Inside the House that Gates Built: 6 SaaS Lessons from Microsoft

Microsoft is a leading SaaS vendor with a worldwide market share of over 17%, leading Salesforce, Adobe, and Oracle, according to an August 2018 report by Synergy Research Group. Its Office 365, a subscription to Office apps, currently has 155 million commercial monthly active users and 33.5 million consumer subscribers. Microsoft’s products were not historically subscription-based, instead offering a classic boxed product in stores. However, it was one of the first major software providers to shift towards a subscription service platform. Microsoft embraced the changing shape of the software market by meeting businesses needs and continues to find success doing so. Here are the 6 SaaS Lessons from Microsoft.

Engage new users with test and/or trial periods.

Microsoft officially launched Office 365 as a monthly subscription in June 2011. In the year before launch, Microsoft made the product available for beta testing, signing up more than 200,000 organizations in just a few months. According to Microsoft, these companies reported increased productivity and reduced IT costs. Microsoft used stories from customers who had success in specific areas, such as employee or customer engagement, and made them into publicly available case studies. This type of product marketing is something Microsoft continues to do to this day.  Microsoft is currently taking a somewhat similar trial approach to encourage adoption of new products, offering a free version of its Microsoft Teams service. Originally launched in 2017 to provide chat, meeting, call, and file sharing services in a shared workspace within Microsoft 365, Microsoft Teams is now the“fastest growing business app in Microsoft history,” according to Microsoft officials, and is on pace it be  the top business app in 2020, all while competing with the likes of Slack and gSuite. Wonder how Slack’s feeling about that full-page New York Times ad it took out a couple years back telling Microsoft to bring it on. Poke the bear, you might get bit.

Offer a-la-carte tools that do specific jobs.

The complete Microsoft Cloud includes Azure, Office 356, and Dynamics 365. Microsoft’s primary SaaS product is Office 365, which provides an online version of MS Office Suite along with SharePoint Server, Exchange Server and Lync Server. Microsoft’s Windows Azure, which provides a Windows Server operating system, is both Infrastructure as a Service (IaaS) and Platform as a Service (PaaS). Dynamics 365 is SaaS that integrates Enterprise Resource Planning (ERP) with its Customer Relationship Management (CRM) solutions that help businesses generate and utilize business intelligence effectively.  Microsoft offers a variety of products and services, allowing both individuals and businesses to tailor their subscriptions to meet specific individual or corporate needs and adjust as these needs evolve. Rather than having one tool with many features, most of which go unutilized, Microsoft’s SaaS services are like a toolbox from which customers can pick and choose the tools that will serve their organization best. Microsoft showcases this ability to meet the specific needs of businesses in its case studies, identifying all of the products and services that customers have used to find success.

Tout cost savings achieved through increased productivity.

Office 365 originally launched offering a predictable monthly price from $2 to $27 per user per month.  When the pricing model changed (from boxed product to SaaS), so did the value proposition. The new model offered many enterprises massive cost savings by reducing infrastructure needs, increasing data security, improving collaboration opportunities, and increasing productivity. Increased productivity can deliver cost savings in less than obvious ways, such as allowing employees to access files securely on the web from anywhere. Microsoft uses case studies to articulate these, identifying how companies such as Toyota have used Microsoft’s solutions to increase productivity and efficiency.

Meet the anticipated needs of customers.

According to Synergy Research Group, a leading market and analytics firm for the telecom industry, a driving factor in Microsoft’s success in the SaaS market is its leadership collaboration capabilities. Microsoft continues to keep on the cutting edge, introducing innovative intelligent event capabilities in July 2018. Similar to its fast-growing Teams service, it anticipates what customers need to be more successful, delivers it (often in a trial format), and then drives adoption.

Have an eye for the future.

Microsoft’s SaaS offerings are growing and it isn’t done yet. It recently opened data centers in South Africa, its first enterprise-grade centers on the African continent, with ambitions to become the go-to SaaS and cloud service for users in this emerging market. Microsoft Azure is currently being delivered from the new data centers with Office 365 and Dynamics 365 forthcoming in 2019.

Get real with customers.

The challenge for Microsoft now? Getting all users to let go of their beloved boxed Office editions and embrace the SaaS model of its product. It’s making the hard sell for that in its recent ad campaign, the Twins challenge. The campaign stresses that while the boxed edition offers the Office apps that customers know and love, they are “frozen-in-time,” without regular updates. The Twins challenge shows pairs of twins performing functions on each version of Office, demonstrating how Office 365 improves productivity while making viewers smile with friendly sibling banter. The ad campaign pits its products against one another in a fun and informative way, selling the benefits of SaaS to those who haven’t yet embraced the change.Microsoft may not have started out as a SaaS player, but it has grown into a market leader simply because it had to. There’s a lesson in there for emerging companies: it’s never too late to stick your neck out. Building great products that people love to use are still the cornerstones of this industry.