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Learning to Love the ASP Model By Allen Bernard April 1, 2002 If an ASP strategy isn't a successful business model to pursue nobody told e-learning management solutions provider Saba. Since launching its ASP Edition two years ago, the company has picked up 45 customers; not a staggering amount, but its client list reads like a Who's Who list. Recent ASP converts run the gamut from electronics retailing giant Best Buy to software giant Cisco Systems. Its remaining nonASP 144 customers include household names such as General Motors, the U.S. Department of Justice, the Principal Financial Group, Proctor & Gamble and familiar names. Why Saba Succeeds So what does Saba offer that all of these widely disparate corporate and government entities need so badly? The Redwood Shores, Calif.-based company provides a learning management program that interfaces with off-the-shelf back office software, allowing corporations to track who is learning what, from whom, when and where. Maybe it's not very sexy, but obviously, based on Saba's customer wins, it serves a niche among the Global 2000. Since its founding in the garage of former Oracle executive Bobby Yazdani in 1997, Saba has grown to become the No. 1 supplier of software in its category, according to analyst firms Gartner and Meta Group. "The niche we saw is companies need to have an efficient way to track and deliver learning of all forms to their employees and also to their customers, partners and suppliers," Kim Woodward, Saba's vice president of Marketing, told ASPnews. "Just as companies evolved to using fully integrated financial systems where they used to use a payroll system, spreadsheets and other things separately, the same evolution is happening with learning events; it's just that the application is different." Prior to Saba, there was no such tracking software. The best a company could do was e-mail spreadsheets around to track what classes where being attended by whom or rely on other, usually manual, means of tracking their employees on-the-job training and certification efforts. To make the life of its customers easier, Saba's solution also comes with a built-in billing engine and tracking software that keeps up with each employee's training needs, even going as far as recommending what modules should be taken next. And, because Saba offers no content services, their package works in conjunction with other e-learning providers like Centra who do offer those services. "We offer the platform," Woodward told ASPnews. "What Centra offers is the ability to attend live learning events online. We provide the back-end tracking and infrastructure platform capability to handle all of that. Centra handles the live, distance learning sessions." For its new Saba Live offering, the company has partnered with Web-based collaboration ASP Placeware to provide the "live" part of its offering. Saba will do what it does best: provide tracking and meeting infrastructure services. (See PlaceWare Beefs Up Core Conferencing Architecture.) Meeting in the Middle Like many independent software vendors (ISVs), Saba started with its eye squarely focused on selling a licensed product to the enterprise market. However, more and more small and medium-sized enterprise (SME) customers began hearing about Saba's offering and contacting the company, only to find out it was too expensive or too much of a solution. The company decided the best way to meet the needs of this unanticipated market segment was to roll out an ASP version aimed specifically at the mid-market. Since then, the number of ASP customers has been climbing steadily. The company is also experiencing a fair amount of duel sales as companies buy the ASP version to ramp up quickly and economically for some tasks while deploying the in-house version to handle broader needs in other areas. Best Buy, for example, used Saba's ASP solution to quickly educate sales associates about the upcoming Christmas season, while deploying the in-house version of Saba software to handle on-going training needs. The difference between ASP and enterprise solutions is that the ASP offering has the breadth of capabilities, but not necessarily the same depth as the enterprise product, which has features such as multi-language and multi-currency capabilities, said Woodward. Today, 15- to 20-percent of the company's business comes from the ASP model. In 2001, the company's ASP business increases 275 percent. In real terms, these are not huge numbers — the company added only six ASP customers in its second quarter of 2001 — but the trend towards its hosted solution is growing, said Woodward. Selling Saba To facilitate all this growth, the company has relied on traditional direct salespeople at the enterprise level and, somewhat surprisingly, telemarketing sales for its ASP offering. Value-added resellers (VARs) such as Sage, an e-learning provider serving the financial industry, add to Saba's bottom line by acquiring more and more seat licenses as their business grows. Ultimately, the secret of Saba's success isn't its ASP products; it's being in the right market with the right offering at the right time. But, without its ASP offering, the company may have never been able to grow beyond the Global 2000. "ASP is important because while we maintain our focus on the Global 2000, we don't want to loose the mid-market opportunities. It's a way for us to keep a foot in both camps," Woodward said. Do you have a comment or question about this article or the ASP industry in general? Speak out in the ASP Discussion Forum.