Burgers and the SaaS for Small & Medium Business
TLDR: Enterprise and Consumer software markets have been taken over by the winner. Software for SMB’s are getting juicier like the middle of a burger. A food analogy to an otherwise dry fact based blog for the SMB SaaS marketplace.
It was a cold and cloudy Saturday in Paris in the month of November 2005. A bunch of Indians descended from the tour bus and quickly vanished into the McDonalds before the cold air could snip at them. This fast food joint held the promise that the vegetarians in the group got a nibble or two. But before they could dig into their burger, this English speaking group had to transcend the barrier of trying to communicate to the Parisian woman (wo)manning the counter of their choice of veg food. After some effort and some pointing out what they wanted from the menu they paid for the food, collected their order and moved to a large table in the corner of the restaurant. One vegetarian in the group (me) was nearly salivating as he unwrapped the burger. To my shock, the burger only had some lettuce, tomatoes, onion and cheese marinated in some cream sauce between the two halves of the bun. There was no veg patty in between. The whole group broke into a laughter after we realized that we mis-communicated. We had told the lady to give us the chicken burger without chicken crust and put the veg crust instead. And the lady seemed to have got only the first part. Thankfully the large serving of French fries made up for any loss of veg patty in the burger. Some of us added a layer of French fries to the burger and ate it. It was still a burger even though it missed a patty which we substituted the fries. :)
At this point, you would be wondering what a burger has to do with Small and Medium Business SaaS (Software as a Service) that brought you here to read this in the first place. Well, of late I had been researching the SMB SaaS market in US and India. Any article that had the term SMB and a hint of even a small stat/trivia was bookmarked for later use. Finally the day came to look for the needle in the bookmark haystack. The facts went like this…
- There were close to 30 million SMB’s in US, 60 million of them in English Speaking countries and 460 million of them globally.
- Of the 30 million SMB’s in US, 91% of them employed 10 people or less.
- By 2025, 75% of the US business will be run by millennials
- 63% of US SMB’s have adopted cloud solutions (of which SaaS is part of). Of these, 25 in every 100 SMB’s used a payroll SaaS, 20 of them used CRM SaaS, yet another 22 used marketing or advertising SaaS solutions, 14 of them used a Finance SaaS and the last 10 used some form of supply chain SaaS.
- There are roughly 500,000 small business started every month. All of them have the need of setting up a website, mailbox, a CRM and probably an accounting solution.
- 87% of Forbes 2000 use SAP (Happy to see my ex-employer in this list or it may also be that my filters were tuned to catch this :-) )
- Intuit is the number one accounting SaaS in US. About 7 million SMB’s of the 30 Million in US use it making it a clear market leader. Mark MacLeod, the author of the article went on to say that
‘There are more businesses that don’t use Intuit than those that do.’ — Mark MacLeod
Another point was also made in the same article about how ‘Winners take all’ in both the consumer and Enterprise software market. And how
‘In contrast, the SMB market is too large and fragmented for any one vendor to build a dominant share.’ - Mark MacLeod
At this point I stopped make a small doodle to illustrate this fact. I drew a Rhombus or Diamond with the top and bottom pyramid being occupied by the Enterprise and Consumer Software respectively.
The broader middle was occupied by SMB software. The SMB market to a diamond was a decent analogy but I wasn’t very happy with it. I was trying to remember the analogies that I had used in the past. One of them was from Chip and Dan Heath’s book ‘Made to Stick’ wherein a researcher put lot of ‘fatty’ food on one table and a tub of pop-corn on the other and asked which one was healthier. People pointed to the stack of fatty food but science had proven that Pop-corn won the battle of unhealthy food hands down. The use of food visualization to drive this point had stuck in my mind since.
I looked back at my diamond doodle and thought about what best could signify. And suddenly the food analogy reminded me of a burger. How the half buns at both the ends represented that the Winner took it all. But how the middle was open to every one’s imagination. Every ingredient had its place in the middle and when customers didn’t like one they could substitute it for another. This seemed a perfect analogy for SMB SaaS.
Here is a picture that encapsulates this analogy. What do you think?
I am an Indian, writer, reverse engineer, entrepreneur and marketer. Besides writing, I run startup; Whenda, a next gen fixed Asset Mangement SaaS for SMB. Hit up www.whenda.com to know more.
