Welcome to The Cirrostratus Group November newsletter.
It's always a worthwhile endeavor to compare your SaaS business to other successful SaaS businesses. The Openview Partners Financial and Operating Benchmarks Report just came out. It is based on a variety of sizes and maturities of SaaS businesses and has a lot of great information in it. Here is a good summary of the results.
A continuing trend outlined in the above is the increased use of usage based pricing for SaaS. Openview has also published survey results on this trend along with a summary. Although there is a clear trend toward usage based pricing, a significant amount of that pricing is a hybrid of usage and subscription pricing. I like the approach that New Relic has taken where they use a combination of usage and subscription tiered pricing. Some good information on this hybrid approach is available in this description of New Relic's pricing change. Although complicated I think this is the approach that works best for many enterprise level customers, it combines the best of both approaches.
Paul Ressler
The Cirrostratus Group
Addressing Some of the Challenges of AI Enabled SaaS
Some of the challenges of AI enabled SaaS include the challenges of all AI applications and tools. This article from Venture Beat talks about some of the issues that VCs get wrong when thinking about AI businesses because there are differences from SaaS businesses without AI functionality. But these challenges occur in varying degrees with AI enabled SaaS businesses. Reviewing these challenges and potential solutions can give you some perspective on possible pitfalls and challenges with your AI enable SaaS business.
This Venture Beat article talks about some of the challenges of enterprise AI projects. The section about "In-house vs Third Party" gives the enterprise perspective on the challenges of each approach. As third party providers of AI it's important to think about some of the challenges of using your solution including visibility into how the AI model works, how the AI model is updated and an understanding of or access to the data used for the model.
The challenge of explaining AI and making it as transparent as possible is an increasingly important issue. Your customers want to understand how your Ai model provides answers and what data that answer is based on. A discussion of this topic, "explainable AI", is provided in this article.
