Big Data and the Fall of SaaS

Print Friendly, PDF & Email

Over at TechCrunch, Raj De Datta from BloomReach writes that Big Data Applications (BDAs) will become the new behemoths of IT.

BDA companies create value differently than SaaS companies. BDA companies are built by teams of people with a strong background in large-scale systems and machine learning / data mining (like my co-founder Ashutosh Garg). They will also be valued differently than SaaS companies. While both sell into enterprises, BDAs deliver much more value per dollar spent, because each acquired customer adds data to the engine, which in turn improves the service for all its customers. Markets typically value SaaS companies on three basic metrics: Customer Lifetime Value (higher LTV is better), Cost of Customer Acquisition (lower CCA is better) and Rate of Growth (higher is better). Certainly, most SaaS companies have a great growth rate. But BDAs will have higher LTVs (because value/customer is higher and churn will be lower) and lower CCA (because of network effects; consider the CCA for LinkedIn to acquire a new recruiter now, versus five years ago).

Read the Full Story.

Speak Your Mind

*