In recent years, the software as a service (SaaS) market has exploded. A recent report suggested that it will be worth $53.5 billion in the U.S. alone, by 2018. Across the Atlantic, Simplify Digital has expanded a service which six years ago offered price comparison services to television, broadband, and home-phone customers, to become a multifaceted firm with revenues rising up to 100% per year.
Simplify Digital began life back in 2008 as a proprietary sales platform selling directly to customers via an online portal, call centers, and face-to-face custom. CEO Charlie Ponsonby had worked on an acquisition at Sky of a broadband retail business, the previous year – and saw an opportunity to found his own, better customer advice service.
“To create a service that simplified these complex and confusing offerings, we needed to create, not only an online retail proposition, but also the ability to engage customers over the phone,” says Ponsonby. By 2011, that service was upgraded to incorporate other clients, and by this year the company had become a fully-fledged SaaS provider working across multiple verticals.
In December 2007 Ponsonby raised a total of $7.6 million in four investment rounds. The investment team packs some serious weight in Simplify Digital’s market: “Jon Moulton, chairman of Better Capital, is our lead external investor, along with a group including Lord (Clive) Hollick, David Verey, ex-chairman of Lazards; Lord Stevenson, Tony Bloom, chairman of Cineworld, and Tony Ball (ex CEO of Sky and ex Chairman of Kabel Deutschland).” For the past three years Simplify Digital has been profitable, and growth and investment have been funded by cash-flow.
Revenue in 2014 is expected to be $43.3 million, up from $26.7 million in 2013 and $12.5 million in 2012. Net profit this year is forecast to reach $4 million, though that adjustment is arrived at after the spending of $3 million on R&D, which the company has increased steadily since its inception. R&D costs were 2% of revenue in 2012, 5% in 2013 and 7% this year.
The company offers customers its SaaS product at two key junctures: first, as prospective clients weigh up the market and make decisions on providers. Secondly, as customers reach the end of a deal, or consider upgrading their existing services. Simplify Digital’s range of in-store, online, call center, and mobile analytics allow customers ease of use, and sales staff a raft of easy-to-access database information. Its analytics are laid out in simply, colorful styles that allow customers to make choices based on the unique details of their home life.
Simplify Digital’s integration with provider CRM systems allow sales teams to quickly identify shortcomings in the competition, locate the option best for his or her customer’s lifestyle, and to enable a switch, retention, or upgrade with minimum effort. There are around 6.5 million switches in the U.K. per year, which equate to over $1.7 billion in marketing costs for TV, broadband, and home phone providers.
With cash-flow healthy and revenue growing exponentially, what next for Ponsonby and co? “Our key strategy is to continue the focus on our SaaS business – deepening our client base within the UK TV, broadband, and home phone vertical – and developing our technology infrastructure to allow the rapid roll out in other verticals, e.g. energy and mobile telco, in 2014-15,” he says. Simplify Digital’s energy proposition launches in September this year, and will allow energy switching on a mobile device. As SaaS grows, Simplify Digital appear to have ridden the market’s biggest wave.