LeapComp - Sales Performance Management Blog

I found an interesting comment on LinkedIn from Chris Collins regarding the difference between On-Premise, On-Demand (Single-Tenant) and On-Demand (Multi-Tenant).  This is not the first time I hear or use the car rental versus car buying analogy, but I think it is well explained and I enjoyed the ‘bus’ example:

Here is one analogy that I use to demonstrate the concept of SaaS to non-technical audiences that always seems to get them understanding the basic idea. I tell them to imagine 2 cars and a bus.

BUY THE CAR: The first car they buy and pay for outright. They are responsible for all maintenance, insurance, gas. This is analagous to buying the hardware and traditionally licensing the software yourself in house. You as the buyer are very interested in the technology you are getting.

RENT THE CAR: The second car they rent by the month. You don’t own the car but you have some say over where the car goes and you are still somewhat interested in the technology. When you go the rental car parking lot, you have a choice of cars and your decision of which car to choose is somewhat based on technology. Also, one person rents one car. This is somewhat analagous to a traditional ASP model. The point is someone else might own it, but you are still interested in the technology underlying it.

TAKE THE BUS: The bus is multi-tenant. When the transmission (platform) is changed on the bus, every tenant is affected because they are riding on the same platform. BUT when you take the bus, unlike when you buy or rent a car, you are not as interested in the underlying technology but in what the bus can do for you. You are now looking primarily at the service aspect, what need can it fulfill for you? If you need to go to the mall and a bus arrives whose ticker says “Mall” on its route, then you take it for that reason, not because of the the transmission on the bus. You only pay for the cost to get to the mall, not by month or not the full cost of the bus.

However you can take the analogy a little further. If you are transporting precious cargo on the bus, you will of course want to make sure the bus is safe from hijackers while stopped and in transport just the same way customers still want to be sure their precious data is protected. If there is a particular transmission type that that is known to have holes in it and cargo sometimes falls out, the customer will want to know about that upfront.Then you risk losing the customer’s focus on the service and put it back on the technology. That is a very important concept.

Do you think this applies to a Sales Performance Management solution licensing model decision?