I have been a late adopter of new technologies most of my life due to circumstances beyond my control. I believe this is true for many people in my part of the world, where economic realities drive a sharp wedge between what is desired and what is feasible. For many of us, the spirit is willing but the wallet is weak.
Financial difficulties are an integral part of third-world entrepreneurship. It is easy to dismiss, say, an Indian software company as a “bunch of Indian cowboys” who lack innovation in product development—which, in this case, turned out to be a hilariously wrong assumption—when you don’t factor in the financial context in which they’re operating. When one of us does make it, you can bet there’s an admirable tale of pain and endurance behind that success.
We’re not Indian (obligatory Sri Lankan announcement!), but South Asia in general is no Silicon Valley. We produce copious amounts of engineers, of course, but they tend to leave us. India leads the world in the business of exporting scientists, and Sri Lanka has no problem getting rid of its own stock. Product companies are a rare breed among the plethora of BPOs, IT outsourcing companies and call centres where most of our talent is employed.
Many macroeconomic and financial factors hinder software entrepreneurship in Sri Lanka, but we have a cultural problem as well. Multiple studies over the past decade have established that Sri Lankan society is actually antipathetic toward business.
Let that sink in for a moment: Sri Lankans are actively discouraged from entrepreneurship by their families, friends and society at large.
That’s why we love to see young entrepreneurs embarking on their own, against the odds and the so-called good advice from people who “know better.” And at last, a startup ecosystem is slowly emerging in Colombo that just might be able to nurture these “cowboy” ventures into growth and success. It is for them—and those like them elsewhere in the world—that SaaS presents an easily accessible and viable business model.
Rise of Software-as-a-Service
Software-as-a-Service is no longer a new frontier: over the past few years it has grown to be a mature and hugely popular way to deliver software products. Flexibility, ease of adoption, ease of scaling and low costs have made SaaS an attractive option for both small businesses and larger enterprises.
In fact, SaaS has become so popular that its rapid adoption reflects a classic “creative destruction” scenario—an instance of old economic models being replaced by new ones. It has facilitated the development of internationally oriented small business entrepreneurship by making it much easier and cost-efficient to release scalable software services to the global market.
According to this roundup of cloud computing forecasts, global SaaS revenues are forecasted to reach $106B in 2016, increasing 21% over projected 2015 spending levels. By 2016, there will be an 11% shift of enterprise IT budgets away from traditional in-house IT delivery toward various versions of cloud computing as a new delivery model.
But it is not only the enterprise market that is shifting toward SaaS. A significant portion of the global SaaS market is B2C, and there are signs of rapid consumerization of IT. Instead of a centralized IT organization deciding which products to buy, product managers, marketers, engineers and data scientists determine which products they think would serve them best and buy them directly, often using a credit card. Thus, even B2B SaaS sales are becoming more like B2C.
We at Vesess are grateful beneficiaries of these developments. Our own forays into SaaS started in 2008 when we launched CurdBee, and we have successfully continued that journey with Hiveage. For us, the cloud has been the great enabler, the humble web browser the great equalizer.
Our SaaS Story
A decade ago, before we started CurdBee and Hiveage, before we were even a web design agency, we tried our hand at developing software products for the Sri Lankan market. Despite having viable products and a handful of potential customers, these efforts didn’t really lead anywhere.
So how could Vesess launch a successful software product to the global market a mere three years after these failures?
Part of it can be attributed to growing up. The first products out of such a young company—both as an organization and as individuals—tend to be what Paul Graham calls class projects:
What goes wrong with young founders is that they build stuff that looks like class projects. […] There seem to be two big things missing in class projects: (1) an iterative definition of a real problem and (2) intensity.
By the time we started work on CurdBee, the team had gained valuable skills and experience in the trenches, and had been strengthened by the addition of three brilliant programmers. However, while these were no doubt important factors, probably the most important change was happening in the software industry itself.
Apparently the term “SaaS,” or software-as-a-service, was first mentioned in an internal document called “Software as a Service: Strategic Backgrounder” by the Software & Information Industry Association (SIIA) in 2000. They predicted that:
SaaS is heralded by many as the new wave in application software distribution. Following the maxim that “the Internet changes everything,” many believe that tradition packaged desktop and enterprise applications will soon be swept away by the tide of Web-based, outsourced products and services that remove the responsibility of installation, maintenance and upgrades from over-burdened MIS staff. SIIA believes that the software as a service model is capable of causing a sea change in the software industry.
In 2008, when CurdBee was launched, this sea change was well under way. We got lifehacked, and never looked back.
Advantages of SaaS as a Business Model
For technology entrepreneurs in the developing world, SaaS and the infrastructure that has grown to support it represent probably the greatest opportunity in many decades, if not ever.
I believe there are four main reasons for this.
First, it opens up the global market in a hitherto unprecedented way. You can just put up a website online and start selling your product to literally anyone, anywhere in the world. Of course you still have to do sales and marketing, but the cost is negligible compared to what it would have been if you were tied to traditional software deployment methods.
Second, technology entrepreneurs now have cheap access to a reliable and ever-growing network of infrastructure (cloud servers, middleware, APIs of other facilitating SaaS products, etc.) to build and deliver our software. This has reduced barriers to entry for software development in domains where high investments were previously required. Hiveage, for example, relies on Rackspace, Digital Ocean, Linode, Amazon AWS, Zapier, Mandrill and our own billing and support apps.
Third, we have a truly platform-independent, accessible, robust and feature-rich interface to deliver software to the customer: the good old web browser. Modern browsers are standards-compliant and play well with HTML/CSS/JS (just drop support for IE9 and older). There’s no shortage of libraries you can use to spice up your product’s front end. And with a responsive UI, you can make your service easily accessible on both desktop and mobile, like we did with Hiveage.
Fourth, support becomes much easier with SaaS. As long as your customers are using good enough web browsers (and if they aren’t, just ask them to upgrade!), any bugs and issues can be fixed without any costly on-site involvement. We’re a small team and don’t have any dedicated support staff for Hiveage, but we still get great feedback for our timely and efficient support.
All of these factors are part of the sea change predicted by the SIIA. It is difficult to emphasize what a dramatic impact they have had on increasing the gamut of possibilities for us.
Hiveage is not the only SaaS product to emerge from Sri Lanka. The guys over at Creately, for example, are doing some fantastic work, and WSO2 has enterprise SaaS options. But you have to keep in mind that we’re not special snowflakes. Instead, these success stories should be seen as proof that it’s possible for any Sri Lankan to build world-class software products based on the SaaS model.
In future articles we plan to discuss the specific SaaS strategies that we’ve used in product design, development and marketing. Our hope is that future technology entrepreneurs from Sri Lanka and elsewhere will be able to use what we have learned to build their own successful companies. If you would like to be informed when our next post goes live, please subscribe to our newsletter.