Freemium Business Models

Part
01
of three
Part
01

SaaS Companies in the B2G Space

Key Takeaways

  • "OpenGov sells software, services, and solutions directly to state and local governments around the country, assisting them in transforming how they measure performance, enhance the digital experience for citizens, budget, and engage the public."
  • "For government agencies, GovSpend provides quotes, vendor validation, co-ops, socio-economics, sole source lookup, bid specs, price check, and the ability to search historical spending."

Introduction

Two examples of SaaS companies that are in the business to government (B2G) sales space include OpenGov and GovSpend. Both of these companies provide services to state and local agencies throughout the United States.

Examples of SaaS Companies in the B2G Space

1. OpenGov

  • OpenGov is a provider of modern cloud financial software with the goal of assisting in creating a government that is more accountable and effective.
  • Here is a link to the official website of OpenGov.
  • Information on the company's business model is limited in the public domain, as it instructs interested parties to complete an online form in order to request a demo. It does not appear that OpenGov currently offers a freemium option to potential clients. The company states that it sells "ready-to-go solutions" to governments via its cloud-based offerings.
  • OpenGov sells software, services, and solutions directly to state and local governments around the country, assisting them in transforming how they measure performance, enhance the digital experience for citizens, budget, and engage the public. Its products include OpenGov Budgeting & Planning (budgeting software), OpenGov Citizen Services (solution for licensing and permitting workflow), OpenGov Financials (solution for automating mission-critical fund accounting), and OpenGov Procurement (solution that offers end-to-end procurement automation). Recently, it launched the OpenGov ERP Cloud (a cloud accounting and financial management system), which anchors the company's Citizen Services and Budgeting & Planning suites with its Financial unit.
  • OpenGov provides solutions and services to a variety of governmental customers, particularly state and local level agencies (e.g., administration, community development, finance, finance and accounting, IT, and procurement offices). For state agencies, the company's offerings have been used by health and human services, departments of transportation, economic development agencies, state treasurers, state auditors, state comptrollers, environmental agencies, natural resources agencies, executive offices, and governor's offices. At the state level, its customers include the Colorado Department of Transportation (CDOT), the California Office of Statewide Health Planning and Development (OSHPD), and the Illinois State Treasurer.

2. GovSpend

  • GovSpend is a government spending database that provides government purchasing information, along with reporting and analytic tools. It operates as a countrywide data sharing platform that enables government procurement that is simpler and more efficient. GovSpend is the market-facing company for SmartProcure Inc., the top supplier of government intelligence solutions.
  • Here is a link to the official website of GovSpend.
  • Regarding its business model, the company's SaaS solution is provided to agencies on a subscription basis. However, government organizations are permitted to create a free account with GovSpend. All that is required is that they provide their contact information and the name of the agency.
  • For government agencies, GovSpend provides quotes, vendor validation, co-ops, socio-economics, sole source lookup, bid specs, price check, and the ability to search historical spending. Agencies are allowed to utilize its search engine to explore for a service or product and discover what their peer organizations have saved funds on, while identifying vendors within their area, compare state contracts, "piggyback" onto other contracts, and validate sole source businesses. Furthermore, GovSpend is offering procurement solutions designed for COVID-19 responses for free.
  • GovSpend provides its customers with access to almost 1 billion records of purchase order information, RFPs, bids, contacts, and contracts from around 30,000 government agencies across the United States.
  • The governmental customers of GovSpend include government agencies at the federal, state, and local levels. The database is mostly utilized by government municipalities to locate local vendors.

Research Strategy:

To find examples of SaaS companies that are operating in the business to government sales space, we scanned through the public domain for any available listings of such entities that were published by prominent sources. These included the likes of review and comparison sites, third-party company databases, and solutions guides, such as Venture Radar, The SMB Guide, Crunchbase, CBS Insights, etc. We also searched through the public domain for any reports, articles, and press releases pertaining to SaaS companies offering business to government sales solutions. Using this research path, we were able to identify multiple companies that fit the criteria, including one that provides a free version/account for its offerings. To provide the requested information on these companies, we visited their official websites to review their offerings, business model, customers, etc. Although pricing information was unavailable for any of the companies, we were able to find some relevant details surrounding their business models.
Part
02
of three
Part
02

The Freemium Business Model in a B2G Setting

Key Takeaways

  • Slack has successfully utilized a freemium business model to nurture its product-led growth.
  • The platform is FedRAMP-certified and used by federal and local government agencies.
  • Through a freemium business model, SurveyMonkey has successfully created an organic viral loop for its product.
  • SurveyMonkey is approved for use by federal agencies such as the Department of Homeland Security.

Introduction

Slack and SurveyMonkey has successfully utilized a freemium business model to grow. Slack markets itself as the perfect platform for government agencies seeking to nurture collaboration and teamwork. SurveyMonkey positions itself as the questionnaire and survey software of choice for government agencies looking to engage their civic.

Slack

  • Slack is one of the companies that have executed a freemium model to great success. A freemium model is a key part of the company’s product-led growth.
  • The model has worked well for Slack, making it the fastest-growing SaaS company. Slack’s free version is considered by many users as being more functional than limited.
  • Slack is FedRAMP-certified. Thus, it can be used by federal and local government agencies.
  • Slack positions itself as the perfect platform for teamwork. Slack for government unites all communications, thus fostering teamwork.
  • By having a common place for tools, messaging, and files, Slack helps everyone to collaborate and save time.
  • Slack's predominant message to government agencies amid the COVID-19 pandemic challenges is “Slack is your new HQ.”
  • To market its product, Slack emphasizes the key features including security, external collaboration, unified access through a common platform, and civic tech.
  • Slack also publishes articles emphasizing its suitability for use by government agencies. Moreover, the company has provided a case study of its successful adoption by the department of defense.

SurveyMonkey

  • SurveyMonkey operates on a freemium business model that allows users to utilize most basic tools for free. According to the company, the free survey software offers a good introduction to obtaining feedback besides offering value out of free surveys.
  • Through the freemium business model, SurveyMonkey has successfully created an organic viral loop for its product. As a result, SurveyMonkey is a well-known and powerful online application.
  • SurveyMonkey is an official government service provider. According to news published on the company’s website, federal agencies across the United States can use SurveyMonkey within the compliance of the federal and government contracting laws.
  • SurveyMonkey positions itself as the perfect product for any government or public agency seeking to obtain feedback or conduct any online research.
  • Through questionnaires, government agencies can connect with citizens to receive feedback and input needed to make important investment decisions. SurveyMonkey brands itself as “government survey and questionnaire software.”
  • To market its product, SurveyMonkey has published extensive content focusing on how government agencies can use surveys. The listed surveys focus on topics such as voters’ registration, environmental issues, and internet usage, among others.
  • In addition, SurveyMonkey markets its software to the government agencies by highlighting its suitability for supporting civic engagement through surveys. The company has also provided a case study of use by the Department of Homeland Security.





Part
03
of three
Part
03

Red Hat's B2G Sales Overview

Introduction

This report provides insights into the business case study for how Red Hat successfully sold into both federal and state government agencies. These insights border around how Red Hat's technologies were initially sold to government agencies, how Red Hat's products were sold to government agencies, how it initially acquired the business from government agencies, and how it has maintained its business with government agencies.

Case Study

Overview

Products and Services

Research Strategy

  • For this research on a business case study, we leveraged the most reputable sources of information available in the public domain, including press reports and market research reports, such as Tech Crunch, GCN and Carahsoft.

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