SaaS: Evolve business practices. Focus on value.

I am very fortunate that I live in Australia. Due to government regulations our financial system is actually in pretty good shape and while it is connected to the global economy I’m led to believe by people who know way more about it than me that we actually have real cash holding up the economy.

In the USA (and some other parts of the world), things aren’t quite as much fun and if you watch the news you’ll be led to believe that the the end of the world is nigh and giant kittens are going to start knocking down buildings. Well – for sure there are going to be a lot of people in for tough times and I feel for them, but the reality is that life will go on, people will still need to get up in the morning and go and do something productive – even if it wasn’t what they had initially planned.

For those of us in the I.T. sector, the last big event that we had was the dot-com bubble burst which saw a lot of us loose our jobs, but even that eventually turned around. For savvy players this downturn actually represents an opportunity to introduce some cost savings and come out looking like a hero to your management team.

For example, if you are currently spending wads of cash on computing hardware, network communications and even office space, look at:

  1. Reducing hardware acquisition costs by using services like GoGrid and EC2.
  2. Reduce office space by encouraging employees to work from home (see note).
  3. Move hosting facilities to cost effective locations (USA is much cheaper than Australia).

The key thing is that in everything we do we simply need to ask ourselves the question. Do we provide the company with value? If the answer is no then you need to start on initiatives that create the value rather than just ensuring that the company continues to spend the same amount on your IT services this year as they did last year (or more).

Let me ask you the question. Who is more valuable? A $120K employee that saves you $1M, or one that argues you need to spend another $500K on top of their salary?

Note: Employees working from home may cost more initially to ramp up that capability, but you may want to consider coming to arrangements with employees who truly can work full time from home where they take a lesser package, but you ensure that they end up paying less for public transport or fuel.


4 thoughts on “SaaS: Evolve business practices. Focus on value.

  1. David Mackie

    “Move hosting facilities to cost effective locations (USA is much cheaper than Australia).” Hmmm Mitch then what do you do with all the code you generate for the customers who don’t want their data subject to things like the Patriot ACT. I see many US based Cloud providers putting in Data Centres in the EU and AU because they can’t get subscribers. Even folk I know in Canada can’t do offsite backup using the cloud if US comms or Data Centres are involved.
    So while cheap hosting might sound good many of us would never be able to go with that.

  2. Mitch Denny Post author

    Hi David (long time no speakie),

    You would put those in iceland 🙂 Seriously though I expect that physical location would be a configuration option. Or perhaps more importantly, jurisdiction. So whilst US is cheaper for bandwidth right now, if protection from certain US government measures is required then you just pay a bit more.

    For example, with Amazon EC2 you pay more to put your servers in the EU, but not too much more.

  3. Luke Notley

    Mitch, always been a fan of your blog.
    I’m currently working on being a SaaS provider here in Perth to combat the problems and uneasyness experienced by myself and others in Oz regarding data in the US. Check the website for more info matey.


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