Why must SaaS vendors embrace the ecosystem?

Author | Yang Li

Leifeng.com: Tencent is gradually exploring its own way of describing the industrial Internet ecosystem. You know, the industrial chain of enterprise services gathers a large number of independent software developers, system integrators, strategic consulting companies, channel distributors, etc. The market space of these service providers is often squeezed downward by Internet giants. Compared with the slightly aggressive approach in the past, Tencent now plays a kind of open symbiotic role to some extent. This also makes potential partners who once held a wait-and-see and skeptical mentality extend a peaceful olive branch to Tencent, and those partners who have actually created value at the business level begin to hope to understand and integrate into the Tencent ecosystem at a deeper level.

Starting in 2010, China's SaaS economy ushered in the first wave of entrepreneurial enthusiasm, with Xtools and Baiduke coming to the fore. Ten years later, driven by the 2020 COVID-19 pandemic, coupled with the maturity and rapid iteration of technologies such as cloud computing and big data, China's SaaS economy has spawned many commercial applications and innovations, driving the pace of China's industrial Internet construction.

ITjuzi data shows that the number of new enterprise service companies has been declining year by year in the past five years, reaching 758 in 2019, and as of October 2020, there were only 151 new companies that year. It is undeniable that the entrepreneurial boom in China's enterprise services has been cooling down since 2015. Although there have been large-scale financing, mergers and acquisitions, and listing projects in recent years, and some excellent companies have grown in various segments, the data shows that the number of new entrepreneurial projects has decreased significantly. What changes have taken place in China's SaaS economy?

According to Gartner's latest research and analysis, the global public cloud market will grow by 6.3% by 2020, with a total value of US$257.9 billion, up from US$242.7 billion in 2019. Among them, SaaS remains the largest market segment and is expected to grow to US$104.7 billion in 2020.

For enterprise CIOs, the previous model of expanding data centers or spending millions to purchase traditional software licenses can now be reduced through cloud services, which greatly reduces the initial cash investment. Government and enterprise users are no longer unfamiliar with SaaS, and even begin to actively request to go to the cloud, which has also attracted Internet giants to follow suit and frequently make footnotes to the enterprise software market through investment or ecological alliances. On the supply side, the market structure of Chinese enterprise services is quietly changing due to the existence of Internet giants.

It can be seen that the giants themselves have obvious advantages in Internet technology, products, and brands, but a good product technology is only the foundation. To meet the diversified and personalized demands of customers, it also requires the cooperation of multiple teams such as sales, services, and customer success. From this perspective, professional enterprise services cannot be without excellent teams such as professional technical service providers, consulting service providers, system integrators, and distributors.

Ecological operations are crucial, and Tencent is an indispensable operator in this regard.

Tencent’s ToB business is actually not that early. Although it had teams such as Tencent Qidian, TIM, and Enterprise WeChat in the early years, they were basically single-threaded operations and had not yet formed an ecological momentum.

An important node began on September 30, 2018, which is also widely known as the 930 Reform. In fact, with CSIG (Cloud and Smart Industry Group) as the lead party, Tencent has begun to expand its ecosystem in the fields of SaaS industry, smart retail, finance, education, smart transportation, etc.

Among them, the SaaS accelerator, which was first launched for the SaaS industry, is becoming the vanguard of Tencent's construction of a ToB ecosystem.

The SaaS accelerator was launched in May 2019. After a year of acceleration, the 40 companies selected in the first phase have achieved remarkable results in "acceleration" and have jointly landed more than 50 product business areas with Tencent, covering office collaboration, CRM, marketing, electronic signature, finance, government affairs, real estate and other fields. In addition, 14 companies have completed a new round of financing, and 8 companies have received investment from Tencent's industry ecosystem, including Daoyi Cloud, FaDaDa, Super Guide, and Feihu Interactive. At the same time, Tencent will also cooperate with the invested companies in different aspects such as products, technology, and marketing.

It can be said that cooperation with Tencent is multi-faceted and multi-layered. For example, at the technical level, there is a need for cloud services and AI capabilities, which are basic capabilities. But more importantly, at the strategic level, it is becoming increasingly difficult for companies to win large orders alone, and the scale of orders is getting smaller and smaller. In contrast, strong alliances between companies are more in line with the current market competition.

Take the cooperation between Salesfunnel and Tencent as an example.

For example, since 2018, SalesEasy has used Tencent WeChat and mini-programs to connect dealers, equipment, and end users in customer application scenarios such as B2B2C, collaborative promotion, and event management. In September 2019, SalesEasy, which once again introduced Tencent's investment, began to deploy two collaborative routes: at the product level, based on Tencent's AI, big data, DMP, call center, QQ channel, and enterprise WeChat capabilities, it built a CRM aPaaS "customer digital platform"; at the sales and marketing level, the two sides conducted more collaboration.

Tang Daosheng, President of Tencent Cloud and Smart Industries, once said: "Tencent and SalesEasy share a common corporate gene, namely 'connection'." To a certain extent, Tencent has the ability to connect enterprises and end customers that SalesEasy hopes to achieve, and then through the connection between enterprise WeChat, mini programs and CRM, it can also enable corporate customers to better serve their C-end consumers.

In the past two years, the intersection between the two parties has also begun to move from cooperation on single-point products to gradually implementing products, businesses, business opportunities and other aspects. This is not only related to the consensus of both parties on the concept of C2B enterprise services, but also closely related to Tencent's own investment in the industrial Internet. If the 930 reform has any changes for both parties, it must be that the two parties have a clearer and more systematic organizational connection.

On September 26, the second phase of Tencent SaaS Accelerator came to an end in Shenzhen, also recruiting 30 companies. The 110 corporate partners shortlisted for the re-examination belonged to a wider range of industries, ranging from general SaaS to finance, real estate, travel, education, medical care, games, retail, industry and other industry SaaS, with a total valuation of more than 100 billion yuan. Salesfunnel is one of them.

Today, Salesfunnel and Tencent are more like an alliance based on an ecological awareness rather than a collaboration.

In 2020, Salesfunnel launched a "dual middle platform" product architecture in the CRM field, namely the business middle platform and the data middle platform, to improve the current corporate demands for improving customer data management and opening up the entire marketing-sales-service business chain.

Obviously, even though it has been cooperating with Tencent for a long time, Salesfunnel still hopes to know more about the Tencent ecosystem and have more interactions with other partners within the ecosystem. This attitude stems from changes in front-end user demands, and the epidemic has completely stimulated the key to this issue.

At the Tencent Global Digital Ecosystem Conference held not long ago, Tencent Cloud Vice President Da Zhiqian pointed out, "Since the beginning of this year, we have found that there are still a large number of B-side scenarios scattered on the C-side platform, such as opening stores and live broadcasting scenarios based on WeChat, and teaching and teaching scenarios based on Tencent meetings. Enterprises doing business based on C-side platforms also need more digital tools to reduce costs and increase efficiency."

Looking at the overall situation, Tencent currently has an absolute advantage in C2B, but how to grasp this advantage and make a comeback in the next industrial Internet era means that it needs to help companies grow on a large scale to become the next WeMall, or even China's Salesforce.

So far, Tencent has released more than 90 solutions for different industries with more than 6,000 partners. For example, during the epidemic, FaDaDa and Feihu Interactive, one excelling in electronic signature and the other in video interaction, had the opportunity to connect their businesses through Tencent SaaS Accelerator and jointly released a solution for the financial industry - Virtual Business Hall. Then, the solution will be amplified by the brand of Tencent Cloud and will soon be implemented in large and medium-sized banks.

For example, the unified identity authentication product Qianfan Yufu built by Yufu Technology and Tencent Cloud enables effective interconnection and unified login of data and accounts between enterprises, while improving the security of the operation of the entire technical middle platform, laying the foundation for the first step of Tencent's ecological technology middle platform.

This means that if the standard is simply annual revenue of over 100 million, it is impossible to define the growth potential of partners in the Tencent ecosystem. It is understood that Youzan also actively participated in the second phase of the SaaS accelerator. As a listed company, its annual revenue has exceeded 1 billion yuan.

Sensors Data, which had no in-depth interactions with Tencent before, has also begun to actively observe Tencent's SaaS accelerator.

Overall, the overall quality of the projects participating in the retest of Tencent SaaS Accelerator is very high, including mature enterprises in the subdivided tracks such as Youzan, Zhiqu Baichuan, Meixin Federation, Weisheng, Yibai Technology, and Tuzhan. Obviously, more and more companies are joining the Tencent ecosystem and are looking forward to completing the acceleration from 1 to 100 in the future.

Zhuang Wenlei described to Leifeng.com the reason why Tencent announced the "V+ Plan" to establish a learning and exchange circle consisting of investors and accelerator company CEOs, as well as a business cooperation circle between investors and Tencent. "This two-way interactive method will be more conducive to the prosperity of the SaaS ecosystem."

It is understood that 11 first-tier VCs that have invested in excellent ToB projects, including Sequoia Capital, IDG Capital, Qiming Venture Partners, Chuangwei, Oriental Fortune Capital, Meihua Venture Capital, Mingshi Capital, Hillhouse Capital, Morningside Venture Capital, Gaorong Capital, and Redpoint China, have participated in the V+ plan. Promoting the construction of the SaaS industry ecosystem with capital + resources as the link and realizing the model of "investment leads to production, production leads to investment" is becoming the next key link of Tencent Cloud Qizhihui Industry Ecological Platform.

IDG Capital partner Wang Xin also gave his view on the potential of high-quality ToB companies:

• First, you need to have a deep understanding and insight into product standardization. For example, you need to know what kind of services to provide to what kind of customers, be able to extract the commonalities of their personalized needs, and then meet their personalized demands based on the commonalities. This requires a high level of product quality. For product operators, they also need to balance revenue growth with product standardization and polishing, and they must make strategic trade-offs.

• Second, we need not only to solve the problem of R&D investment in technology, but also talents in product, sales, brand promotion, etc. Because SaaS is an industry involving the entire supply chain, no SaaS company can win the competition by relying solely on technology. The software itself is a process of function superposition and code implementation, which is more of an engineering problem.

• Third, the long-term strategic determination of manufacturers needs to be able to endure a relatively gentle growth slope. In China's ToB industry, the growth rate of SaaS is unlikely to be as explosive as ToC. It is a long-term compounding business. If you are impatient and only focus on short-term interests, it will be difficult to run a good enterprise service company.

Back to the question at the beginning: What stage is China's SaaS economy in at present? Wang Xin believes that "it is still in the early stages, and the penetration rate of SaaS in many fields is not high. In particular, large enterprises are accustomed to paying by project system, and it will take some time for them to accept the annual payment method."

Perhaps, China's SaaS economy has been accelerated by the epidemic, but the era of breaking the boundaries of enterprise digitalization with processes has begun to need new models to break through. SaaS can be understood as a business model, a delivery model, and a technical architecture. In other words, a sustainable and iterative enterprise digitalization is not a simple stacking application of technology, but a construction result that solves problems for customer business and things.

The good news is that the State-owned Assets Supervision and Administration Commission recently issued the "Notice on Accelerating the Digital Transformation of State-owned Enterprises", which undoubtedly released another wave of policy dividends for the digital transformation and upgrading of government and enterprises. In this context, SaaS vendors, which originally had little say in front of large enterprises, have begun to gain the opportunity to retest (bid) with the help of the SaaS ecosystem.

If you want to follow AI+ enterprise services, break news or seek coverage, please add the author on WeChat: 15135116989