Sell SaaS Solutions To Achieve SMB Success

I think you would be hard-pressed to find a VAR that doesn't (or wouldn't) love to land big, enterprise-level sales. DSSI (Document Scanning Systems and Imaging) is among the crowd that has been successful in the enterprise arena. The reseller has found success in revenue-rich verticals such as entertainment (20th Century Fox, EMI Capitol Records, and Universal Music Group) and aerospace (Pratt & Whitney Rocketdyne and Boeing). In fact, one of the VAR's favorite quips about aerospace is that its solutions actually circle the globe as part of the national space program.

Since 1996, DSSI has been providing clients with document imaging products and services, including scanners, data capture software, content management software, and document automation and workflow solutions. Although the reseller is quick to tout the benefits of enterprise-level selling, it has noticed its most rapid growth occurring in a very different arena — the SMB market. Last year, the VAR saw its SMB revenue grow by 27.6%. Numbers from this year are even more promising, increasing by 38.2% in just the first six months of 2008. Perhaps what DSSI has learned from targeting this market can help you to cash in on your own SMB sales success.

Target SMBs For Document Management Sales
One thing you might wonder is why a VAR that has been so successful selling to enterprise customers would consider investing so much energy in developing an SMB strategy. The reseller has its share of Fortune 100 and Fortune 500 customers, and it continues to target additional prospects at the enterprise level. But according to Mike Paule, director of business development at DSSI, the allure of the SMB market is simple — it presents a larger customer base and a faster sales cycle.

"Everyone likes to go after the really big sales, but you have to realize that there is a limited number of those opportunities," says Paule. In contrast, the SMB market offers a substantially higher number of businesses to target, which according to Paule, remains a segment largely underserved by traditional ECM (enterprise content management) solutions. DSSI marketing material cites research from Delphi Consulting Group that indicates as much as 90% of documents in SMBs remain in hard copy form. Of these documents, 15% are misplaced, and as much as 30% of a workday is spent looking for lost or misfiled information.

A second reason to target SMBs is the pace at which revenue can be realized. The team at DSSI finds the sales cycle with an SMB to be shorter than marketing to larger firms, finding it easier to get to the final decision maker. "Like most VARs, we want to identify ways to shorten the sales cycle," says Paule. "When dealing with a larger prospect, you typically need to meet with multiple individuals and departments before a decision is reached. This is not the case when dealing with an SMB." Based on DSSI's experience, the sales cycle for an SMB typically ranges from 30 days to 6 months. Of course, there are exceptions to this time frame. For instance, Paule recalls a recent appointment with a dental group where he was reviewing patient charts in order to determine the requirements for an imaging project the group was contemplating. He submitted the proposal the following day and had signed approval back within a half hour.

Bundled ECM Solutions Are Better For SMBs
To capitalize on the SMB ECM opportunity, DSSI needed to understand the challenges of selling document management to small and midtier companies. In the world of the SMB, restrictive IT budgets and a lack of technical expertise appear to be two of the most common objections resellers encounter when selling technology solutions for document management. But neither of these objections negate the fact that SMBs need a solid file management strategy as much as their Fortune 500 counterparts.

With economic conditions remaining questionable, companies of all sizes are tightening financial belts. If a company is privately held, as many SMBs are, the budget constraints can be even more restrictive. "We took a look at some of the technologies we use in our enterprise solutions and examined how we could effectively port them over to the SMB market," says Paule. "We also looked at how we could do so in such a way that we could sell solutions at a lower price point, requiring a lower capital outlay, which is more important than it was just a couple of years ago."

Additionally, the VAR wanted to develop a solution that could eliminate the potential challenge of the limited IT infrastructure common to many SMBs, especially those on the smaller end of the scale, having 100 employees or fewer. On the enterprise end of the scale, it is not uncommon to find IT leaders and teams that can easily grasp the fundamentals of document imaging and content management. In contrast, smaller companies simply don't have the human resources or the time to dedicate to identifying, comparing, and integrating all the elements of a document management system. DSSI knew that removing the need for any technical expertise would make a big difference when selling to an SMB.

The VAR's answer to all of these concerns came in the form of its ScanPortal-WebConnect, an integral part of DSSI's SMB growth strategy. The reseller took a turnkey approach when constructing the solution, eliminating the IT challenges of an SMB by bundling everything needed for a complete document management system from front end scanning and capture to image repository and archive services. On the surface, this solution may sound both IT-dependent and expensive — exactly the opposite of what the VAR was trying to accomplish. But DSSI designed ScanPortal-WebConnect as a hosted, or SaaS (Software as a Service), solution that enables the reseller to assume all the IT requirements. Because of the hosted nature of a SaaS solution, the VAR can break the cost into smaller, monthly payments that are much easier to justify on an SMB budget.

DSSI also realized that selling a complete solution would not only be more favorable in the eyes of its prospects, but would also protect its profit margin. "Let's face it, margins are shrinking, and you can't stay in business just selling hardware," says Paule. "In software, margins are still pretty good, but even then you are running into more and more competition. By offering a bundled solution that includes a hosted document repository, we create a long-term relationship with our customer, and we generate recurring revenue. Best of all, we are achieving good margins."

Leverage SaaS To Provide Index And Archive Services
On the front end of the ScanPortal-WebConnect solution, DSSI couples scanners, most often Kodak or Fujitsu, with Kofax capture technologies that include VRS (Virtual ReScan) and the Ascent capture platform. The reseller then offers its customers the option to either process the scanned images, which includes steps such as OCR (optical character recognition) validation and indexing, on their own or let DSSI perform this service on a SaaS basis. For customers that opt for the SaaS solution, the reseller recommends a system that utilizes bar codes or separator sheets to identify document sets. In some cases, the VAR even custom designs a PDF separator sheet that can be used to either enter key fields manually or autopopulate those fields through a text lookup process. For example, in the case of an invoice, key fields may be invoice amount and purchase order number. These pieces of information can be entered manually into the PDF separator sheet, or the capture solution can be customized to extract this information when the form is scanned and populate these fields automatically.

Regardless of whether images are processed by the customer or by DSSI, those images are then uploaded using Kofax Remote Sync agent into a document repository built on the Captaris Alchemy content management platform. The repository is also a hosted service that DSSI provides by co-locating with the Qwest CyberCenter, a facility built specifically for secure Web and data hosting. According to Paule, security is as much a concern for the VAR's SMB customers as with its enterprise clients. Choosing to co-locate was a strategic decision that helped DSSI provide security for its customers' data without having to develop, deploy, or maintain its own Internet data center. For further security, the reseller's servers run multiple power supplies and redundant hardware. In addition, the data is backed up daily to an offsite storage location. The reseller also gives customers the option of receiving a CD library of images every quarter for their own, internal archive purposes.

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Presenting a SaaS solution also enables DSSI to overcome the financial challenge of selling document management to SMBs. "ScanPortal-WebConnect allows SMBs to retain the control of scanning documents without having to pay the capital and IT expenses of maintaining their own content management platform," says Nancy Lazenby, executive VP at DSSI. For example, if the VAR had to present a complete in-house document management system, the price tag could easily reach $20,000 to $30,000 — an up-front investment many SMBs cannot justify. However, leveraging these technologies on a hosted basis enables the reseller to spread the cost across multiple customers using the system on a monthly basis. The VAR is able to determine a per-customer cost for ScanPortal-WebConnect by annualizing the cost of the hardware, software, and system setup, along with the cost of processing and storing document images and of system maintenance. As far as SMBs are concerned, an initial account setup cost of $1,000 followed by a monthly cost of $500 to $600 is much easier to justify.

Market To SMBs With Online Tutorials, Webinars, And Web Sites
DSSI discovered that the limited IT expertise of the typical SMB meant it not only had to price its solutions differently, it had to market them differently as well. The VAR needed to present the solution from the customer's point of view, turning it into more of what Paule and Lazenby refer to as a 'visual sell.' "In small business, people often have to wear so many hats that they don't really have the time to allocate someone to do all the education and training necessary to put together a complete document management package," says Lazenby. "We've taken the time to create Flash demos, Webinars, and other visual tools to demonstrate how our solutions work and also illustrate what our solutions can do for them."

The VAR's visual selling tools have garnered such good results that it has launched a major initiative to redesign its Web site. The site is being developed to be more user friendly, visually rich, and educational in purpose. On the agenda are plans to include multimedia tutorials, demos, Webinar opportunities, and white papers. "We want to drive more people to the site, we want them to stay on the site longer, and we want to be able to track people who download the site's content," says Lazenby. To track the effectiveness of the new site, as well as gather potential leads, DSSI will have visitors register in exchange for unlimited downloads of the site's educational content. In addition, DSSI plans to post an ROI calculator that can help prospective customers compare the cost of a paper-based system with a document management system.

When it comes to calculating ROI, marketing to the SMB market is certainly paying off for this reseller. With SMB sales in 2008 already reflecting a 38.2% increase, DSSI is well on its way to accomplishing its goal of generating a 50% increase in SMB revenue over last year.