I don’t like the word “disruptive” when talking about new technologies and their impact on software vendors. We have been working with ISVs and their partners since 1992, starting with mainframe and mid-range solutions, then client-server, thin clients, the ASP blip in the late 90s, and now SaaS. We see these changes as a continuum, with new platforms to deliver benefits to the end user.
In fact, this continuum seems to have come full circle – 30 years ago mainframes provided massive storage and compute capability, logical partitions (VMs, anyone?) and load balancing. Timesharing companies such as General Electric Information Systems offered timesharing services to smaller users who couldn’t afford their own mainframe. The more things change the more they stay the same, and the tech community has always been able to adapt to advances in technology.
With SaaS, though, I am almost willing to use the word “disruptive” to describe the impact on organizational structures. The traditional software company is organized along well-defined functions:
Product development comes up with the great ideas and solutions and sends them on to marketing
Marketing creates awareness, generates leads, which are then passed along to sales for follow up.
Sales walks the prospects through the closing process, inks the deal and turns the client over to support.
Support nurtures the relationship to ensure satisfaction, and hopefully help drive more revenues.
In many companies these functions really are silos, with little communication between them. Getting sales and marketing to work together can be enough of a challenge, never mind getting collaboration across all four areas!
Many of the software companies we help to transform their business models to succeed with SaaS solutions find that this structure is unworkable. Developing, marketing, selling and supporting a multi-tenant solution creates cross-function dependencies that very few companies are prepared to deal with:
- Product development has to reduce support requirements by building support capability into the SaaS solution itself, for example, building user analytics into the product to learn how users interact with the product, and where they run into problems;
- Customer support increasingly relies on automated support platforms that can capture client satisfaction, or dissatisfaction, with specific functionality. This information is fed back to product development, to improve the next version of the product, and to marketing, to help sharpen the value proposition;
- Marketing is taking over many phases of the sales process through marketing automation and lead qualification. This means that sales gets involved much later in the process;
- Product development needs to make it easier for a salesperson to close a deal, often by developing a simpler, standardized deployment that takes the cost and complexity out of the implementation process;
- Customer satisfaction starts during the onboarding process, putting more responsibility on sales to provide a seamless hand-off to customer support.
For many on-premise ISVs this will be disruptive to their organization because it is almost impossible to do it incrementally. People don’t like change and the biggest barrier to a successful SaaS business model is the internal resistance to do things differently.
Some companies have successfully re-engineered their entire organization, and have found that the transformation has had a positive impact on their on-premise business as well. It requires a cultural shift, becoming a customer-centric services organization, and all of the changes described above make them a better company.
Others have found they simply can’t change the current culture or organizational structure, so they have set up a new business unit, with its own product development and a separate sales and marketing team. Customer support is the one function that can be modified to accommodate the SaaS solution while still taking care of existing clients.
Three simple ways we can help you
If you should have questions about reorganizing your organization or any aspect of transforming your business to the Cloud, I would like to offer you three ways of getting answers very quickly:
- “101 Questions to ask about your Cloud business strategy” ebook. We get a LOT of questions. This FREE download has the questions we get asked most often.
- Do you have a specific question or two? Well then, let’s talk. CLICK HERE to set up a phone call. It’s free.
- Want to discuss and gain guidance on specific issues, we make special 90-Minute Advisory Sessions available.