If it was shrink wrapped software they would need a bigger sales team, a bigger support team, a bigger professional services team, etc. It’s just trade offs.
That's a really interesting point, and it piqued my curiosity. I decided a pretty fair comparison was Red Hat at the time of its 2005 IPO.[1] Its annual revenue for FY2005 was $278 million, so adjusted for inflation, a little smaller than Asana. (I'm annualizing the last reported quarter for Asana, because of its meteoric growth rate.)
But, still a fair good comparison of the shrink-wrapped software startups of yesteryear to today's SaaS business model. Operating systems certainly seem inherently more complex, so that should handicap things in favor of Asana. Of course, Red Hat is just re-packaging what's mostly developed by external open source contributors. But still, if we're talking about the overhead of support/services/sales, if anything that should make things harder for Red Hat.
In terms of COGS (cost of goods sold), its amazing how close the two land together. 14% or revenue at Asana and 17% at Red Hat. Since COGS includes technical support, it doesn't really seem that shrink-wrapped software is significantly more costly to support than SaaS.
For both companies sales is a major expense item. Still Red Hat's model seems to have a handy advantage. Its "only" paying 32% of revenue to sales, whereas Asana is paying a whooping 76% of revenue to sales. To be fair Asana is achieving a much faster growth rate than 2005-era Red Hat. Still, there doesn't really seem to be any clear sign that shrink-wrapped software is more expensive to sell than SaaS. At least in the enterprise space.
However with R&D costs the discrepancy's pretty clear. In 2005, Red Hat was spending 16% of revenue on this line item. Asana triples this rate by spending nearly 50% of revenue on R&D. And again, ipso facto it certainly seems like Red Hat is developing a much more complex product.
I've been involved in debugging a bug in a software that occurred on Kubernetes cluster at the client site but couldn't be reproduced locally. Reproducing that is so much harder than a similar software installation. You have so many moving parts that it's pretty much impossible to create a test cluster with the same properties.
Also, with SaaS you can get access to log files, if it's installed on prem that can be heavily restricted by regulation.
