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Rather than piling on Amazon…let’s talk SaaS mindset

July 3, 2012 Update:  I wrote this post over a year ago, in April 2011, when Amazon had a significant outage.  In the wake of this weeks outages, I thought it was worth reposting…)

April 2011:  The easy thing to do today would be to pontificate about the Amazon outages and the impact they had on service delivery for a wide range of SaaS providers…but you don’t need this blog to do that, it’s old news now (4 days later!). Instead, I’d like to use this as a great opportunity to talk about what I call the SaaS Mindset.

Last week, I blogged here about bridging to SaaS success and said that you have to change not only your product to a service, but you have to change mindset, org structure and go to market tactics. Today, I want to talk about transitioning from a Build and Sell mindset to a Market and Deliver one.

In our last 20 years in the tech industry, we’ve been in what I would call a Build and Sell mindset. Now that we are selling services, we must transform to a Market and Deliver mindset.
Mindset is made up of 3 things, orientation, perspective, and focus. In order to make this transition, we must get all three of these in alignment.

First and foremost, we must shift our orientation from product to service. Products, even software products, are tangible things to be purchased, installed and used. Services are experienced. This fundamental shift ripples through everything else we need to do to succeed with SaaS. Maybe all you Product Managers should change their name to Service Managers. When I worked with AOL, with their many flaws, one thing I noticed was their maniacal focus on “The Service”. The words had almost a mystical quality and permeated their mindset.

Second, we must shift our perspective from spikey to continuous. Products are built, shipped and sold as discreet widgets, which leads release schedules, sales quotas and customer relationships that are “spikey” by their very nature. Services are always running (hopefully:), and always under evaluation and subject to churn. Customers make a continuous buying decision and their ongoing experience is what drives long term value. Providers who understood this went the extra yard to be ready to drive continuous delivery despite Amazon’s challenges. A great example of the right mindset driving the right investment.

Third and last, we must change our focus from transaction to relationship. Great product companies have always understood this, good ones not always. There is no missing this continuous mindset with SaaS, it’s a must have. In the enterprise software world, transaction is king. Large investments create both economic, organizational and personal committment to decision well beyond healthy levels. Buyers love SaaS because it raises the bar on providers to deliver real service levels, and lowers both real and perceived switching costs. I know their are plenty of Amazon customers looking TODAY at alternative service providers. This is a wake up call for Amazon if they should choose to compete for mature and enterprise customers, they need to raise their relationship game significantly.

How does your organization’s mindset stack up for SaaS success? What action plan do you have to get a Service orientation, perspective and focus to permeate from Dev to marketing to sales and support???

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