The Role of OEM Software Service Providers in Empowering SaaS Vendors

"The ToB business entails a lengthy service chain, and the associated costs of trial and error are substantial. Therefore, SaaS vendors should acknowledge the importance of specialization and division of labor, identifying the limits of their capabilities instead of attempting to shoulder every task. It is equally crucial to delegate responsibilities, which can streamline the process with minimal effort."

Currently, numerous OEM software service providers act as "enablers" at the boundaries of capabilities, aiding SaaS vendors in enhancing their development, implementation, and delivery capabilities.

Development, implementation, and delivery services are not standardized products or solutions but rather collaborative processes that rely on division of labor. This approach safeguards the research and development resources of SaaS enterprises while addressing the tension between product standardization and customization. Consequently, companies can concentrate on core product development and business expansion.

Now, let's explore whether SaaS vendors can outpace their counterparts through the adoption of "software OEM."

I. Entrust Challenging Customization to SaaS "Enablers"

The conflict between customization and product standardization poses a significant challenge for many SaaS vendors.

Customization plays a crucial role in the sustainable growth of SaaS companies; thus, it must be addressed promptly. Otherwise, the organization may encounter future complications. Currently, persuading large and medium enterprises to directly adopt standard SaaS products is arduous, as personalized customization is often required. In this context, integrated cloud-based software development and delivery platforms have emerged to assist SaaS companies in overcoming the most daunting aspects of customization.

Upon serving SaaS companies, these platforms discover that numerous unresolved challenges persist, such as enhancing development and implementation efficiency, optimizing project management and collaboration, achieving cost-effective implementation, addressing the absence of separation between production and research, and tackling issues within the system development process.

Technically speaking, these service providers are not SaaS companies themselves, but rather resemble enterprise services that primarily focus on enabling service platforms. Nonetheless, as their clientele predominantly consists of SaaS industry stakeholders, they have become experts in the field of SaaS.

II. Streamlining through Specialization

Specialization, which allows professional companies to focus on their respective areas of expertise, has found success in numerous industries. However, this approach has not been widely adopted in the development process of the SaaS industry. Typically, SaaS companies handle everything from customer connections, pre-sales services, design, R&D, implementation, development, maintenance, and more, resulting in high operational, managerial, and human resource costs. I believe it is more advantageous for SaaS enterprises to concentrate on what they excel at and collaborate with others to serve customers collectively. Let's explore specialization from this perspective.

First and foremost, from an efficiency standpoint, specialization can reduce fixed costs and enhance human productivity.

Previously, many SaaS vendors used to handle the entire process internally. However, after partnering with "OEM software service providers," the most noticeable change was cost savings.

Enterprises need to consider two factors: firstly, there is a substantial difference in outcomes when the same development team is allocated to core business and R&D compared to customization, implementation, development, and project delivery. Secondly, forming internal implementation teams for each project incurs high fixed costs, whereas collaboration can reduce overall expenses. Through division of labor, project management, operations, and teams can be streamlined, leading to significant long-term efficiency gains.

From the perspective of vertical specialization, core competence is supported by extensive R&D, while specific verticals benefit from specialized application methodologies. By employing a collaborative application methodology and practical cloud-based development tools, the management and efficiency of the development process can be improved.

Therefore, advocating specialization within the industry becomes necessary as it safeguards the core R&D team.

Considering market competition, SaaS products' features and user experience are easily compared by customers in a transparent and fiercely competitive environment. Focused SaaS companies are more likely to offer products that customers choose. By investing the majority of resources in a specialized field, it becomes easier to lead the industry, establish a benchmark within a specific vertical, and distinguish oneself from fierce competition.

In summary, SaaS companies must streamline their operations to enhance efficiency, build professional expertise, and boost competitiveness. They should prioritize the development of their specialized fields and core strengths while collaborating with fellow practitioners to foster a mutually beneficial and harmonious industrial ecosystem.

III. Partnering to Cultivate Customers: Prioritizing Customer Success over Sales

Collaborative initiatives with customers are widespread, encompassing diverse scenarios. For instance:

1. Companies should focus their resources on technology and product research and development, freeing up technicians from implementation and development tasks.
2. The absence of separation between production and research within the company necessitates the division of R&D and implementation efforts as development and implementation begin to burden the team.
3. As the company's business expands, the development team grows, increasing the labor risk. Thus, it becomes crucial to strike a balance.
4. Investors propose reducing the workforce while maintaining regular operations, necessitating the streamlining of the organizational structure and reduction of fixed costs.
5. When customers are spread across the country, leading to high implementation costs, collaboration with external teams can supplement areas with high team service expenses.
6. Simplifying fixed costs and addressing workload fluctuations constitute the simplest objectives.

Motivations and requirements vary, but ultimately, "OEM software service providers" assist in executing the development, implementation, and delivery of specific requirements. Most often, they engage in co-creation with SaaS companies, undertaking secondary development based on existing systems and collaborating to deliver software and provide ongoing maintenance for brand customers.

For instance, if a customer in the garment industry seeks to upgrade its warehousing system, vendor A provides standardized warehousing products, project managers, and top designers. The "OEM software service provider" takes responsibility for the customized development, implementation, and delivery based on the system, settling in accordance with the project's work plan. Various flexible employment models exist, such as organizing business consultants, implementation specialists, business analysts (BAs), technical experts, and other resources to collaborate on projects.

For "OEM software service providers," cooperative SaaS companies span multiple industries rather than focusing on a specific vertical, demanding high capabilities from the development team. Can fulfilling such requirements be challenging?

The foundation of serving across industries lies in co-creation with customers. It is essential to consider SaaS vendors not just as customers, but as partners, fostering a cooperative relationship between production and research.

Customers handle the R&D and design of products and solutions, while "OEM software service providers" undertake implementation, development, and delivery, working together to serve the brand and establish an environment conducive to open collaboration. The primary direction is dictated by customers, with the "OEM software service provider" assuming responsibility for enhancing development capacity and delivery quality.

Furthermore, such service providers must possess significant advantages in development capacity and delivery quality.

For "OEM software service providers," customer success holds greater importance than sales.

Customer success hinges on robust implementation and delivery capabilities to meet a wider range of brand needs and secure a larger market share. SaaS vendors serve numerous end customers and assemble a group of developers, serving as a channel to bring development services and cloud production lines to various industries.

Numerous vendors currently demonstrate significant demand and a strong willingness to engage in production and research collaboration. However, they often lack the courage to initiate the cooperative process. Once this hurdle is overcome, "OEM software service providers" become integral to customer service as part of the SaaS vendors, establishing a closely intertwined enterprise-level partnership. The primary obstacle lies in establishing trust.

Establishing a robust trust with a new partner is a gradual process, but once solidified, it becomes unwavering. Many service providers adopt the strategy of a "free trial." Analogous to connecting water pipes, they offer an initial pipe connection free of charge. Users can turn on the tap and experience the water for a nominal fee of 1 yuan at their convenience. After the trial period, if they find the tap water convenient, they can continue using it as desired. However, if it doesn't meet their requirements, they can decline the connection without incurring any expenses.

Conclusions

In conclusion, we have delved into three crucial topics in this discussion. Firstly, it is imperative to promptly address the challenge of customization, which poses a significant obstacle for SaaS vendors. Secondly, embracing specialization is vital to enable SaaS companies to streamline their operations efficiently. And thirdly, fostering a culture of co-creation with customers, prioritizing customer success over mere sales.

I firmly believe that the concept of "OEM software service provider" can offer SaaS vendors valuable insights and opportunities for business growth. As practitioners, they can serve as facilitators and catalysts for SaaS vendors, providing support and expertise from various perspectives.