Surround the Customer - Why You Must Rearchitect Your Organization for SaaS Success

Continuing my blog series on bridging to SaaS success, today I want to talk about transitioning from a linear to a circular organization architecture. Once I have adopted a SaaS Mindset, the next think I need to do is build the supporting infrastructure to SaaS success. In this context, your infrastructure is made up of your people and skills, your domain expertise and your organizational approach.

For the time being, let's assume you've built/hired the technical skills you need, and you are sticking to your domain "knitting", in other words you are an EXPERT in the needs and solutions you deliver and you are not simultaneously bridging to a new solution space as you move from product to service. If you lack the skills, then get them, if you are jumping domain AND delivery models, well, good luck, you'll need it.

OK, now that we have that out of the way, let's talk organization. Today's organization and its interaction with customers looks like this:

It's linear, with sporadic customer contact. The product mindset we discussed in the last post is spikey and transaction oriented, and the organization's linear structure is perfect to support this mindset.

But, as we move from a product to a services model and mindset, the organization must reflect the continuous and relationship oriented mindset we've adopted.

The organization must be circular, surrounding the customer and look like this:

Because services are about experience, to truly optimize our experience delivery, we must collapse our organizations and surround the customer. Sales and Marketing, Dev and Ops and Support and Delivery must function as a tightly knit ecosystem, enveloping the customer in the highest quality service delivery possible, continuously.

This is a HARD transition to make, it requires executive commitment and drive, and constant attention. However, market leaders MUST do this or they will fundamentally remain a product company, which is the kiss of death for any SaaS provider. Marc Benioff was wrong when he said the "End of Software", he should have said the "End of Products".

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???

Bridging to SaaS Success - A Basic Blueprint

(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.

Happy Bridging
Ken

Nimsoft, market disruptive again???

See for yourself, but my biased opinion is that Nimsoft has done it again. Their Unified Manager delivers the integrated IT Service Assurance and Service Management that leading IT Depts have been striving for for years. Instead of bubble-gumming a couple of products together through loose integration, this is truly a single, unified product.

And in true Nimsoft fashion, it's ready for all the change that can be through at it, or what Nimsoft calls, "Modern IT" . Tom Grubb and the mktg team even put together a nice little animation which has quite a few subtle and not so subtle digs at the giants of the business... Nice!

Read about it at www.Nimsoft.com . On a personal note, I'm blogged in the past that positioning should be "built to last", and Nimsoft has built on the work we did 2 yrs ago, and it has served them well... and continues to do so...

Looking for Built to Last Positioning with Kick Ass High Impact Launch? For you, your friends, investments or clients? Let me know!

The 4th C, Sil Valley Product Camp Style

I had the honor to present to the Silicon Valley Product Camp yesterday. Amazing event, over 600 Product mgrs, mktrs and related folks. Had a packed room of about 40 or so in the room, very positive reception, except for a few engineers who thought I was going to talk about how to build SaaS apps, not the Go To Market of them.

Anyways, I've taken the BackofTheNapkin drawing approach to this preso, and I even think I now have an "iconic" drawing of GTM in the Cloud Era...

One attendee tweeted it best, "I've seen the future of Go To Market, and it's circular". Also, a bit an epiphany, this is all driven because -aaS offerings are SERVICES, not products. But our Go To Market mindset is a product one.

So without further ado, here's the link, enjoy!

Over and out...Ken