A lot of the companies that I talk to who are considering some sort of SaaS (Software as a Service) strategy – seem to be missing one important aspect: the Service part of the equation.
They have the first part: software, and they’re usually pretty good at it (or they would have been out of business a long time ago). Even if their current tool is lacking (and 99% of the time it is – and thus why I’m talking to them) they generally have a good idea of where they want to go – and most of them want to get into the SaaS business in some way.
So, they focus on the things that they have done the best in the past – plan what parts of the software will be ported to the browser, and what the “user experience” should be, and they have a good idea from their customers on what they would be willing to pay, etc.
But they generally miss one important aspect – the service aspect.
This is something that’s easy to overlook – because, after all, one of the reasons customer like the SaaS idea is because of the low barriers to entry, the lack of having to install and maintain software, the predictive pricing, etc. But what happens when one of these users gets stuck? What happens when (not IF, but WHEN) the service goes down? What if someone wants some kind of customization? What if this all happens at 2:00am from a customer in Europe?
The important part of any SaaS offering is the service part – and I would argue it’s just as important as the actual software part, and how a company deals with customer service and technical support becomes really focused when there’s no one else to blame.
It’s not running on their hardware – so they don’t need to “get the latest service pack” – or “uninstall the latest service pack.” There’s no client-side software (usually) – so there goes the “it’s conflicting with something on your computer” portion of the excuses. In general, all the “good excuses” for flawed software or a crappy customer service experience just go away.
To be fair – the expectation of service is also tied to whether or not the offering is free or not, as well as how front-line business critical the application is. The more expensive and business-critical to a customer who is trying to get their work done it is – the higher the expectation of good service becomes.
People also recognize that you get what you pay for. If you are using the free version of Google Apps – and the service goes down – you’re not only S.O.L. – but you really can’t (shouldn’t) bitch about something you’re getting for free.
On the other hand, if you’re paying Salesforce.com $125 per user per month – and their service goes down – and your whole business comes to a halt as a result… that’s the time when the service portion of the program comes into play.
Remember: it’s really about how you handle the communication and support when things go wrong that stick in people’s mind. Even if you have 15 straight years of up time, they will be screaming and yelling when the site goes down for an hour.
So, be prepared. Think about how to provide excellent customer service, excellent technical support and still make a good profit. Don’t be afraid to have different tiers of support – and have a strategy to provide SLAs (Service Level Agreements) to customers (for an additional fee, of course).
Regardless of your SaaS strategy from a technical point of view – don’t forget to cover your aaS!
I just love it when Steve Ballmer, CEO of Microsoft, opens his mouth in public. He nearly always says something that is either outrageous, stupid, embarrassing – or all of the above.
This week was no different. He was doing a webcast interview at the Gartner symposium (the equivalent of their “user’s conference) and if you watch the video – about 24 minutes into it he tries to completely dismiss Google Apps saying it’s not even in the same league as Office.
He cites one example: “you can’t even put a footnote in a document.” And, that was the case. Until two days later.
Yep, Google added that feature and rolled it out to its more than 1 million users within 48 hours of his comment.
On one hand you have the largest software company in the world – one that is battling the irrelevancy question of their operating system by throwing money at it – and here’s another huge software company with a pure SaaS (Software as a Service) offering that is just proving that they’re more nimble and in touch with customers while at the same time proving that Microsoft isn’t.
You just gotta’ love it. I mean really. If that wasn’t the biggest bitch slap I’ve seen in a while – it was close.
The other bitch slap came this weekend while I was watching some prime time TV. I got a glimpse of the new Apple “I’m a Mac” ad – this one feature our dynamic duo – but this time PC is wearing an accountant hat and counting money into two piles – one for “advertising” (with an enormous stack of cash) and one for “development” that has a tiny pile of cash.
Ooops. Looks like poor little Microsoft is getting picked on by the “little” guys – big time. There was a time not too long ago that no one would dare take on Microsoft (at least that publicly) for fears that Microsoft would just buy them and kill their technology.
As Microsoft gets ready to debut Windows 7 (which Steve admitted is Vista [again] – but “better”) – they better get this one right because it seems that the world is getting to be a pretty competitive place where just the mention of “Microsoft” doesn’t carry the same weight as it once did.
Most executives in most companies are really freaked out right now. It sucks to be the leader of a company right now – and it sucks to be the head of departments – because the buck’s gotta’ stop somewhere. In this case, crap flow UP hill.
The economy is in full meltdown mode, and lots of people are losing lots of sleep – and are self-medicating with booze (at least someone is making money in the downturn!).
It’s easy to get caught up in the general panic and malaise – and therefore lots of people are reacting to what others are reacting to – not the realities of the day. The herd mentality is ruling the average business person rather than the facts – and it’s kind of pissing me off.
I’m all for cutting costs and watching expenses. I’m all for trimming the “dead wood” of non-producers out of the workforce. I’m all for delaying “luxury” purchases until the smoke clears out a bit. I’m all about watching travel and entertainment expenses and cutting marketing programs that don’t produce tangible results.
However, I’m totally against just cutting for cutting sake. Some companies are just going absolutely nuts – cutting 20% to 50% of their staff; stopping all marketing; etc. They are “cutting to the bone” in order to go into “survival mode.”
In fact, Sequoia capital came out early and hard – as documented in the Om Malik blog basically telling all of their portfolio companies that “Cutting deeper is the formula to survive, and this is an era of survival of the quickest.”
As a result, a bunch of their companies shed anywhere from 30% to 50% of their staff – even though they were (are) cash-rich. Maybe in those cases it was a case of hiring some “fluff” people or just the giddy feeling for an upstart entrepreneur that you don’t have to do everything absolutely by yourself anymore… I don’t know.
In any case – you have to carefully weight the “costs” associated with cuts in terms of your current sales, current customers – as well as what it will do to your chances of thriving when (not if!) the economy returns to its “full glory.”
In the spirit of not throwing the baby out with the bath water – here’s some questions for you to ponder if you’re thinking about massive cuts in your company:
- If you just up and layoff a bunch of people – what will that signal to your current customers?
- What about people that are evaluating your product for possible purchase – how will they view massive cuts?
- How long will it take you to replace that person/function when things get going again?
- Can you really afford to stop all your marketing? What will happen in 6 months when the current flow of leads dries up?
- How will you continue to make enough money to keep even your “reduced” company going?
- How will you mitigate the inevitable drop in productivity and morale with the people you don’t cut?
Sure – there’s the herd mentality and things are clenched up at the moment. And, it very well be that there are cuts you could make (and SHOULD make). Just be sure that you’re not throwing out the future of your company – and something you’ve worked very hard at (and invested your retirement in) for a number of years - over a short term panic in the marketplace.
Hopefully, the “sliver lining” in this economic mess is that we’ll have stronger, smarter, healthier companies come out as a result of these difficult decisions and (sometimes brutal) cost cutting.
I tried – I really did. I wasn’t going to blog about Apple today – but after I put out a “status update” on the social media sites that I wasn’t going to blog – I got some Mac-type fans asking me to do so – so… here goes.
First of all – either Apple is unclenching a bit – or their security really sucks – because most of what they announced today was pre-announced by all the gadget sites last week (for a good view of the event today – check out Engadget’s coverage).
They did a “refresh” of their entire laptop line – new MacBooks, new MacBook Pros, and a refresh of their 17 inch and 24 inch Cinema displays, and they’re really, really proud of a new “unibody” construction process.
YAWN! There was one bright spot – they’ve replaced all the trackpad with a new, bigger, glass “touchpad” that is gesture-aware. This means that you can now give Apple “the finger” multiple times per day. But seriously, you can use 2, 3 or even 4 fingers to map gestures to common commands. And rather than having buttons to click – the holetrackpad is a button. I’m not sure how that will work with click and drag… but I have to assume they worked it out somehow.
They added a new NVIDIA graphics chip to increase graphics performance “…up to 6 times…” – and they knocked $100 off the low end MacBook.
Everyone was hoping for $200 – to make the thing $899 – but I guess they really, really wanted that extra $100 per unit. It makes sense if you stock fell 40% in two weeks… but really – $100?
To be fair they knocked off $700 from the next-from-the-bottom MacBook – new price $1,299… but the one that people will actually want (with a bigger hard drive and backlit keyboard) is $1,599 – so, in reality, they only did a $200 cut there.
So, it’s interesting. They’ve cut the price points a bit – but in my mind they should have cut them a bit more. If they could have hit the $899 level for the low endMacBook and then priced the next one at $1,199 and the “feature-packed” one at $1,499 – I think people would have just flocked to the stores.
It’s only $100 per unit (and I don’t know their costs on the thing – but I’m guessing they still have a pretty nice margin) – but the perception by consumers would finally be that Apple “gets it” when it comes to pricing.
As it is, at least they’re consistent. They’ve trimmed a little bit of the price, but if you compare it to other hardware – and the new ultra-cheap “netbooks” – they’re still in the elitist, don’t-care-if-there’s-a-recession, standard Apple pricing mode.
Which is good – if you’re Apple.
Over the weekend I was continuing my thoughts about how companies are going to face the “interesting” economic times ahead. For sure they’re going to reduce expenses and try to maintain or even boost sales – that much is obvious.
The other part of the equation, of course, is keeping on keeping on doing what they do. That takes an orchestrated effort of getting the most out of their people and processes. In order to do that – it will require that folks take a look at what they’re doing – and being able to do it better and with more efficiency.
If you sum it all up into a single term – that means that everyone will want/need to be more productive. More productive, and therefore more efficient, in all aspects of their business. This means that the salespeople need to do better – but it also means that product development, customer service, support, marketing and all the other moving parts be enabled to do what they do – better, smarter and faster.
Then I came across an article in CIO Insight that talked about Business Process Improvement (BPI) – and it just confirmed my thoughts and gut instincts:
The top drivers for improving processes were quite similar during good times and bad, but IT executives signaled more urgency during more trying climates. For example, during good times, respondents cited productivity boosts as a top overall goal for business process improvement: 34 percent for companies with less than $500 million in annual revenue; 24 percent for companies making $500 million or more.
During a downturn, however, that number skyrocketed to 73 percent across all companies. Similar spikes were seen in other drivers, such as reducing costs, increasing revenue and keeping up with competitors.
So – that’s all good and everything – but what the heck are you supposed to do about it? The answer is: technology.
When you’re forced to more with less the only way to do it – is with smarter, better, more flexible technology – because at the end of the day – there’s still only 40 hours in a work week.
That means that NOW is the time to “fix” those processes that are “broken.” If you have internal or customer-facing systems that aren’t up to snuff – it’s time to take a look at where you can get the most “bang for the buck” – and change/enhance those systems.
Those changes can be small, or be large, depending on where you want to go with your business. It might mean additional reports to give managers more real time information into how the business is functioning – or it might mean adding aSaaS (Software as a Service) offering to your customers who want to “rent” rather than “buy” your application.
Either way – you need software tools that are flexible, fast, scalable and allow you to take advantage of multiple delivery methods (native client, browser, mobile) – with as little re-coding as possible. The last thing in the world you want – especially now – are tools that are complex, hard to debug and slow to roll out.
The key is to get these improvements in place quickly. It’s not going to do you any good to start building stuff that can’t be in the field within 2-6 weeks. Granted, if you’re re-writing your core application to addSaaS capabilities – it’s not going to get done in that time frame, but for other, internal applications those are the time targets you need to strive for.
If you are going to add a SaaS offering – try to offer a “lite” version of your current main application. This will allow you to potentially add to the top line growth by getting new customers into yourecospace . It will also allow your smaller customers the ability to stay with your software rather than jumping ship to a competitor who offers a more slimmed-down version of the same basic functionality and meets 80% of their needs at a much lower cost.
It’s time to have a sit-down with your folks and discuss where things are “broken” – and to come up with ways to maximize their productivity (and hopefully make their jobs easier). The last thing you need in a down economy is unhappy, overworked, frustrated people on your team. Now and for the foreseeable future – it’s all about productivity.
Bob’s Note: My wife posted a great piece on pricing today on her blog – and I thought it was so good that I’ve re-printed it here in it’s entirety. For those of you who don’t know her – Brenda has an MBA and has been doing marketing and consulting for years. This article was originally posted on Marketing FlyTraps just this morning:
How do you price things — and keep your profit margins as plump as possible in a recession? I like to call my concept “Blue Stove” pricing.
Allow me to explain. Nordstorms – that upper crust store, aimed at selling shoes (and other stuff) to women, is smart enough to know that they need to feed us women while we shop. In the past, they have offered an excellent cafe or bistro within their stores – keeping us with in the store to eat, so we can shop again. It was convenient, had excellent food — and while not as cheap as going outside the store — it wasn’t Soooo expensive that you were willing to drive somewhere else.
But now comes … *dum – dum – dum* (cue the recession…) and women are watching their pennies (we want money to spend on shoes…not food).
So recently, Nordstroms introduced a “pairing” restaurant. Its called “Blue Stove”. The restaurant literally has a blue stove. The “pairing” menu means they offer “little plates” of delicious food — priced very reasonably (most are about $5* Actually, they are priced at the .95 cent mark — this is called psychological price breaks…I’ll write about that in my next blog…) and are meant to be shared. For example, a little plate of chopped veggie salad. A small platter of chicken wings – seasoned and cooked to perfection. They can be “paired” with a glass of wine – from very reasonable price ($6/glass) to more expensive($20/split of champagne).
So what, you are asking, does this have to do with pricing my software or my consulting services? Well — in a recession, we ALL become nervous about our income. Our cash in the bank. We want a bargain, and we want to be conservative.
Your customers do too.
RIGHT NOW, you need to re-think your pricing. You need to do the following:
- Figure out what are the top 3 or 4 things your customers buy the most often.
- Assess how can you make the price as small as possible. (Chop out stuff, re-plate your offerings into “Tapas” or small plates!)
- Determine how you can you make it appear as “value” oriented as possible.
- Figure out what other things can you pair it with (e.g. – have the sales guys suggest the “chef” (the expert) says to get 2 or 3 plates and share, wine, dessert — all these items also re-priced to recession “small bite” pricing…)
Nordstroms NEVER gives the impression that their new Blue Stove restaurant is “cheap” – but they DO reposition themselves (very elegantly, staying within their realm) as giving the customer quality, value, choice — with the option to spend a “tiny” bit more (on the wine) or a dessert or one extra “small plate”.
I bet every lady is spending (almost) the same amount on lunch — but, boy. Do we feel smug — having ordered lunch at only $4.95 (well… times 2, plus a small glass of wine, plus a dessert — that we shared…). Actually, I bet we all spend exactly the same – but we don’t feel as jittery about it.
So, I’m not sure where this great invention came from – but Google launched a new feature in Gmail called “Mail Goggles” that gives you the ability to make sure you REALLY want to send that email you wrote at 2:00am after your fifth shot of Jack Daniels.
Really, could I make this up? Here’s a blog post of the guy that came up with it Jon Perlow, a Gmail engineer.
Remember – Google allows their engineers to use 20% of their time for their own projects – anything that they want to pursue. Well, I guess this Mr. Perlow sent a few emails he regretted so… being a geek… he came up with a technological way to program common sense. Oh, I get it – “beer goggles for email” – brilliant!
I guess it was too much of a hassle to just hit “save” and not “send” then wait until the morning to review the email. Nah, that’s too easy.
Jon’s “big idea” is to make you do some simple math questions (that you have to get right) before the email will be sent. Ahhhh…. geeks with time on their hands!
I guess the thinking is that if you have to answer some math (or are sober enough) – that it will make you think twice before sending that potentially embarrassing orsnarky email. In the Gmail “Settings” (upper right side) click on the “Labs” tab – and turn it on.
It will allow you to set a time range so any emails sent on between the times that you specify will all automatically have the safety blanket enabled. If you’re a real hot head or a professional drunk – you can set it up so it will check the mails for you every day of the week – not just on Friday and Saturday nights.
Wow – how did I ever live without this?
I mean, it’s a “cute” idea and all – and I’m sure someone, somewhere will find it useful and everything – but frankly, I would appreciate it if the engineers spent more time on stuff that actually matters to more than 8 people.
At a time when Google’s stock is down more than 20% – one suggestion would be to actually ship one damn product and get 99% of their current products out of “beta.”
Oh crap – I guess they don’t have Goggles for Blogger yet… oops.
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