(June 2012 – A quick note and update: While I originally wrote this series in early 2011, today it seems both slight dated, but also more relevant than ever. While I still see packaged software vendors, nearly 100% now have significant SaaS/PaaS and IaaS efforts underway. It is without a doubt the future and it is here. However, many managers still have not fully understood the nuance of this transition, and are still operating with product mindsets, linear orgs and evaluation based go to market tactics. This makes this post and series more relevant than ever. I hope you find it helpful and informative…)
I see a lot of ISVs launching SaaS services, that’s great. However, many of these initiatives fail to attract leads and customers in the volume expected, resulting in management, market and shareholder disappointment. Why is this?
While organizations spend a LOT of time understanding the technical transformation required to build a SaaS service, they fail to understand that this is just the anchorage of the transitional bridging they must do. In order to gain share and revenues they must deal with the remaining pieces of the bridge to SaaS success, which are their mindset, their organizational structure and their go to market tactics. Let’s take a look at a basic blueprint for bridging to SaaS success.
Mindset – P-> S: Product to Service. Services require a mindset of continuous relationship management, not of spikey product delivery and transactions. Changing your organizational mindset is the next step to SaaS success. Read more about Mindset transitions here.
Organization – L-> C: Linear to Circular. Today’s ISV structure is built to deliver products in a build and sell mindset. Even organizations that have adopted Agile SW development paradigms still go to the rhythm of minor and major releases, quarterly sales cycles, etc. Lead to sale to renewal. All linear processes. Successful service organizations are circular, they surround the customer with experience, support and delivery from the time of first contact onward. Read more on surrounding the customer here.
Go to Market Tactics: E -> E: Evaluation to Experience. Today’s go to market mix, pricing, channel and promotion is built to drive evaluation and transaction. Successful service go to market requires a shift to tactics that drive experience and satisfaction. Successful SaaS organizations shift their go to market tactics and investments and become experience, not product marketers. Read more on driving your marketing and sales Velocity with Experience here
Are you catapulting or bridging?
If you know where your going, but fire away without preparation and work, you are catapulting not bridging. Even SaaS start-ups can fall into the trap when they build their organization and tactics with people who are not transitioned to this new world themselves. Catapulting leads to poor execution and results. So start today by looking to see if you have bridged to a SaaS world or have catapulted without changing your mindset, organization and go to market tactics.
Great post Ken. Difficult for any organization to change. Much easier to start from scratch – perhaps as a spin off, or to functionally split the execution teams at least for a time on the new vision for service delivery.
The other risk I see is that we have a Product mindset in the valley. And when you hire a bunch of classically trained valley people, they bring that mindset, org structure, tactics and KPIs from that world. So even startups look like product not service companies…
KJR, your framework is great for this discussion, as it crosses many disciplines. Nowhere is it more apparent then in Sales. We sold our SaaS company to a product company and the clash between the selling cultures, goals, objectives, techniques, etc. created shockwaves throughout both product and service delivery organizations. At the end of the day, the customer wanted the same thing – whether they bought and built or subscribed to our SaaS offering. Thank goodness we had enough runway (about 3 years) to get our collective act together.
In my 20+ yrs of experience, sales is ALWAYS the hardest integration in an acquisition, but then you add Service V. Product, and wow, you've go a mountain to climb…