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Opportunity analysis  in SaaS Model Software Business in Nepal

Opportunity analysis in SaaS Model Software Business in Nepal

06 Jan 2019 05:07

Table of Contents

Executive Summery. 2

Introduction. 2

Theoretical and conceptual perspective of entrepreneurial innovation. 3

Sound application of the opportunity and its viability. 5

Classifying the opportunity and risk in SaaS model business  5

Opportunities. 5

Risks. 6

an effective practical foundation of SaaS business. 7

SaaS Growth Strategies  7

Increase Organic Traffic. 7

Introduce New Marketing Channels. 8

Add Product Upsells. 8

Add an Affiliate Program.. 8

Conclusion. 9

References. 10

Appendix. 12

 

 

                 

Executive Summery 

The Entrepreneurship report requires the analysis of entrepreneur opportunity and practically implementation of the opportunity in the current market. In order to be an entrepreneur there are several thoughts and theories are stated as per several academicians. Compiling the thoughts of academicians an opportunity in the SaaS model business is identified which is more appropriate in the current market of the world not only Nepal. In order to convert opportunity to good business it is required to use different frameworks, tools and techniques. Furthermore, to develop SaaS business it also requires investment, technical manpower etc.     

Introduction

In the part of entrepreneur opportunity analysis of the entrepreneurship report, selected topic is SaaS (Software as a Service) model software company.  SaaS is model that generally could not exist without internet connection.   The software is stored or hosted on the online server i.e. cloud runs through the web browser and business companies pay a monthly rental payment to get access of this particular software and services.

In general SaaS businesses are perhaps the most complex business model. It requires the good IT knowledge including coding knowledge and user interface design skills which really makes SaaS product valuable (Elfrink, 2016). The major difference among SaaS model software companies and business is that SaaS is hosted cloud. Mainly, this gets fee to get license to active the infrastructure and software to host the software.   As an alternative, the SaaS business hosts their involvement. The end user or customer just has to log into their account and they can get full access.

As stated by Stephan (2017) the traditional IT system migrating their business into the cloud slowly and progressively increasing. A research report of the Gartner (2017) shows the $111 Billion of IT investing has updated to the cloud from traditional system which will rise to $216 billion by 2020.  This data shows the huge opportunity in the SaaS model service sector in all over the world.  

According to Makkreel (2017), "The future of SaaS will be defined by doing more with less. Nowadays, technology is active, but tomorrow technology will be predictive. Interestingly, 90% of all data has been generated in the past two years" (Fusebill Inc, 2017). Along with the above reasons opportunity in the SaaS model software business has been recognized. 

Theoretical and conceptual perspective of entrepreneurial innovation

The concept and word "entrepreneur" was derived from a French origin "entreprendre" sense "to undertake".  As stated by the economic theory by Centillion (1755) but Say (1803) the term entrepreneur prominence. Nevertheless, who really innovated the field of entrepreneurship by relating it visibly with innovation (Filion, 1972:2).

As stated by Praag et. al. (1995) Cantillon stated the entrepreneur as answerable for all circulation and exchange in the economy. As contrasting land owners and wage workers who both get a fixed rent/income, the entrepreneur makes an inexact income (Link and Hebert, 1988). Cantillon's entrepreneur is a separate person which equilibrates demand and supply in the economy and in this purpose accepts uncertainty or risk.

As defined by the Schumpeter entrepreneurship from the economic viewpoint by concentrating on the insight of the new financial opportunities and the following outline of new concepts in the market. Entrepreneurs recognize opportunities, collect mandatory capitals, implement the conception in practical, and earned the profit in a flexible way, timely, (Stevenson et. al., 1991). In the management world most of the peoples apply Schumpeter's definition: "entrepreneurship is a technique of management which includes tracking opportunity without affection to the currently controlled resources".

As stated by many academicians such as Schumpeter (1989) and Drucker (1985) there are many traditional and modern theories of entrepreneurship some of them are discussed below.

Cantillon's theory (1755) suggested that an entrepreneur is not production factor, it's an agent to equilibrates demand and supply in the economy. The theory of Marshall (1949) supported the Cantillon's theory but he suggested that an entrepreneur is a person who can create the equilibrium in the monopoly market playing the important roles (Schumpeter, 1942). It advice to be creative and innovative and should create the equilibrium among supply and demand to be a successful entrepreneur (Schumpeter, 1942).   

Schultz Approach (1975), suggest that entrepreneurship whose is closely related to the disequilibria situations, and that entrepreneur keeps the ability to deal with the situations (Link and Hebert, 1988). This approach suggest that entrepreneur should have ability to deal with the situations.  

New theories of entrepreneurship such as modern theories, management economic theories, the entrepreneur in economic modeling theories. Venkataraman and Shane (2000) suggested that entrepreneurship contains the connection of two phenomena the presence of enterprising individuals and the presence of lucrative opportunities (Venkataraman and Shane, 2000). These theories encouraged by the "Kirznerian" entrepreneurial discovery process theory, that suggest an entrepreneur need previous information to grab the new business opportunities. Schultz who stated that human capital is an important factor to be an entrepreneur.

Analyzing the several theories regarding entrepreneur and grab the new business opportunities as stated by Casson (2003) an entrepreneur is a person who is creative, innovative, inspiring, capable, charismatic, capable in decision making and daring person which can be an entrepreneur and contributes to the innovation.  

 

 

Sound application of the opportunity and its viability

The application of the opportunity is difficult and important for an entrepreneur. The similarities among Schultz and Kirzner's theories on hand and Shumpter's on the other also seem significant, particularly with specific task achieve by businessperson. As main aspects of these theory entrepreneur discover the business opportunities (Kirzner, 1997).

Although, Schultz described opportunities normally, these are considered accordingly by Schumpeter as innovations that bring economy far from equilibrium. Under disequilibrium assumption of the Schultz and Krizner's, opportunities create when information is discovered.  To respond for these opportunity individuals should reach by changing their performance and acting in a different way. It is relevant with the Schumpeterian innovative process which also stated the doing things in a different way (Kirzner, 1997).  

Classifying the opportunity and risk in SaaS model business

Opportunities 

As stated by Elfrink (2016) there are several opportunities and risk exist in the SaaS model software business some of them are discussed below.

The good aspects of the SaaS model business are that any customer can become immediately loyal to the product. To make make customer loyal SaaS business should deliver the product and services which is important for their business. At last, they are normally becoming member of the business.  

As an example, we can evaluate the very successful SaaS model business such as Zendesk delivers software which helps business develop an effective solution for customer service. Under the Zendesk new ticketing software has been introduced as a SaaS product which might be important for the business success. Which has been improve as per changing demand of the market. The loyalty of customers helps generating more incomes and makes SaaS product more profitable.  

Apparently, another big advantage of having SaaS model product is every customer is technically only hiring SaaS product on a monthly basis instead of one-time purchase. It means every month SaaS product makes bit of income from that customer.  Earning profit is dream of the shareholder who is got involved in the project. So, SaaS product is that novel idea which generating incomes at its vary core (Elfrink, 2016).

Risks

While generating income is very good, but to make large amount of income in SaaS product is not that much of easy. It requires to sort of investment in the initial phase for example, hiring good programmers, UI designers and developers which will include knowledge and skills to develop product efficient and user friendly as much as possible (Elfrink, 2016).

Once, having a complete product off the ground, and it is difficult create product's value to customer, it may require reinvesting in order to scale the business as well create the value on the particular product. You may require enhancing data security, storage capability and keep staffs to handle manage and maintenance for any unexpected problems which are likely to crop up during the hypergrowth stage (Elfrink, 2016).        

Another unfavorable side of SaaS product, separate of the capital-intensive model business, it is generally not simple product. Although, model itself easy maintaining and understand but the actually product may be difficult to understand and maintenance to those people who do not have coding knowledge. These are the limitations of the SaaS products Elfrink, 2016).

 

 

 

an effective practical foundation of SaaS business 

As stated by Elfrink (2016) several SaaS model software development company has been developed in order to focus on the small and medium organizations. Enterprises software development company develops the enterprises software focusing on the large business organization.  Enterprises software requires huge fixed and variable cost in the time of establishment and installation and it produces the expensive software. In the case of Nepal there is no many large business organization which can afford the cost of enterprises software. Enterprises software requires the full payment to buy/use the software. In the case of Nepal most of the business organizations are in the very emerging phase and there are various small to medium organizations.  So that all the small to medium company might be able to adopt the cost of the SaaS. SaaS does not require high amount or full payment in the time of its use it's just and thus requires only rental fees for its use. Analyzing the past and current data of Nepali organization the demand for the SaaS product seems very high. So, this is the right time to start SaaS business.  

SaaS Growth Strategies

The growth strategy of the company depends on the core competencies and what has past indicators.  Nevertheless, here some ideas to grow SaaS model business (Elfrink, 2016).

Increase Organic Traffic

In order to promote the product, it is very best way to increase organic traffic. To increase the organic search traffic from search engines like Yahoo, Bing and Google. It increases, the traffic from search engine we have to do more post and include links related to product in search engine which will help to optimize the product in top list of search engine that will obviously help to promote the product. It is good to see the article hanging fruit for Adsense & Amazon businesses (Elfrink, 2016).

Introduce New Marketing Channels

When new products lunch in the new market, it must need to invest for new market channels which will help to reach statistically significant numbers. A new market could be as good opportunity to track your organic ranking, such as most popular content converting into YouTube video. It may help to increase marketing channels of the particular product (Elfrink, 2016).

Add Product Upsells

This is really good chance to offer existing customers, as serve them better way as can earn more. 

Add an Affiliate Program

The affiliate program can play significant role in the business. Generally, if you offer a profitable program which can attract skilled to grow the business. The are several ways to use affiliate program, but it requires to choose best way, it is better to offer residual earning opportunity. This offer could be appealing in SaaS model business than a one-off payment. Some affiliates also recommended such as marketing campaigns often are working on razor thin margins.

Moreover technique, an affiliate program could be an incredible technique to make better marketing power of the product when competing in the market (Elfrink, 2016).

 

Conclusion

Analyzing the several theories tools and techniques an entrepreneur is that person who keeps the passion to do something creative and different than other, and also keeps abilities to equilibrium among supply and demand and comes up with the new ideas.  In the process of in identifying the opportunity in the market, it has been selected and analyzed the possibility of SaaS model business specially for the Nepali market, but it is relevant in the entire world because SaaS product is very affordable for the small to large business ventures.    

Furthermore, the revolution of the technology and technological products are increasing day by day which will increase the demand of the new and innovative product as well. As per the scenario of advancing technology in the world there is also high ratio of developing in Nepal.  With the advancement of the technology demand of software products are increasing and advancing. In the context of Nepal, there are more than 100 software companies. Most of the companies are providing the enterprises services to their customer and end users. It requires high finance, so it is not affordable for every small and medium business organization. 

There is comparatively large number of small and medium business company in Nepal. Out of 100 software companies in Nepal, only two companies are providing the SaaS service to the customer. But both companies are not Nepal based companies and are USA based companies. So that here is the demand of the Nepal based SaaS model software company. Thus, plan to establish a SaaS model software company and develop SaaS product focusing to the Nepali customers, according to the small survey and interview with some end users is in demand. There is quite high demand of SaaS products in Nepal. It is a golden opportunity to establish the new business here is niche market.   The SaaS model software business is most demanded business in the word. In the part of the entrepreneurship, there should be ability to convert weakness to strengths and threats should be minimized and convert it into the opportunity.

                 

References 

Cantillon (1725) Person bearing the risks of profit (loss) in a fixed-price contract with government.

Casson, Mark (2003). The Entrepreneur: An Economic Theory. 2d ed. Cheltenham, UK: Edward Elgar.

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Effective Database Management. 2017. Effective Database Management: The Difference Between Enterprise Software and Software-as-a-Service.
 

Fusebill Inc.2017. The Future of SaaS According to These 16 Companies.

Greg Elfrink. 2016. The SaaS Business Model Explained - Empire Flippers. [ONLINE] Available at: https://empireflippers.com/saas-business-model-explained/. [Accessed 02 August 2018].

IT companies in Nepal. 2017. IT companies in Nepal. [ONLINE] Available at:

Link and Herbert. 1988 The Profitable Theory of Entrepreneurship and Economic Growth.

Peter F. and Drucker (1985) Innovation and Entrepreneurship: Practices and Principles, New York: Harper & Row, Publishers, 220-225.

 Praag, C. Mirijam Van and Hans Van Ophem (1995) "Determinants of Willingness and Opportunity to Start as an Entrepreneur," Kyklos, 48:4, 513-40.

Roy Stephan. 2017. 4 Ways SaaS (Software-as-a-Service) can Help in Your Business Growth . [ONLINE] Available at: https://www.apogaeis.com/blog/4-ways-saas-software-as-a-service-can-help-in-your-business-growth/. [Accessed 02 August 2018].

Schumpeter, Joseph. 1989. “Economic Theory and Entrepreneurial History.” Reprinted from Change and the Entrepreneur. Cambridge: Harvard University Press, 1949.

SearchCloudComputing. 2017. What is Software as a Service (SaaS)? - Definition from WhatIs.com.

Stevenson, sahlman, J. Carlos Jarillo andd Howard. 1990. “A Paradigm of Entrepreneurship: Entrepreneurial Management,” Strategic Management Journal 11: 17-27.

TechSansar.com. 2017. Current status of ICT in Nepal and ongoing efforts. [ONLINE] Available at: https://techsansar.com/technology/current-status-ict-nepal-ongoing-efforts/. [Accessed 2 August 2018].

The Tech Wars of 2018 | Tech Buzz | TechNewsWorld. 2017. The Tech Wars of 2018 | Tech Buzz | TechNewsWorld. [ONLINE] Available at: https://www.technewsworld.com/story/84995.html. [[Accessed 2 August 2018].