Positioning and the open source / SaaS model

In some ways, the SaaS open source business model has the most straightforward positioning, one that tends to make sense to prospects fairly intuitively. On the other hand, there is a very dramatic difference between consuming an open source software and consuming a SaaS product. Building the open source community and building the business around the SaaS product amount to building two businesses at the same time.

Here are some things to consider.

The use cases for your SaaS product could be dramatically different from what you intended to do with the OSS. When I talked to Sam Selikoff about Mirage, he talked about he started the project with other developers in mind, but realized that the project could be used by salepeople to provide better demos for SaaS products. So the open source project might be for developers, but the SaaS product might be for sales teams.

The types of people who will use OSS might be categorically opposed to using a SaaS instead. Even if your market is still engineers, moving from OSS to SaaS is a big jump. It might mean jumping from shadow IT to regular IT, might mean that your product is used by managers or directors, might mean the difference from being a tool for hobbies vs a tool for managing reliability of banking transactions. The requirements (and buyers) are very different.

You still need to pay attention to how the two “products” relate. Confused prospects do not buy. If you want the OSS to contribute to the financial success of the SaaS product, you need to make it clear how the two software products are related, why having an OSS version of the SaaS product is a good thing for someone who just wants to consume the SaaS software and who is an ideal buyer for each option.

The company will need to clearly articulate why the open source project matters but also be clear about how to expand both the open source community as well as the customer base for the SaaS product. If you’re not clear on how to do that, get in touch — that’s what I help with.