One of the big buzzwords right now is “SaaS”: Software as a Service. Today I’m coining a new term (drum roll please…): “SSaaS.” Let me elaborate on both of these and explain why SSaaS is superior.
Cloud-Based or Local?
The old business model for software, of course, was to buy it, install it on the local network, then maintain and upgrade it over time. MANY companies in our industry STILL employ that model for whatever alarm and security service software they’ve chosen. Even in the last few years, we’ve converted dealers from DOS-based software, for heaven’s sake. But for now, let’s focus on the growing share of companies that have chosen to embrace the SaaS model.
SaaS: Renting Software
SaaS really means renting your software in the cloud on a subscription basis, rather than buying it and running it locally. Today, nearly all software developers are building SaaS offerings. Why? Because it’s a more efficient model, by far. All companies and users are on the SAME version. That makes support far easier. New releases and updates are handled behind the scenes without users even being aware of them.
Financially, it’s certainly a better deal for the software company, because they get a steady and growing stream of recurring revenue—their ‘rental’ payments. It CAN also be a good deal for the software customer. They’re trading off a large upfront capital investment in their alarm and security service software for a lower monthly operating expense for the SaaS offering. Normally, training and support are included, as are upgrades. The company no longer needs to maintain servers and the software installation on their local network—so it’s lower overhead.
One of the drivers of the SaaS model is integrations. Cornerstone’s cloud platform is integrated with most major central stations, a collection agency, and document/eSignature platform, and others. Dealers that embrace SaaS can often reap the benefits of these integrations to make their daily operations more efficient.
For example, our dealers can set up their monitoring agreement in our system, and it will be populated with a new customer’s information as a fillable PDF. Our dealer can them complete other parts of the agreement and push it to their new customer with a few clicks. Very efficient!
Cost vs. Complexity & Features
One of the ways that SaaS providers keep their costs down is to make their platform as “plug and play” as possible. The more complexity they start adding, the more their support costs per user will increase. You’ll often see on their websites 3 versions of their platform: Basic, Pro and Enterprise, with increasing costs for each. They need to be compensated more for needing to support the more feature-rich options.
That’s only fair, and Cornerstone has a similar approach in that our dealers using our Service Module, or our Collections Module will pay slightly higher rates. These modules require more server space, server power, and more training and support. It’s difficult for a software company to offer a one-size-fits-all package, because there’s such a wide range of needs among potential customers.
So What’s This SSaaS All About?
SSaaS stands for Software & Services as a Service. Let me explain. Well-designed software can improve efficiency and save time. BUT there still many, many complex business processes that security dealers need to tackle with their alarm and security service software – whether in the cloud or managed locally.
Take payroll as a prime example. Managing and running payroll, then filing all the necessary state and federal reports and paying those taxes, is usually a complex business process. In our early years, we at Cornerstone we did DIY payroll using QuickBooks’ built-in payroll service. We managed the payroll settings for our staff, and the software would then do the calculations and help us file the reports. But it was still quite “hands on” and time consuming.
Now we use OnPay, an excellent payroll service. It’s all cloud-based, and we pay a reasonable monthly fee. They do the work. We obviously need to enter hours/rates, but they then file all the reports, pay the taxes, AND provide a nice QuickBooks add-on to bring the payroll entries back to QB in a few seconds. Yes, OnPay has a SaaS platform where we manage our employee profiles. But they also offer SERVICES that are a valuable time saver.
Software Alone Isn’t Enough
Good software is not enough. The reason Cornerstone exists is because recurring billing – like payroll – has become more complex and time consuming through the years. Our dealers are time-starved, and our billing solution does a great deal of work for them. Our services are the main reason dealers are loyal to us, and why our retention rate is so high. Providing clockwork billing, and then following through with 100% comprehensive payment processing, is a real SERVICE that they come to depend on.
Another way to put this is that SSaaS provides both good software and enables outsourcing of certain business processes. That’s precisely what our cloud system with integrated billing services offers.
More Work…But More Valuable
Pure SaaS companies would likely NOT want to embrace our software AND services approach—it’s way more work than they’re set up to handle. It’s far more hands on. It requires frequent interactions with our customers, to clarify things and help make sure we’re billing 100% of what should be billed. While we’ve automated what we can, sometimes there’s no substitute for human eyeballs, especially when it comes to something like the pre-billing audits we do.
Yes, it’s more costly for us to provide these value-added services. But we’ve achieved scale economies over our 21+ years. So we can offer these services at very affordable rates. Most important—these are valuable services, a large chunk of actual work that our dealers don’t need to mess with. In many cases, the auditing and oversight we provide, though more costly, improves the cash flow of our customers. This improved cash flow easily pays for our monthly servicing fees and makes it easier for our customers to grow!