Already supercharged by the pandemic and associated demand for home lockdown-related enterprise software resources, the industry continues to grow at a double-digit compound annual growth rate; specifically, global SaaS revenues are expected to nearly double from 2020 levels by 2026 (from US$158 billion to US$307 billion).
Ease of deployment/ubiquity of deployment and pay-as-you-go are just a few of the features that characterize the rapid adoption of SaaS products by businesses of all sizes. While concerns over data privacy, security, and a relative lack of flexibility to customize the software are tempering factors in the SaaS market, the advantages of scale and cost-effectiveness have driven widespread adoption.
The software landscape
The market for software products is generally composed of two types:
- The companies that started as on the spot, but have now largely moved (with varying levels of success) to mostly SaaS, while retaining an on-premises option for customers who want/insist on it. Examples include SAP, Oracle, and Blue Yonder.
- New businesses that are SaaS pureplay. This model started with companies like Salesforce, which quickly became a preferred alternative to on-premises CRM software, but has now grown to cover almost all major business applications, including emerging areas like cycle management. life of contracts and expense management. Companies like these now originate not only from the Americas, but also from Asia and Europe – for example, Freshworks, Icertis (India) and OneTrust (UK).
Apart from this supplier dichotomy, it is also important to note that there is also a growing number of technology-driven companies which are in fact SaaS companies; many are B2C companies in areas such as consumer services (eg Tripadvisor, Uber) and finance (eg Stripe, Tide, Starling).
The Big Talent Squeeze in the Executive Suite
There is clearly a three-way leadership talent war in the SaaS space, where traditional enterprise software companies that are transitioning/have transitioned to SaaS, are competing for top executive talent with companies born in the cloud such as Salesforce, Workday or Marketo, which also compete with Internet companies such as Amazon, Facebook and Google.
It’s no exaggeration to say that technical and executive roles in technology companies are more in demand today than they have ever been in human history, eclipsing the dotcom bubble. This will only increase as businesses continue to embrace digitization, automation, AI, machine learning, and data intelligence.
Evolution of capability skills
For software product companies, people’s capabilities are changing rapidly as their business and operational models increasingly embrace cloud/SaaS offerings and their associated agility.
More than ever, today’s software leaders must operate under a mantra of continuous innovation and make real-time decisions based on the acceptability and use of the customer base, dropping products that don’t work. not and improving what works, quickly. An ability to lead geographically dispersed teams is also essential, as SaaS companies can scale quickly as they go global.
A SaaS platform also involves additional complexity for finance and legal roles, due to revenue recognition and cost matching (e.g. cloud-related expenses), as well as establishing agreements legal in multiple jurisdictions.
Business development functions in software vendors have also evolved significantly. The focus is now on annual recurring revenue (ARR), churn, account growth (to maximize the number of users within a customer), and customer acquisition cost.
While a SaaS model still requires considerable investment for the end user (transition, training, support, new business processes), this can be mitigated to some degree by the nature of the contract. The Customer Success feature has evolved rapidly over the past few years to reduce churn and maximize usage, reversing the past trend of vendors selling more products than the customer needed, resulting in shelves (and larger sales commission payments). With some (but not all) SaaS vendors, customer success is also part of the sales function.
Sources of executive talent
A sophisticated and cohesive talent search and engagement strategy is essential for software companies to attract top-notch leaders in the current climate. There are four main sources to search from:
- Newer pure play SaaS companies: SaaS businesses run the gamut from start-up outfits with significant growth potential to established corporate players. In terms of the types of SaaS players to target as potential sources of executive talent, ARR range and customer base are important qualifiers, as the pool of people tends to be stratified around these variables.
- Technology-focused companies: the leadership pool in consumer tech, B2B tech, fintech, health tech and education tech is large and talented and represents a rich source of executive talent for independent companies in the industry . These companies are agile, customer-centric and data-driven. The software companies that target this sector most successfully tend to align their talent search strategy (and the technology companies they approach) according to their own scale, size and growth trajectory.
- Software companies that successfully transitioned: Companies that offered purely on-premises solutions but have successfully transitioned to SaaS operating models are also good targets. This can be particularly fertile ground for finding leaders who have led the adoption of a new business model. Target specific industries or application areas if you are targeting this group.
- Design officesNot seen as an obvious choice, we’ve found that professional services organizations that have worked closely with a long list of technology clients can sometimes be a valuable source of talent. This is especially the case for functions such as account management, strategy, planning, and go-to-market.
A compelling proposal is essential
Finally, booming industry conditions have made it exponentially more difficult to attract many executives to a new platform simply because they are so successful where they are. In order to generate interest and consideration, an opportunity must be extraordinarily compelling and presented in a way that is compelling, persuasive, thoughtful, and personal to each candidate (the last part is often the hardest to get right, but when done well made, has the most impact).
The recruiting challenge is particularly true for companies in the “turnaround” phase rather than pure growth companies. For organizations trying to bounce back (often because they have difficulty leapfrogging legacy technologies or services), hiring an A-caliber CEO or GM is critical to their ability to attract new business. other high-level candidates for leadership positions. Executive talent for software turnarounds is specialized and less abundant than “pure growth” expertise.
The process of recruiting turnaround executives can be long and complex due to the careful due diligence that hiring organizations and corporate boards undertake of the hiring executive and vice versa. There is also usually a very specific corporate window or phase in which a turnaround executive is unwilling to consider leaving a current engagement for even the most compelling opportunity.
The industry is growing at a breakneck pace. Software service providers and many technology-focused companies compete for the same leadership profiles and skill sets. Hiring managers and/or their executive search partners must not only understand the software industry and where successful executives are likely to work, but also be as focused and nimble as the industry itself in their strategy. targeting. Equally important is the ability to develop and present a compelling proposition to attract top industry leaders.