and specialised SaaS providers in the architectural, edtech and content creation space, and non-specialised SaaS companies can develop CPD offerings.
5. Customer Support (CS) is a well understood concept. For B2B SaaS providers key is to move away from thinking like a B2C company — unlike B2C customers, B2B customers have well-defined CS expectations and many also have allocated budgets for dedicated and additional support. Also B2B CS is far more specialised — in addition to administrative support, B2B CS capabilities typically also cover business, technical and critical functional areas. Few, if any, B2B SaaS startups have clearly defined service level agreements and corresponding delivery capabilities. This is another missed service revenue opportunity and also attrition risk factor.
6. Data services. Probably the most creative and hi-potential service area for all SaaS companies is data services. SaaS companies handle vast amount of user and usage data opening up many opportunities for incremental, value-added services as well as product innovation. For example, student learning data combined with machine-learning and analytics can generate new products such as personalised learning (B2C and B2B) and services such as flipped classroom and teacher training (B2B). The possibilities are infinite and require a strategic and compliant approach to data architecture.

In B2B, trust is a must.

Trust-as-a-Service. In B2B, trust is also a product- and service- level expectation broadly covering the topics of data security & privacy, quality & performance, disaster recovery & contingency, and compliance. Depending on the geography and sector, many of these trust-based service criteria will be regulated, required or considered essential to doing business with your SaaS company. Building trust into your SaaS offering at the platform, process, system and service level, and acquiring necessary accreditations and certifications is key to success in sensitive sectors such as BFS&I, healthcare, education, security, communications and defence, and markets such as the European Union and United States. When trust is central to the B2B SaaS business model, it can create significant competitive advantage and stickiness with customers, unfortunately many SaaS companies do not give trust sufficient consideration.

Software and Service are like two sides of the same coin. B2B SaaS companies should give both equal investment and strategic priority. When done well, service can be a standalone revenue generator and competitive advantage for SaaS companies and deliver meaningful value for customers. Some or all of the seven powerful service propositions combined with a strong software platform can transform your SaaS business.

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Most tech companies don’t know how or lack the motivation to invest in higher education (B2B) — a profitable and strategic market for those willing to commit to it. Whether you are a design software or cloud services provider, here are seven ways to succeed with higher education institutions.

Higher Education (HE) is an attractive and strategic market for technology providers.

Per student spending on tertiary education across OECD countries is a substantial $17,559 with the Top-3 countries — US, UK and Luxembourg — spending upwards of $30,000 per student. From a commercial standpoint, Higher Education Institutions (HEI) are also mature buyers of technology with a more structured and often consolidated procurement process that makes doing business with them easier (than say for example pre-K or K-12 in education or SMB in business). Also HE tends to be more privatized as a result providers have more decision-making freedom, discretionary budgets and strong commercial motivations to invest in the latest technology — quality technology is one way HEIs differentiate themselves from competitors especially in competitive academic fields such as business, law, medicine and STEM.

From a strategic standpoint, building fruitful relationships with distinguished faculty and HEIs can give technology providers credibility in academic and business worlds, opportunities to participate in top-tier innovation and R&D and a commercial edge over competition — as a trusted partner rather than a transactional vendor. Also not to underestimate the power of young talent — HE students are not only users and influencers of technology today, but also decision-makers in business tomorrow.

Why most technology companies struggle in B2B/B2G education

Most tech companies especially those coming from legacy consumer or enterprise business backgrounds, including many startups, do not know how to engage with HEI in a commercially viable way. What do I mean? Consumer businesses focus on the B2C student market; the few that engage with higher education providers do so as a PR or marketing play and seeing no tangible return-on-investment, drop the idea. In contrast, enterprise tech companies make no distinction between education and other commercial sectors, applying generic B2B strategies which backfire, or they relegate education to a social responsibility initiative.

A handful of big tech companies and niche mid-sized players who have made a long-term commitment to education market, have had huge success. Here are seven proven strategies to build commercially successful relationships with HEIs. The first three are strategic, next two focus on student engagement, and the last two are sales oriented.

1. Faculty research projects. Investing in a strategic relationship with relevant faculty can be a game-changer for tech companies especially for providers of specialised software for eg. architectural design or whose solutions are relevant to current academic research topics such as data privacy & security. HE faculty are thought-leaders in their fields and decision-makers in cutting-edge research. An opportunity to align with the research agenda of a reputed faculty is a win-win both on the R&D and commercial side.
2. Technology / innovation labs. Understandably, tech. leaders shy away from deals for free stuff. Sponsoring a technology lab in a key HEI can be a strong sales and marketing tool if the project is structured properly and with clear expectations around value-creation on both sides. For example, fitting out a data sciences lab with cloud infrastructure and analytics modules, or setting up a VR simulation at a medical college can serve as multiple purposes — for user research, R&D projects, PR, demonstration to clients and most importantly as a trial facility for students and faculty.
3. Curriculum integration. This is a strategic opportunity, well worth it for those in it for the long run. Curriculum and teaching in academia often lags practice in industry. Especially HEIs and faculty members specialised in leading research areas such as digital pedagogies, data and applied sciences are keen to partner with technology providers to bring in a practice-oriented and contemporary perspective. This strategy also works well with vocational educational institutions that rely on industry to co-develop curriculum. Collaborations focused on developing or revising curriculum by leveraging a technology companies’ inhouse capabilities is a great way to embed the solution into teaching practice and get endorsement.
4. Internship programs. Developing a HE internship program is an excellent way to convert students into fans of your technology. HE students are influencers and future decision-makers and hiring managers in their careers. If they love your product, they will take it with them not just back to campus but also to their future workplace and possibly become lifetime customers.
5. Ambassador programs. Whereas interns are hosted on-site by employers, ambassador programs work the other way round — students promote tech companies on-campus and online. Big tech companies do this very well — Google’s Student Developer Clubs and Microsoft Student Leader programs create opportunities for senior and graduating students to develop leadership skills by hosting on-campus clubs as well as mentoring and training peers on technical skills.
6. Preferred vendor. Working with HE IT and administrative functions to understand organizational requirements and initiate the formal process of getting qualified as a preferred supplier has significant benefits down the line. Especially in markets where HE procurement is consolidated, getting onto the preferred supplied list of central authorities can simplify the sales process with individual buyers.
7. Framework agreements. Complementary to qualifying as a preferred vendor, for speed and scale at sales execution stages, its very effective to start framework agreement discussions where possible. With standard terms and conditions ironed out by central authorities, individual HEIs find it much easier to purchase on demand, rather than get into protracted contractual discussions each time there is a need.

Higher education is an attractive market for technology providers that are willing and able to modify existing roadmaps and commercial models, or develop bespoke ones, to fit the unique needs and characteristics of this segment. The seven ways mentioned here are industry best practices which can be integrated into your strategy to develop a commercially viable higher education business.

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When was the last time your business lost a tender because the pricing was not as competitive as the next ten vendors? How many times has your business not even been invited to bid for more strategic opportunities even though you qualify?

Unless your company makes a specific solution that is in a niche of its own, most B2B technology sales scenarios across hardware, software, infrastructure, and services are primarily driven by pricing and technical factors. This ends up being a price-driven race to the bottom with vendors undercutting one another so that even when the contract is won, the margins are razor thin. This dynamic is particularly noticeable as product categories / sectors mature — even big brand OEMs like Samsung or NEC, and ISVs like AWS and Microsoft command only a small brand preference. Further downstream, dynamics get even harder as last mile service providers — systems integrators, value-added resellers etc — get easily and quickly swapped out for cheaper alternatives.

The one proven way to overcome this dynamic and leapfrog from being just another transactional vendor to becoming a preferred (and sometimes even strategic) partner to customers, is building vertical / industry expertise in your business.

Tech sector is full of industry jargon and often the same catchwords — horizontal solutions, vertical markets etc — can mean very different things to different people.

What is verticalization in B2B?

Verticalization at the product / solution level

Horizontal solutions are industry-agnostic and for more general application in business environments. For example computing devices, word processing and productivity applications, cloud services and content management systems (CMS) can be used in office and administrative areas across industries. Horizontal solutions become verticalized when industry-specific features and functionality are added — for example, CMS designed, modified or customised for education sector is a learning management solution (LMS), for hospitality sector is a Hotel TV solution and for retail is Retail CMS.

Verticalization in the Go-to-Market (GTM)

In addition to product / solution-level verticalization, tech. companies that invest in verticalizing their GTM model have two advantages. Firstly, they build ‘stickiness’ — closer commercial ties with customers and partners — which in B2B is the ‘Vitamin B’ factor that can influence buyer decisions. Secondly, they build more relevant offers for the customer vis-a-vie a horizontal solution provider. Verticalizing the GTM creates a crucial reverse feedback mechanism (from industry into the business) which if structured properly can build superior industry intelligence across the business from pricing to service. Typically verticalizing the GTM includes building industry-specific expertise in sales, marketing, business intelligence, customer success and service functions.

In practice it looks like this …

Imagine you are the customer evaluating [fill in the blank] solution, and you received two offers. Company A, has a good price, all or most of the functionality you need but the overall experience leaves you with the impression that they don’t really ‘get’ your business.

Company B, gives you the same price or maybe even a slightly higher price. However the knowledgeable sales executive provides deep insight into how your peers and competitors in the industry are using the solution. The solution architect steps in and knows exactly what use-cases are most relevant for your specific requirement; he suggests valuable tweeks at the implementation stage that would give your business much more bang for the buck. Marketing speaks the language of your industry and has put together a great training program to get your employees up-to-speed with the new solution. The product team shares next years’ roadmap — it includes many of your ‘wishlist’ features.

Which company would you give your business to, A or B?

Must-have or good-to-have?

It depends on the type and size of customer, as well as the solution and level of competition/commoditization in your sector. Generally speaking, small business segment does not require a vertical approach they would appreciate one! Also when the solution is not focused on the customers’ business operations but is meant for general management and administrative use, a horizontal approach may be sufficient. However when solutions or requirements touch a customer’s core business operation — production, retail, warehousing, logistics, commercial — some level of verticalization at the solution level as well as in the go-to-market capabilities is required.

The level of verticalization is a strategic decision companies must make. Both at solution and GTM level, verticalization can be superficial or deep. Many early-stage companies still exploring market-fit, start with one-size-fits-all solution and then as they discover traction in a particular industry, making substantial verticalization investments. Others prefer to dabble in various sectors — here an in-between approach can work for the interim where strategic modifications are made at solution-level and verticalization of GTM is limited to customer-facing functions. Where the entire business is industry-specific, verticalization should be an investment priority and at the core of strategy.

Here are my Top-5 tips to start building vertical expertise in your business

1. Recruit salespeople from target verticals. Rather than recruit from the tech sector, hire salespeople from industry and train them on product. This approach is faster and more successful than the other way round — building ‘Vitamin B’ in a sector can take a lot of time and is the Achilles Heel of many tech companies that hire generalist tech salespeople to penetrate vertical markets.

2. Build vertically focused business intelligence resources. Business, sales and operations analysts are low-cost, high-influence resources, responsible for the critical function of gathering, analysing and distributing market and business intelligence across the organization. They are also often working close with CxOs and management teams on strategy. Hiring analysts with academic backgrounds, work experience or passions in target verticals, providing them with access to industry resources such as subscription services, conferences etc and assigning them with the responsibility to develop a vertical focus within the business are some great ways to disseminate vertical know-how.

3. Evangelize the management team. It’s crucial that all founders / management team members are on-board a vertical strategy. This is easier said than done. Many Tech CEOs have never worked in the target industry. Many CHROs, CFOs and CIOs have never visited the customers’ business. How can we expect them to appreciate a vertical strategy? Invite your executives to the next customer visit or demo — nothing beats experience.

4. Work with HR to design a customer-centric organization. Usually each function has its own success metrics and key performance indicators (KPIs), and while its uncommon for line functions to have a customer-centric focus, even between customer-facing functions, often success metrics are misaligned, creating a disjointed customer experience. Work with HR to design organization and processes so that a customer-first approach and vertical expertise is a priority.

5. Design incentives that motivate desired behaviours. Human behaviour is driven by motivation. We expect people to behaviour a certain way but do not empower or reward the desired behaviour. Work with HR to recognise and reward team members and especially sales for desired behaviours and performance w.r.t vertical expertise. It could start with something as soft as a learning & development goal ie industry training completed and mature to vertical-specific quotas and targets.

Building vertical expertise can change the dynamics in the B2B technology provider — customer relationship. Vertical know-how and capabilities enable your business to deliver more value than competition, defend pricing and margin, and build sticky relationships in industry. This is one proven way a select few make the leap from transactional vendor to preferred partners.

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This will be the most expensive Christmas in recent years in terms of food prices. Most of us will gain a pound in weight, which doesn’t sound like a lot except that it will not come off and add up year-on-year. Holiday season wining and dining can leave us feeling guilty, but it doesn’t have to be that way. Here are my best tips to eat well and stay in control of health and finances.

Food is a source of pleasure and nourishment especially during festivities when family and friends are around. Yet it can be a major source of stress, guilt and worry as we try to juggle seemingly conflicting goals of enjoyment, heath or fitness and finances.

Even more so this year as retail food prices reach unprecedented highs. Although global food prices appear to have returned to November 2021 levels according to the FAO Food Price Index (FPPI) — a measure of the monthly change in international prices of a basket of five food commodities (cereals, vegetable oils, dairy, meat and sugar) — the retail reality in many countries is very different.

The UK seems to have had the worst of it. Food price inflation reached an all-time high of 16.2% this October and according to the Guardian has tempered somewhat in November to 12.4%. What’s worse is that the prices of staples such as eggs, dairy and fresh produce has shot up. This would mean that food shopping this Christmas would on average be 8.2% more expensive than last year, despite holiday discounts offered by UK food retailers. The situation is only slightly better in the US — although food inflation has eased from its peak in August to 10.9% as of October, it is nevertheless 4.6% higher than December last year.

Not only food prices, but also health goals and concerns can dampen festive wining and dining. I’ve cooked Christmas meals for friends and family members who suffer from various health conditions including food allergies, autoimmune conditions, blood pressure and diabetes. Even without serious health conditions catering to groups with diverse dietary preferences can be challenging.

No one wants to make and then break another New Year resolution to get fitter.

The good news is that most people won’t put on as much weight as they think they will or the media suggests — the average person will gain 1.06 pounds or 0.48 kilos according to the most widely quoted study on this topic conducted by the New England Journal of Medicine in 2000. The bad news is that most people don’t lose holiday weight gained. Since adults gain one or two pounds per year on average, it means that we gain most or all of it during the holidays. Moreover that pound gained this Christmas will compound over the years! It gets worse for overweight people, who will gain five pounds or more.

Is it mission impossible to enjoy food without worrying about health and finances during the holidays?

I don’t think so. I’ve had the opportunity to celebrate the holidays, cook, shop and eat in eleven countries while staying within one kilo range of my average body weight for over a decade. Here are my best tips to have a great Christmas, stay fit and within budget.

1. Give discounters a try; you may be pleasantly surprised. It’s easy to dismiss food discounters and in many countries discount stores do infact compromise on food quality. However in others such as Germany and Italy, its where even gourmands and chefs do their groceries. At Lidl stores in Germany for example, I have been very impressed by the selection, quality and pricing of fresh and local produce, regional wines as well as speciality items. Even in the UK, where the quality difference between premium, regular and discount retailers is noticeable, it still makes sense to buy essentials at discounters since the overall quality standard is high.
2. Ditch retail fads, design seasonal menus. Seasonal produce is usually fresher, healthier and cheaper than imported or exotic ingredients, yet often retailers and celebrity chefs tempt us with promotions of international Christmas menus and food items. Locally- or regionally- sourced produce does not require unhealthy, shelf-life enhancing treatments that are often necessary for imported foods to last during international transport and which can dull the flavour profile of the food. Usually they can also be substituted for imported foods on an international recipe at a fraction of the cost. For example, a variety of native squash varieties grow in Germany this time of the year which I plan to use instead of the exotic Japanese Hokkaido pumpkin that is trending this year in grocery stores. Also I will be adapting Gordon Ramsey’s brussels sprouts recipe — a classic Christmas dinner side dish in the UK — with a recipe that shows off Germany’s unique cabbages.

3. Make fitness part of holiday fun. As daylight hours shrink and temperatures drop, it’s tempting to put off any outdoor activity and settle on the couch or opt for indoor (typically sedentary) entertainment — going to the cinema, mall or café etc. Yet what we need in between a great big meal and the next is actually some fresh air and cold weather. Even a short walk can get the metabolism going — burn calories, aid digestion, stimulate appetite — and shake off that notorious winter cabin fever feeling. In many parts of northern Europe, families including little children will go outdoors every single day come rain or snow. A great many imaginative outdoor winter activities are designed for this reason such as ice-skating and mushroom foraging. My favourite is a curious ball-throwing sport popular in northern Germany — adults compete to throw a heavy iron put as far as possible in the forest, and players that hit a tree must take shots of schnaps as a penalty. After a few kilometres of hurling heavy balls in the cold, rest assured that big meal is thoroughly worked off and there might even be a calorie deficit in preparation for the next one.

4. Short, regular exercise is the key, when indoors. With a full house it can be logistically challenging to get daily outdoor exercise or fit in a long gym routine. The trick is to do a short, high calorie burning exercise routine every day. I highly recommend high-intensity interval training (HIIT) — 20-mins in the convenience of your living room (no equipment needed) burns about as many calories as 60-mins city walking or cycling. The low-intensity variation is a good option for seniors, overweight people, those with injuries and as a group activity with children.

5. Eat like the French do. Ever wondered how the French manage to look so fit at all ages even though their cuisine is one of the richest in the world? Incorporate some French eating habits into your household this Christmas. My French friends make a point of cooking as a family — food handling and preparation is not only a fun group activity, but an immersive experience that satisfies all the senses so that when it’s time to sit down for dinner, the tendency is not to over-eat. Cycling between feasting and fasting, correct course sequencing, portioning, and plating are other great ways in which the French eat well and stay fit.

6. Modernise traditional recipes. So often the nostalgia of re-creating traditional holiday recipes overtakes contemporary common sense — does that recipe need 100% lard or would a heart-friendly substitute work just as well? I believe festive cooking should be indulgent, but no more than is necessary. Over the years through trial-and-error I have discovered that modern ingredients can improve a well-loved family recipe both in terms of form and nutritional profile. For eg. instead of using only butter, a saturated fat, in Christmas fruit cake, I use butter and light olive oil in equal parts. Olive oil is not only a healthy fat, it also gives the cake a lightness whereas butter which solidifies in the cold, makes the cake too dense.

7. Eat mindfully. How we eat and what food means to us is just as important as what we eat. During the holidays we eat, drink and socialize more than usual, and rightly so. Yet, taking a moment to reflect on our food habits and values can be consequential. Does eating more increase satisfaction in a meal? Is spending essential to celebration, or can we do more with less? In the modern consumerist society, we are told that quantity equals satisfaction, and consumption means celebration. Instead by re-focusing on the creative, qualitative, and experiential aspects of the holiday season, we will discover that it’s possible to eat well and maintain health and finances.

Christmas and the year-end is truly the best time to enjoy good food, drink and company. With these practical tips on food shopping, winter activity and festive cooking, we can eat well, enjoy the holidays, and not worry about health or finances. Happy holidays!

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Everything-as-a-Service

SaaS is the hot catchword in the startup/ tech world right now. According to Dealroom, a quarter of all start-ups founded since 2020 are SaaS businesses — that’s excluding marketplaces and manufacturing startups, many of whom also deploy ‘SaaS-like’ business models. A B2B marketplace for contract hiring, 3D printing factory selling customised sneakers and even the local organic grocery store can be structured as a ‘X-as-a-Service’ offering.

‘’What is SaaS” — a popular Google search term

As the name suggests, the SaaS business model originates from the software industry, and while everything-as-a-service is a hugely popular concept today, how it works in practice is not very well understood outside software business circles and especially by founders, management teams and mid-level managers that come from outside the tech sector. It is no wonder that ‘’what is SaaS” is a popular Google search term.

So first, the basics — what exactly is SaaS, operationally speaking?

Simply put, SaaS is a software use license that is bundled with additional services and sold via a recurring pricing model i.e. ‘as a service’.

Traditionally software was distributed and used in various physical and digital formats most popularly via a compact disc (CD) or USB, direct downloads, or custom installation (in the case of business customers or complex software). The most common pricing model used to be perpetual licencing, that is, customers bought software as a one-off purchase for lifetime use, be it a popular soundtrack, accounting software or ERP solution. However to use the software, customers would incur additional fixed and variable costs — hardware, applications, services, skilled operators, and technicians etc. All of which could be a significant upfront burden especially for business customers and a major barrier to adoption. SaaS was introduced by the big software companies as a commercial innovation to overcome this problem — by freeing customers from high associated costs, termed the “Total Cost of Ownership” approach, software providers essentially transferred these costs from the customer onto their own P&L, together with the workload and provisioning responsibilities for the same and charged it back to the customers in the form of manageable recurring payments which bundled the original software price with service. As a result pricing evolved from perpetual- to annual- licencing enabling software companies to amortize the additional costs over multiple years and at the same time create incremental cashflow to finance continuous software development. A win-win! With the ever-increasing penetration of mobile devices and cloud infrastructure, as well as the merging of personal and professional use cases, SaaS pricing has evolved further — in addition to time-based pricing (monthly, quarterly, and annual), device-, user- and consumption- based pricing enables SaaS providers to maximise business profits, finance innovation and growth, and deliver incremental value to customers.

No one needs more software — customers need a solution to their problems

Three biases startups and small-medium business (SMB) must overcome to succeed in SaaS

1. Industry bias. Founders’ personal experience and industry background understandably and directly affects the lens with which they view the SaaS business model and shape the business. Case in point is my good friend and founder of an EdTech tutoring platform — despite selling a successful subscription-based service for years to parents, he is offended by the idea of thinking about his business as a SaaS company thus missing out on many SaaS-specific strategies. He and the management team, including the CIO have an education sector background and a strong bias against the technology sector. This misunderstanding of SaaS is prevalent even within the IT sector, ironically among IT service providers (SP), many of whom are now augmenting their people-led service models with complementary technology-based services. The business model of SPs is based on annual management contracts (AMC), service delivery and manpower-based economics, which although a key component of B2B SaaS business model, is not a substitute for B2B software development & sales capabilities – a key point that many executives in the service sector miss. Therefore SPs, especially Systems Integrators, BPOs and KPOs struggle to build competitive technology platforms and profitable SaaS strategies that move up them up the value-chain. Traditional media sector — news companies, publishers, CD-era software providers, educational content companies — faces similar industry bias when migrating to SaaS business models. Similarly, Media sector has an entrenched belief that content is king and should be monetizable as a standalone offering. As a result media executives struggle to make the shift to SaaS-based thinking where often the content is subsidized by a strong technology and/or service offering and at times given away for free as vast amounts of user-generated content on social media drives content commoditization.
2. Technology bias. Many early-stage SaaS companies especially ‘digital natives’ ie those that do not have a brick-and-mortar background or presence tend to overinvest on the software / tech platform while neglecting or under-investing in service capability and proposition development. I recently evaluated a handful of B2C accounting SaaS offerings — while the onboarding, UX, standard workflows etc were all very well designed, when as a user I needed bespoke subject-specific (tax in this case) or technical support, that’s when most of these solutions failed to deliver. Instead of being presented with a menu of monetizable service offerings such as issue resolution with a qualified CA or a knowledge bank of self-help tools, I was faced with incompetent chatbots, call centre support outsourced to a country outside of my time zone and customer service personnel that were illiterate in taxation. Over-reliance on software is also risky from a company valuation and long-term competitiveness perspective. With rapidly declining s/w development costs and access to cheap, highly-skilled developers, the software component of a SaaS business can be easily replicated especially at early stages. On the other hand, in many late-stage SaaS markets we see that intense competition from software providers leads to software commoditization such as we saw in the mobile device management (MDM) space in past years. The winners ended up being companies that had integrated propositions with diversified strengths across the hardware, infrastructure, software, and services stack (or some components thereof).
3. B2C bias. Many B2C SaaS companies are extending or pivoting to access B2B opportunities for example in EdTech post-Covid as home-users return to campuses and offices, and in the productivity/professional software space as employees en masse switch to freelance and entrepreneurial work. However with propositions that were built primarily for B2C consumers and without investing in B2B capabilities, many of these growth strategies have limited success. B2B customers are more mature buyers of SaaS as well as have higher and different expectations than B2C customers. Some of the most important B2B capabilities that SaaS companies need to develop include a deep know-how of the B2B customer, buying behaviour & needs, which then must inform and shape the B2B sales & marketing process, service delivery model and solution roadmap. Google is a great example of a strong B2C SaaS offering that for some years now has been trying to evolve its B2C portfolio (email, storage, productivity & collaboration apps, video-conferencing etc) to service B2B customers (SMB and Enterprise) with limited success. Google Apps for Enterprise (GAfE) suite in 2022 is a significant improvement over its 2020 version, even so the current capabilities compared to incumbent Microsoft both in terms of the solutions portfolio & functionality as well as service & support limit its addressable market to small businesses at best, even as the company aspires to serve enterprise customers.

Software-as-a-Service (SaaS) is an incredible business model that has the potential to continuously innovate and generate incremental value, both for the business and for customers. Key is to build a SaaS model based on deep know-how of the customer and strong domain expertise not just in software but also service, infrastructure, data, pricing, and sales.

If you liked this article, please follow me as I am a new writer on Medium, and stay tuned for the next article where I will talk about seven service strategies that B2B SaaS startups and SMB can use to create tangible business value.

2022 technology job market is starting to look a lot like 2009

I was a freshly-minted MBA from the Class of 2009 with a new job offer at an impressive office location — 1 Wall Street, New York — a six-figure starting salary and a six-figure student loan. Within a week, Lehman Brothers had crashed, officially starting the global financial crises and sending shockwaves in labour markets as company after company shut down or started downsizing. Back on campus, most of the job offers were either withdraw or indefinitely postponed. Almost overnight the hallways of one of America’s most prestigious B-Schools started resembling a back-office call centre operation as desperate graduate jobseekers rushed to apply for any open positions, some at unknown companies in remote corners of the world, many underpaid and some unpaid ones too. This initial period of chaos lasted for about six months, after which followed a couple of years of intense cost reduction, change and reorganization, and then began a new cycle of growth and expansion in technology. Over the course of this 13-year cycle, I navigated a unique career path in technology which gave me the opportunity to work in 42+ countries, build a $5 Billion division, bring cutting-edge cloud, AI, data, mobile technologies to market, play a strategic role in the incorporation, restructuring and winddown of large enterprise divisions, small businesses and startups, build global teams of upto 1000 co-workers, and switch freely between full-time employee, business owner and self-employed status.

Here I share with you my take on the current job market and some ‘growth hacks’ to successfully navigate a career in Tech.

Understanding Change & Uncertainty

Year to date, including this week’s announcement from CISCO, tech companies have laid off almost 100,000 jobs in US, Europe and India alone. More organizational and human resource changes are expected going into 2023 as four major macro-economic and labour market changes affect employers. Foremost, what we are seeing up to this point are layoffs related to right-sizing business operations which were ramped up during the pandemic to support peak demand. Additionally, as back-to-office policies are being implemented, many employers are also considering more structural changes — for example, long-term work-from-home (WFH), which economists say can potentially be implemented for upto 17% of the global workforce. 2023 business plans are also being revised down as expectations of a weak economy become more solid in H2 2022. Finally, ‘Future of Work’ related changes are influencing employers’ organizational and resource planning decisions — according to World Economic Forum estimates, 42% of core job skills have changed in 2022 as more technology is used in factories and offices.

Looking at the Opportunity

Where there is change, there is also opportunity. Even as layoffs and restructuring carry forth, many key markets face a severe talent crunch — for example, Europe’s present tech talent shortage is expected to reach 14.3 Million FTE by 2030 creating new hiring and contracting opportunities. International tech talent often face work authorisation and immigration challenges in accessing overseas job markets — here too we see positive change, as a growing list of European countries relax residency rules with new ‘digital nomad’ residency programs that enable skilled non-EU talent to live and work in Europe independent of an employer. Some of the largest tech talent source countries — India, Eastern Europe, Africa — are emerging as high-growth technology end-user markets for the coming decades creating domestic job opportunities for local talent. The start of a downturn is also an excellent time to invest in further education — to upskill, re-skill or change course — through formal, informal and on-the-job routes. Contract hiring is also likely to increase, allowing Big Tech companies to hire temporary resources on flexible basis during the interim period of change and reorganization. Finally its important to keep in mind, that a fulltime job is no longer the only path to a successful Tech career. The Creators Economy and Gig Workers are two major alternative employment routes that have surged during Covid, creating exciting career and opportunities to work on self-employment or freelance basis from anywhere in the world.

Career hacks for young tech talent

1. Up-skill, everyday: Tech industry moves fast — jobs, skills and sectors that were hot just a few years ago, can quickly become obsolete — the way Html5 killed Flash for example, or WhatsApp, text messaging. Never stop learning and keep your skills up-to-date. Make learning & development a daily habit — allocate time to it and develop a personal learning plan to get you from where you are, to where you want to be. Don’t enroll into just any course; be strategic — choose content/courses that offer learning as well as tangible employability skills & qualifications.

2. Explore non-linear moves. Don’t just do a job-search or follow the conventional ‘career ladder’ so to speak. A lateral move, special assignment, additional qualifications, or exceptional achievement can often lead to asymmetrical growth. For eg. instead of completing regular coursework at B-school, I took credits for doing consulting work for the University on a clean-tech investment fund which gave me relevant experience, required credits and extra income. Similarly, as key young talent at Samsung, I took on a number of unconventional and high-risk roles that fast-tracked my career within the company.

3. Develop a growth-mindset. The ability to learn, adapt and improve is key to a successful career in Tech. A lot of things will not work out- don’t be defeated by rejection, instead focus on the learning. How can this experience make me better? Learn, adapt and try again.

4. Work for good people. In my experience, who you work for is more important than what you do in the early stages of your career. Working for visionary leaders and savvy managers can completely change the trajectory of your career. Look for leaders and managers who invest in people.

5. Work on important topics. Find a way to always be involved in cutting-edge topics in your sector or function. If a published position is not available or you don’t qualify, create one — volunteer at an industry association, start a Meetup group, host a Twitter space or offer to be a research assistant to a thought-leader.

6. Know your value. Some country’s will not offer work authorisation to foreigners, some employers will pay below industry average, and some educational institutions’ selection criteria will just not fit your background. Do your homework, know your options and your worth. Especially in downturns, some job markets and career paths can seem closed. Choose opportunities that value you and feel good.

7. Personalise your career. A dream job can have-it-all — be financially rewarding, provide work that is fun & meaningful, and offer career growth & learning opportunities. Often we must create such a job description ourselves. For eg. I work as an independent technology advisor, publish as a way to contribute to the industry and am involved in food- and education- tech initiatives because these are my passions. Each of these activities contributes to my personalised career path. Especially for first-time jobseekers, unemployed and career changers, diversifying your professional experiences via freelance work or a passion project is a great way to get additional experience and income, as well as reduce dependence on any one source of employment.

Technology is the single greatest change agent of the 21st Century — a chance to build a great career.

The tech sector is in a state of constant, accelerated change as older solutions, standards, languages, products and services give way to newer, faster, better versions. A successful career in tech is less about holding onto to a job; it is more about continuously reinventing yourself as the sector moves through cycles of disruption, change and expansion.

Education has historically been an under-invested sector from a technology standpoint. Covid changed that.

In March 2020, the world went into prolonged lockdown — 160 of 200 countries announced full or partial school and university closures disrupting the education of 214 million children (pre-primary to secondary levels) and 220 million tertiary-level students according to Unicef and UNESCO reports. Further, an estimated 557 Million workers or 17.4% of the global workforce started work-from-home in Q2 2020 according to the Center for Economic Policy & Research (CEPR) and 255 million full-time equivalent (FTE) jobs we lost in 2020 alone.

Covid was a (good) Black Swan event for technology — EdTech skyrocketed in 2020-21

Technology sector boomed and especially EdTech saw unprecedented growth as home-office and home-schooling users rushed to buy additional devices, software and subscriptions. Governments acted fast with over 90 per cent of 149 education ministries surveyed by UNESCO having policies in place for remote learning via online platforms, television and radio within 8-months. Global venture capital (VC) funding to EdTech doubled from $7.7 Bn in 2019 to $15 Bn in 2020, reaching a record $20.8 Bn in 2021. A third of all EdTech unicorns — 23 in total — were minted in 2021. India and Europe saw the most action as these previously niche markets overtook China to become #2 and #3 global EdTech markets respectively in terms of VC investment, unicorns and new edtech company registrations in 2021. 2021 was also the year of EdTech IPOs and M&A — Coursera, Duolingo, Skillsoft, Nerdy, Udemy, Powerschool and Infrastructure all listed successfully on public markets, while Indian EdTech champion Byju went on a global acquisition spree and US-based Blackboard merged with Anthology to create a uniquely global higher education offering.

2022, in contrast, has been a bumpy ride of ups and downs

War and inflation take a toll on household and public spending on education, adding to worries about the possible impact of worldwide campus re-openings on the demand for online learning.

2022 EdTech VC funding data is unclear — the estimates of four quality sources vary quite a bit. Only NY-based HolonIQ has published comparable data for H1 2021 and 2022 and here we see positive signs — EdTech funding grew 14% to $11.4 Billion in H1 2022, compared to H1 20217. Not only value, which can get skewed by large deals, but also overall deal count is comparable year-on-year. Also, each of the three major markets seem to have maintained momentum with US, Europe and India reporting 34%, 22% and 150% year-on-year growth respectively. While HolonIQ’s H2 outlook is less optimistic than H1 — year-end forecast of $17.4 Billion for FY 2022 would be a 16% decline from the all-time high of $20.8 Billion in FY 2021 — it is nevertheless 8% increase over FY 2020, if we consider Covid-led hypergrowth as an outlier event. In contrast, Dealroom data paints a very different picture — H1 2022 funding seems to have crashed to $6.7 Billion and year-end forecast of $10 Billion would indicate not only a 52% decline compared to FY 2021 but also a 35% decline compared to FY 2020.

From an operational standpoint, global EdTech startups except in India showed resilience in the face of widespread layoffs in the technology industry which have impacted atleast an estimated 95,000 fulltime equivalent (FTE) across US, Europe and India 8, 9, 10 year to date. Only five of the 335 US companies reporting layoffs were EdTech, whereas no European EdTech company has reported layoffs. This is a good sign for EdTech indicating that strategy and operational plans have been less reactive and more sustainable. In contrast, Indian EdTech accounts for a third of all companies announcing layoffs and 44% FTE impacted.

Volatility in the India market is concerning for global EdTech given its market position and growth potential — according to McKinsey, education is India’s top-5 digitization sector estimated to increase in value by 50x to $50Bn in 2025. While some in the industry have justified the drastic headcount reduction as ‘right-sizing’ the over hiring done during Covid to meet excess demand, the issues are more structural and strategic in nature. India EdTech’s flagbearers — Byju, Unacademy and Vedantu — have attempted complete U-turns on strategy reverting from pureplay digital to traditional brick-and-mortar business models. Many others have shut down operations abruptly without notice or outplacement provisions for employees and instructors, leaving a poor impression in the labour market. There have also been several high-profile cases of commercial malpractice causing media backlash, regulatory tightening and public trust issues — in Dec 2021, the Ministry of Education issued an advisory to citizens cautioning against EdTech providers.

What do customers think — will they spend or cutback in Academic/Financial Year 2022–23?

Government accounts for the largest share of a country’s total education spending. According to the World Bank, budgetary analysis of 54 governments shows a mixed picture of the priority of education in the post-pandemic recovery plans of countries. In upper-middle and high-income countries, education share of total government budget increased in fiscal 2022–23 compared to the previous year. In contrast, low- and lower-middle income countries have reduced the priority of education in 2022 to below 2019 levels. In select key markets, the Central Governments of India and United States have increased education budgets in absolute $ terms by a promising 17% and 18% year-on-year, whereas the new German Government has suffered a historic cut of 2% in the education budget and the United Kingdom budget has improved by a marginal 1%. It’s important to note that this data includes only central government budgets, which although are an important signal of a country’s spending priorities, comprise the smaller share of total national spending (State and Local Governments contribute the lion’s share in the selected markets), and include technology and non-technology investment plans.

A growing central government education budget coupled with a strong digital and skill development agenda is a favourable signal for public sector EdTech market especially in geographies such as Europe where the government (and not households) carry the greater responsibility for education spending, and in geographies like India, where central government is taking a strategic role in transforming the education sector and digitizing the economy.

The 2nd part of this article will go deeper into the education and digital budgets of select markets.

Households are the 2nd largest source of education funding contributing as much as 50% of the total in the UAE, and 38%, 28% and 25% in India, UK and US respectively. In India, while the National Statistical Office’s Feb’22 update had reported 2.9%18 year-on-year cutback in education spending for academic year 2020–21 and warned that spending would not recover anytime soon, Deloitte’s latest consumer research confirms the opposite. Indian households have made a strong comeback in Aug’22 ahead of the festive season — discretionary spending increased 30% compared to Apr’22, presumably this implies that essential spending also recovered, although education-specific spending data is not published. In the UK, consumer confidence has fallen for five straight quarters to a record low in Q3 2022, when most of the education spending occurs. UK households have gone into savings mode in response to economic and inflation worries — even though essentials spending has increased 7% points year-on-year, the additional budget is going towards higher energy & food bills and not education, which is 2% points below Q3 2021. In the US, K-12 parents’ plan to increase overall spending by 8% for 2022–23 Academic Year despite inflation worries, although after two years of pandemic-fuelled technology shopping, spending in this category is expected to decrease 8% year-on-year according to Deloitte. In contrast, college parents plan to increase both overall as well as in technology spending by 10% and 22% respectively this year compared to last year. Household spending on education is less important in Europe comprising only about 2–10% of total household budgets so we won’t go into it here.

Indian and American households’ positive spending behaviour is good news for the EdTech sector, although families will be more discerning about further EdTech spending considering the lifecycle of recent purchases (devices for example), provisions from school budgets, and pent-up demand for other academic purchases such as clothing and stationery that were deferred during the pandemic. Social considerations, physical contact and mental wellbeing will also play a bigger role going forward as parents and learners globally strive to achieve a healthy balance between physical and digital learning.

Household surveys typically capture school and college spending but not adult education spending.

Covid-led shifts in the workplace and labour market have triggered higher out-of-pocket (B2C) spending on adult learning as jobseekers and impacted workers try to keep skills and qualifications up-to-date and pursue new careers. A sizeable number of employees have switched to freelance and self-employment careers, a consumer segment that tends to over index on personal & professional development spending. Baby boomers and workers at the tail end of their careers are also exploring extended and second careers to finance their retirement plans, giving rise to an emerging market for lifelong learning.

Looking at the Q3 2022 earnings’ reports of two global online learning providers — Coursera and Udemy — we see that the consumer business fundamentals of both companies look stable and growing in 2022, despite volatile stock performances. Coursera’s new users, total registered users and consumer revenue increased 13%, 23% and 17% in Q3 2022 compared to the same period last year. Udemy reported 4% year-on-year increase in monthly average buyers, and while revenue declined 6%, it was due to unfavourable foreign exchange and not demand.

Enterprise / corporate is the third and probably fastest growing of customer segment and where most of the action is expected. Digitization of the enterprise has been underway for several years now and transformation has occurred sequentially in various functions starting in IT and moving to marketing, finance and so on. Covid brought human resources (HR) to the front and centre of digitization as employers dealt with sudden organizational and human resource changes in 2020–21 due to remote work.

Changes continue into 2022 as back-to-office policies, mass layoffs & resignations and restructuring impact organizations, and will extend into 2023 as the ‘Future of Work’ becomes an organizational reality. An estimated 42% core job skills have changed in 2022 due to greater role of technology in the workplace — a massive up-skilling, re-skilling and hiring opportunity that employers are just starting to address.

The Top-4 L&D priorities for employers in 2022 are leadership & management training, upskilling, re-skilling and digital skills. Nearly half of all global L&D professionals surveyed by LinkedIn expected budgets to increase in 2022 to support this mandate, with Asia-Pac region being the most optimistic on budgets. Education & training providers are seeing a clear shift in their business models post-pandemic towards enterprise business— at both, Udemy and Coursera, enterprise segment grew 73% and 55% in 9-months ending 30-Sept 2022, compared to the same period last year. Not only growth, but also the share of enterprise segment to the total revenue at both companies increased from 39% to 53% (Udemy), and 29% to 35% (Coursera) during the same period. Even as corporate L&D spending data for 2023 is yet to be published, considering the ongoing and structural nature of organizational and human resource change, we can be optimistic about enterprise demand for 2023.

2023 Outlook — building on long term gains or betting on quick-wins?

Basing future expectations on the short-term effects of a Black Swan event is statistically flawed, overly simplistic and misleading — it’s very unlikely that such ‘textbook perfect market conditions’ as we saw in 2020–21 with the global learner population cut-off from all offline modes of education will reoccur, and we certainly hope they doesn’t! The danger of such an approach is setting unrealistic expectations — too high or too low, but likely too low in this case — which can demotivate stakeholders, result in loss of momentum and cast a shadow over the real opportunity that lies ahead.

The EdTech outlook for 2023 should be based on long-term gains made during Covid, forward-looking end-user demand trends and mid-term macroeconomic outlook.

If we review 2022 not as a year of contraction but as a year of transition (from Covid dynamics) and refocus on three key longterm market shifts that have occurred between 2020 and 2022, EdTech in 2023 looks like a sector that is maturing and ready for scalable and systematic growth.

Three key longterm market shifts that signal growth for EdTech

1. A quantum shift in the infrastructure baseline. There have never been as many homes, educational institutions, and workplaces with end-to-end digital learning infrastructure as there are today — internet access, minimum required speeds, devices per user, cloud & network infrastructure, and information, communication, productivity, teaching & learning tools. With this new foundation in place, more and better educational products and services can be provisioned at scale.
2. Ready decision-makers with a compelling need. Whereas EdTech and Digital/Job Skills were buzzwords pre-Covid, today it is on the agenda of most education ministers & institutional leaders, CHROs & L&D managers, learners & jobseekers — seen as the solution to a nation’s economic development & growth, an organization’s productivity & profitability, a learner’s career and life outcomes. Decision-makers now ‘get it’ and the buying process is a lot more streamlined and structured as a result than it was before — concrete strategies, allocated budgets and standardised procurement processes. This substantially improves EdTech sales & marketing effectiveness for scalable approaches.
3. Users have overcome barriers to adoption, en masse. One of the biggest issues to scalable EdTech adoption pre-Covid was that educators and administrators resisted the switch from traditional to digital, due to high perceived learning curve, inadequate training and lack of IT support. After 2-years of exclusive online teaching, learning & administration, educators now feel digitally confident, IT is experienced with handling largescale distributed audiences, and even a 1st grader can launch an online lesson! EdTech has leaped over the Chasm on the Technology Adoption Curve from early to mainstream adoption

What is your outlook on EdTech? — please share your comments below.

This is the first of a three-part series on EdTech in preparation for 2023 — if you enjoyed this article, stay tuned for the second piece where the focus will be on specific trends, markets and segments where I see opportunity for growth, profitability and education impact.