Understanding why people accept or reject SAAS may be one of the most challenging issues in the information society. It may be assumed that the success of any SAAS to a large extent depends on the services’ ability to induce a positive experience in the end-users. Services that for some reason are associated with poor user experiences will tend to be less used. Similarly, if pioneering services of a sector is associated with negative user experience, this may create difficulties for the introduction of related later services.
The end-users’ experience clearly depends on the quality of the service; which, at least in principle, should be under the developer’s control given proper inclusion of Human-Computer Interaction (HCI)-activities throughout the development process. It may be that end-users’ experience of Internet services also depends on end-user characteristics, not the service itself. Such end-user characteristics may include frequency of Internet use, previous use of similar Internet services, age, gender, and education. For the developers of future SAAS products,it will be of great interest to know whether end-users’ experience of SAAS products depend on characteristics of the end-user population rather than service characteristics
The Beginning of Software Industry
The history of information technology has largely been dominated by looking at the development of hardware and its inventors and producers. Information technology was equated by its electronics, its electronic relays, its vacuum tubes, and circuitry. History of software as a technology has only recently been recognized as a domain of research. Of course, some software pioneers have been looking back on their past, for example discussing the history of programming languages. But the history of software as a technology written by historical experts is a rather new phenomenon. Because of the emergence of the personal computer as an everyday tool, people tend to think about Microsoft as the only important producer of software. However, Microsoft has only 10 % of the total software market and acquired this market share only since its successful introduction of the MS-Office package, less than ten years ago.
The market entry of UNIVAC in 1953, an advanced version of ENIAC, the first digital computer, developed for business worlds is often regarded as the beginning of software industry. The use of computers further expanded, and in a course of two years, the number of computers in the world reached to 246. 240 of these computers were in the US. In 1960 this amount rose to 5.500 and in 1970 it reached to a whopping 79.000!
As semiconductor and related technologies advanced, computers became smaller and its scope of use became wider. So did the need for software products and software developers.Computer Sciences Corporation (CSC), which was among the pioneer companies established in 1950s had became the largest software company in the United States by 1963 and the first software company to be listed on the American Stock Exchange. By the end of 1968, CSC was listed on the New York Stock Exchange and had operations in Canada, India, the United Kingdom, Germany, Spain, Italy, Brazil, and the Netherlands.
Programming services came to the front in 1960s and companies producing package software products for the business world began to operate in 1970s. Diversification took place in sub-segments of software products. For instance, initial examples of Computer Assisted Design (CAD) programs began to emerge in this period. At the end of 1970s,the size of global software market mainly dominated by the USA reached 2 billion $$.
The software industry has periodically evolved through three primary eras: the CIO Era, the Exec Era and the End User Era.
The CIO Era
The CIO Era dates back to the 80s and 90s when the software industry really got going. Back then, software lived in a physical box installed on a physical rack inside of a physical data center. This monolithic on-prem software was expensive to build and expensive to buy—think 6- to 7-figure CAPEX purchases.
The CIO was the buyer and her key decision-making criteria was IT compatibility—will this product work in my environment?During this period, software distribution was defined as “sales led growth” with blazer-clad field sales reps taking CIOs out to fancy steak dinners in hopes of winning the RFP.
Yeah…the CIO Era was the stone ages.
The Exec Era
The Exec Era began in the 2000s and you know the story. Virtualization eventually drove software out of the data center and into the cloud. On-prem became on demand, and SaaS companies made sure to specify that
their software was proudly “single-instance, multi-tenant.” Development costs fell as it became possible to build, maintain and continuously improve a single codebase for all customers. This drove a huge economic shift for customers: you don’t buy the expensive software anymore; you rent it for a fraction of the cost.
The CIO went the way of the data center and we saw the rise of the non-technical executive as the new buyer.
The decision-making criteria was now all about the ROI and the KPIs—will this product help our team achieve its goals?These huge paradigm shifts brought us “marketing led growth” as a distribution model, and we all started using fun terms like MQL and SDR for the first time. Inbound marketing fueled high-velocity inside sales, and we jumped on the treadmill of chasing demo after demo, gong after gong.
The Exec Era should feel familiar. This is what the VCs and SaaS talking heads are still droning on about online, on stage and in the boardroom, even though it is rapidly declining in relevance as software evolution continues at a breakneck pace.
The End User Era
And so we come to the present day and the End User Era.
While the shift in focus to the end user feels like a hard pivot, it’s just the next logical step in the market’s evolution. Infrastructure has become an elastic utility that scales as needed, and developers have gained further superpowers from APIs and other modular tools and services.
Developers increasingly compose software by stitching together building blocks with new logic, rather than hand-coding everything from scratch. The efficiency gains passed along to customers mean that it’s cheaper than ever (usually free) to try out a new product. Thousands of shiny new products are just a few clicks or taps away.
The affordability and accessibility of software has fully democratized purchasing down to the end user.
The decision-making criteria is now personal productivity— will this product actually help me day-to-day?
Software distribution today is best described as “product led growth,” and it looks a lot like consumer growth models. When you need to attract tons of individual end users to a free product, human-dependent growth doesn’t scale. The only choice is to de-labor the distribution engine behind your product by empowering end users to find, evaluate and adopt your product on their own.
There is an inexorable march toward the End User Era that simply can’t be stopped. As a software company, you can’t opt-out of this secular shift. It’s pretty damn obvious that you wouldn’t build an on-prem product geared for the CIO Era. While you can still get away with building your business for the Exec Era, that wave has already crested and its days are numbered.
The End User Era is here. Product led growth is how you thrive in it.