Learning the Business Value of SaaS

Computer and software companies have been battling for the hearts and minds of students for decades, and now school administrators are becoming the target of smart Software as a Service and cloud computing service providers.

The most notorious examples of using classroom marketing tactics to gain a long-term strategic advantage are Apple and Google. Apple made a concerted effort to win over a new generation of corporate end-users long before they ever entered the workplace by enticing them with brightly colored, easy-to-use eMacs. Google has been giving away Google Apps to public schools and college students for years to get them hooked on its simple collaboration tools.

In both cases, the objective has been to demonstrate to the students the virtues of the vendors’ hardware products and software solutions to gain their allegiance later in the business world. As Apple and Google have become leaders in the rapidly expanding cloud market, their education sector marketing efforts also have helped to make school administrators aware of the business value of cloud-based alternatives.

Business Benefits

Another SaaS company has been proving this point in the education sector, and using its success in schools to expand into other vertical markets with similar challenges.

Fifteen-year-oldSchoolDude helps school districts streamline their facility maintenance work orders and IT helpdesk management processes, including scheduling preventive maintenance services, planning capital requirements and replacements, improving inventory accountability, optimizing facility usage, and reducing utility consumption spending.

SchoolDude’s success in primary school systems has enabled it to broaden its target market to include universities and community colleges. It has expanded its reach even further under the FacilityDude brand to serve local governments, clubs, hospitals and other healthcare organizations.

In fact, more than 2 million users in approximately 8,000 school districts, universities, community colleges, local governments, clubs, hospitals and other healthcare organizations performed more than 30 million transactions utilizing 15 cloud-based SchoolDude and FacilityDude SaaS solutions last year, according to the company.

In total, its customers have saved more than 55 million hours of work effort and more than US$1.1 billion in operating costs, SchoolDude claims.

In addition to the immediate quantitative business benefits, SchoolDude’s users gain from its services. SchoolDude also is harvesting the metadata it is collecting from its growing population of customers to generate valuable insights about how they can improve their operating policies and procedures to produce even more cost efficiencies.

I’ve written often in this column about the unique capability of cloud-based SaaS vendors to capture and share this kind of benchmark data to provide key performance indicators, or KPIs, that strengthen their customer bonds.

Strategic Investment

The growing value of SchoolDude’s services, combined with the opportunity to exponentially expand its business into more schools and other institutions, recently led the private equity firm Warburg Pincus to make a strategic investment in SchoolDude of up to $100 million.

This investment will enable SchoolDude to more quickly grow its existing operations and accelerate the growth even faster via acquisitions, according to Lee Prevost, cofounder of Dude Solutions and president of SchoolDude, and Alex Berzofsky, managing director of Warburg Pincus, with whom I spoke after the announcement.

SchoolDude’s story is an example of the deepening penetration into specific vertical markets I predicted for 2014. It also demonstrates how smart SaaS companies can capitalize on the data they collect to provide benchmarks and KPIs that offer greater value to their customers. The Warburg Pincus investment in SchoolDude is among a growing number of private equity moves into the SaaS/cloud marketplace.

Most importantly, the SchoolDude success story shows that school districts, colleges, local governments, clubs, hospitals, and other healthcare organizations are becoming comfortable with SaaS solutions, and cloud alternatives are becoming more mainstream.