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Phases of Software Licensing and What They Mean for Startup Growth

By Michelle Amodio, TMCnet Contributor

There are many business cycles, but software as a service (SaaS (News - Alert)) startups tend to go through two basic phases over the course of their healthy development—the Wildfire Phase and the Maturity Phase—according to the folks at Flexera Software. Neither phase is superior to the other nor is one more important than the other but differences during both phases can either make for unheard of success or simply spell doom for an SaaS company if the context of its growth is not fully understood.

The Wildfire phase is a the point in the lifecycle of an SaaS where they are concerned with grabbing the largest portion of the market that they can, often ignoring the opportunity to optimize profits in lieu of focusing on expansion; they also prioritize gaining a larger customer base and developing a brand that is known for its simplicity and ease of use, so as not to scare off potential customers with minimal abilities to interface with the SaaS.

The Maturity Phase is when the SaaS company changes its strategies to offer more diverse products or several tiers of service. If the brand recognition is significant enough, licensing might be one of the important strategies to help monetize the brand.  Longer contracts come into play, and since the products are more robust, the SaaS company has to think about long-term technical support for its customer base.

It is important to remember that each phase is important:  excessive growth in the Wildfire stage that is unsupported can lead to severe attrition in the Maturity Phase and prohibitive fees or unnecessary complexity of the product can inhibit growth during the Wildfire Phase.  Similarly, confusing offerings or bundles during the Maturity phase can turn off steady customers, as can tech support that is unavailable or slow to make patches and other updates.

It might seem like these are two discrete phases but the transition is very diffuse and can take a long time; even those within the company may not notice and suddenly wake up to realize that their whole strategy has changed, even part of the identity as a SaaS company.