Thursday, May 26, 2011

Find Your Glider Bike - Paths to Successful SaaS Transitions

I am constantly surprised at how much my 4 kids teach me, but sometimes it's really cool!!!

Owen, my youngest is a typical 3 1/2 year old boy, energetic, physical and fearless. He's been riding on a glider bike for the last year, and loves to blast down hills with his feet in the air, scaring the daylights out of his Dad.

For those of you unfamiliar with glider bikes, it's basically a pedal-less 2 wheeler that you propel like a scooter with your feet. I've been watching him scoot around on his glider wondering how he would do with pedals, would he need training wheels at all?? Would he be faster than his 3 older siblings at getting on a "real" 2 wheeler? (they all transitioned from training wheels at ages between 5 and 6, one with virtual ease, one with a few tries and one with 6 months of struggle. )

On Tuesday this week, the answers became clear. Owen said, "can I ride Addie's bike?". I said, OK sure. Owen hopped on, I gave him a little push and he was off pedaling, with the balance already second nature. Amazing, 3 1/2 and riding a two wheeler already with NO teaching, no back breaking run alongs, no leaning the wrong way for balance.

So, what did I learn? First I kicked myself for not having glider bikes for the other 3, oh well. Second I marveled at the effectiveness of learning balance and pedaling separately, and how it eased the transition in a way that training wheels fail miserably at. Third, I learned that the boy is crazy fearless, but I kinda already knew that from his accumulated trips to urgent care and many other sorties in playgrounds and parks.

This episode got me thinking about transitions, especially ISV to SaaS transformations, and how to ease the pain and difficulty. Certainly, doing this requires a good deal of fearlessness and courage to change mindset, organization and tactics, as I've blogged extensively about. However, I think most organizations can find a glider bike or two to help speed the transition and avoid losing organizational balance in the process.

For example, one client of mine who has been incredibily successful with this transition, was already selling their product in subscription mode 90+% of the time. Perpetual to Subscription is a huge and often challenging business problem. However, for this client, it became a glider bike to SaaS. Pricing drives many sales and customer behaviors, my client rode this glider right into the SaaS model.

Another glider bike to SaaS might be your go to market model. Do you focus on customers getting a taste of your product through download or guided demos? This focus on direct product experience can be your glider bike to SaaS success.

What other glider bikes are out there to help speed this business transition? Would love to hear your stories...

In the meantime, we will be shopping for a new bike for Owen this weekend, and hopefully not going to urgent care!!!


Monday, May 16, 2011

Getting Your Head Around Mindset - Driving Succcessful Transformations

I recently finished my blog series on Bridging to SaaS Success, and I've been thinking a lot about one part of that framework, Mindset. I talked about the SaaS mindset, and said, "Mindset is made up of 3 things, orientation, perspective, and focus".

Since then, Mindset has come up in my client work with technology clients, not only in the SaaS context, but in the discussion of transformative selling. Then it was there again in my non-profit work with our local school district and lastly in some work I've started on career transitioning from engineering to marketing. In all cases, my OPF (tm) Mindset framework has proven to be a quick and powerful way to both explain and leverage mindset as a way to understand and drive transformations in belief and action.

The OPF Mindset Framework:
Mindset is made of 3 components: Orientation, Perspective, Focus. In the OPF framework, each of these have a very specific definition.
  1. Orientation - My relationship and adjustment to the environment that I am in
  2. Perspective - My way of regarding/judging and interpreting facts
  3. Focus - Where I choose to concentrate my attention
Let's take a look at a couple of examples.

Example #1, The SaaS Mindset - As I blogged earlier, SaaS providers need to change their Mindset:
  • Orientation from Product to Service
  • Perspective from Spikey to Continuous
  • Focus from Transaction to Relationship
Without these changes, the incentive to drive the organizational requirements for success and the framework to make strategic choices will be flawed. I've seen many cases where ISVs have not succeeded with the transition to SaaS, not because of technical barriers, but because they failed to change mindset and therefore made poor organizational, resource and strategic choices.

Example #2 - Transitioning an educational institution. There has been a lot of talk in our schools about the pressure put on young students to perform to ever increasing pressure and academic standards. Tales of preschoool parents worrying about whether their preschool is the right feeder to the Ivy Leagues is now a cultural meme. Fighting this are documentaries like "Race to Nowhere" and "Waiting for Superman" which document the huge costs to our children and society of this over emphasis on achievement. Locally, I've been working with our elementary school on trying to raise "whole children" and what this means to the community. I believe that to succeed, we must redefine the communities mindset when it comes to their goals of the public school:
  • Orientation - From Curriculum to Learning
  • Perspective - From Achievement to Development
  • Focus - From "Teach to the test" to "Teach for life"
I firmly believe that if we can shift our mindset on our educational goals, we can actually not only raise healthier, happier children, but can actually improve our levels of achievement.

Example #3 - Transitioning careers from engineering to marketing. I work with a LOT of engineers, many who have marketing in their job titles. The #1 thing that separates those who successfully make this transition is those who change their mindset.
  • Orientation - From Technology to Business
  • Perspective - From Details to Big Picture
  • Focus - From Problem Solving to Solution Sharing
Engineers who fail to change their mindset are easy to spot. They have a hard time focusing on scale related business problems and solutions. They get trapped in "features and functions" and can't see the proverbial forest for the trees.

As you can see from above, the OPF Mindset framework can be applied to a wide set of transformations, from organization, to cultural to individual. So the next time you are faced with a transformation that is failing or struggling, step back for a minute and examine the Orientation, Perspective and Focus that you, your organization or team has adopted, and whether it is the right one for success, or anchored in your behaviors and beliefs of the past.

Happy Bridging - Ken

Sunday, May 15, 2011

Tale of 2 Panels- The Cloudy Future Of Enterprise Tech Sales

A couple of weeks ago, I had the privilege of attending the Goldman Sachs Cloud Computing conference in Menlo Park, Ca. Goldman put an amazing group of companies and execs on stage. Particularly interesting to me was the conflict in opinion between the "Selling SaaS to the Enterprise" and the "Empowering the Clouds" panels when it came to the topic of the Enterprise sale cycle and process.

The first panel had execs from Workday, Apptio, Appirio and Zuora. The execs from the first 3, took the position that SaaS has NOT fundamentally changed enterprise sales. I am not a reporter, but the net of their position was, "We are still doing large deals, the cycle is still 6 to 9 months, nothing has changed"

The second panel had execs from PaaS providers Engine Yard and Joyent, and automation PaaS provider RightScale. Not surprisingly, these folks, who tend to target developers, saw that the dynamics have and are changing to shorter, trial and experience driven selling cycles. They see developers log in, code and deploy, and boom, there's a sale. Short, sweet and fast. John Dillon, CEO of Engine Yard was emphatic in declaring that the enterprise sale was coming to an end.

I have blogged recently about the transition from evaluation to experience go to market, and so I definitely lean toward the second panel's view. Successful SaaS and PaaS and IaaS providers understand the power of experience to start, accelerate and end a sales cycle.

Now certainly, many of the SaaS providers on the first panel, rightfully point out that successfully implementing a ERP or CRM or IT Portfolio management Service requires more change within the organization, which is really NOT related to SaaS vs. Software. Change in large orgs comes slowly and with pain. However, Chris Barbin of Appirio did agree that SaaS has shortened the time and cost of prof services in support of these implementations, and in fact is building his business on these types of $100K range projects vs. the old Accenture/EDS style $Ms of dollars projects.

We are in the 5-6 yr of the cloud computing transformation, the early SaaS successes (eg., Netsuite, Workday and Successfactors...) took the enterprise sales model and replicated it with SaaS Services.

However, next generation successes like, DropBox, and those we haven't seen yet, will likely disrupt these first generation successes with new sales and marketing models that fully leverage the power of experience. This, I believe is the future of Enterprise technology sales.

Monday, May 9, 2011

SaaS Go To Market - Why Experience Rules

This is my fourth blog in my series on Bridging to SaaS Success and today I'd like to focus on Go To Market Strategy.

Once we have shifted our mindset from product to service and our organization from linear to circular, we must now bridge our go to market strategy, objectives and tactics from Evaluation to Experience.

Today's customer has little patience for White Papers, datasheets, detailed feature function product specs and the like. They may attend a webinar, but the next step is experience. Even for large organizations with complex buying behavior, the expecation of SaaS is easy, accessible and meaningful experience of the service, either through demonstration instances, trial or freemium models.

In a post in November 2010 entitled, "Meet the New Enterprise Customer, He’s a Lot Like the Old Enterprise Customer" , Ben Horowitz of Andreesson Horowitz concluded;

"If you are selling to consumers or companies that behave like consumers, then moving away from the old channel models may make perfect sense. However, if you plan to sell to a large enterprise, keep in mind that the new boss is the same as the old boss."

And while Ben's point on having to manage a buying process is spot on, this blog has been bandied about by others as evidence that we should cling to the old enterprise sales and marketing model. This interpretation is just WRONG. It ignores the fundamental shift from product to service.

Service organization knows this first hand that services are evaluated via experience, not spec sheets, RFPs and lab evaluation. SaaS providers who replicate and cling to today's software Go To Market model are doomed to LONG sales cycles and MISSED opportunity.

One infrastructure ISV who launched their SaaS offering experienced this first hand. Initially, they continued their sales and marketing model of stringent business and lead qualification before trial approval. For every 100 trial requests, they approved less than 10, with an average qualification period of 2 months. This stringent qualification gave them a close rate of about 2 in 100 trial requests, as 20% of trials closed.

When they experimented with a much loosened qualification, where ~30% of the 100 requests were granted in an average of 2 weeks an amazing thing happened. Their conversion rate per 100 request shot up from 2 to 6, an incredible result, meaning the "less qualified" leads that experienced the product actually converted at the same rate as the previous model. This means that for every 100 leads in the old model, they were throwing away 4 deals!!! Not only that, they shortened their sales cycle, and are now leveraging their SaaS trials to sell their on-Premise solutions as well.

The mindset and tactical shift from Evaluation to Experience marketing and selling can payoff like this in any market segment. However, to reap the full benefits and scale of a SaaS model, providers must take a long hard look at all pieces of the marketing mix, from pricing to channel to promotion and messaging, to competition and company organization.

This brings me full circle to the post that started this series. In order to be a successful SaaS provider, organizations must not only build a great service, but they must shift their:
  • Mindset from Product to Service
  • Organization from Linear to Circular
  • Go to market strategy and tactics from Evaluation to Experience.
With that, the Bridge to SaaS Success can generate revenues, share and valuation that meets and exceeds our most aggressive goals.

Happy Bridging,