Yes, that is it. Since you seem to have questions about the progress, I thought you might find it helpful.
As with any SAAS business, there is a startup cost for each customer you need to bear. Perhaps the GEICO model for Berkshire
is a the way to thing about it - you suck it up for 18 months with a loss on each customer, but keep the average customer for
15 years - and make plenty of money over time, as they upgrade their services. They literally get locked in to the data.
So I see your concern, since DJ is obviously playing the LT game to capture customers first - but it's the smart way to go.
I have NO knowledge of how they compare to the competition - and that is critical. But if the value proposition of DJT actually
does reduce costs significantly over the long term - these products can be very easy to justify. By using the SAAS model - you make it
very easy to test the fit of your product to the customer - many software companies have not moved to the SAAS model because they
want the big license deal up front.
So the appropriate questions to management would be 1) size of the market. 2) pricing strategy 3) Typical ROI
I can't say that they can be cash positive soon - but the contractual commitments of SAAS deals are long and predictable and recognized
month-by-month as delivered. Once the customer is set up, there is very little cost on the vendors part to deliver services beyond
the implementation phase. These can be very profitable deals. You spend a year implementing a system, and collect for another 10 years
with little cost on your part. What matters with these companies is the backlog of signed deals, not the actual revenue recognized.
All of these application software companies have these implementation snafu's - since they are trying to automate your business processes
and everyone has unique requirements. SAAS makes it a lot easier, since the vendor has more control over the implementation.
