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Over the past 15 years I’ve seen so many software companies’ “SaaS Migration Strageties” perish as they jump on the SaaS bandwagon and try to migrate their software to the cloud. So I thought I’d come up with some simple rules to follow:

1. SaaS is more than just a financing model

Too many people (including analysts) talk far too much about SaaS simply being another way of  financing software purchases. NO, NO, NO, SaaS is whole new way of purchasing, delivering and using software. The Sales Process & Pipeline is different, the R&D lifecycle is different, the support mechanisms are different, Product Messaging & Positioning are different , revenue recognition is different. If you are just after an alternative financing model for your business you need to consider the hosted/managed service alternatives. It’s a business model not a financing option.

2. Ensure Rapid Deployment for success

There is truth in this phrase “On Demand”. Every successful SaaS business can rapidly deploy their software, often without vendor intervention. This means you need to take a long hard look at your software and ask yourself “Can we make this a Rapid Deployment Application?”. If you still need to undertake significant professional services work to deploy your software for customers then you’re running a hosted solution that will do little to drive user adoption. Go back and understand what you need to do to make it a RDA. Investment upfront will pay dividends very swiftly.

3. Reduce Software Replication

You don’t need to run the ‘multi-tenanted’ architecture from the outset, but you do need to understand where your scale points are, and have a migration path mapped out as your SaaS strategy succeeds. Running multiple copies of your entire software  has more inherent problems that is worth managing. You’ll kill any chance of reaping the benefits of eventually running a single solution by doing this, and burn 4 times as much cash than you would with a proper SaaS migration Strategy.

4. Properly Resource Your ‘SaaS Migration Strategy’

Every SaaS business [new or converted] goes through an initial period of cash burn as you line up your SaaS ducks. Prepare for this. You’re embarking on a new investment that requires dedicated resource to succeed. If you can’t fund or project manage dedication to the strategy then you are better off putting the strategy to one side. Over the last year I have helped 4 software businesses with their ‘SaaS migration Strategy”, 2 took my advice on this and succeeded, one took my advice on board after wasting 3 months of distracted resource planning, and the other has shelved their plans after 5 months.  Remember your SaaS Migration Strategy is more than just a software project.

5. Integrate to communicate.

Now that you’ve decided to run your software from the cloud the best way to exploit this is via integrations to other systems, I go as far to say, put some of your maketing spend into creating integrations. It’s the principle of social networking applied to SaaS applications, the more you network the more business you’ll generate. Just take a look around the web and how many integrations the successful SaaS apps have. SaaS requires integration to be truly useful.

Ignore any of these and you risk running a hosted/managed solution not a SaaS solution. More cost, less benefit…..

As Prince Charles (you know the one once married to Princess Diana) might say “Beautiful Architecture is there to be admired, stand back and enjoy the view”.

No, I haven’t posted to the wrong blog, this is about computers not buildings, but this post is not about the detail it’s more a ‘stand back and think about what you want to see’. SaaS architecture comes in many guises and, like most things in life, adapts and evolves over time, so when you are sketching out your architecture and standing back to admire your work, keep 2 thoughts in the front of your mind:

  1. My company is on a journey, therefore my architecture is too – be tactical
  2. We’re all a long way from Nivarna

In the early days of SaaS (when we used to call ourselves ASPs), the vast majority of SaaS businesses evolved from web apps that had been successfully sold to one or more customers in a traditional licence deal, where the CEO suddenly get’s a “Michael Caine Moment” (“Hang on lads, I’ve got an idea”) and henceforth this software company calls itself  a SaaS company. More often than not this also means the architecture (hardware and software) isn’t exactly “designed” its more “acquired”.

Don’t be fooled (or let anyone else fool you for that matter), into thinking that you need to have pure SaaS, all singing all dancing architecture with a tinted gearbox and double overhead wobble board from the word go – it just ‘ain’t true. There is nothing wrong with transitioning through the “hosted – hybrid – pure” models. Also don’t get hung up on single points of failure.

On many occasions I’ve been approached by a member of the sales team asking for architecture diagram (hardware) because a customer has requested it along with details of how we avoid single points of failure. I always politely decline such requests as nine times out of ten the salesman still has a little more to do in his sales cycle and the customer is looking for excuses, usually these come in the form of single points of failure.

Now, until you really have more cash than you can spend, don’t give single points of failure too much thought, Here’s why:

  • Practically you need 3 of everything to avoid a SPoF (up to and including 3 datacentres).
  • The vast majority of hardware (good stuff) will outlast your financial write down.

Instead concentrate on 2 things that should be entirely within your control:

  • Uptime
  • Performance

If you are using good hardware the amount of unplanned downtime you have through, say, CPU failure will be negligible – it doesn’t take long to swap out a CPU.

Software Architecture is where your efforts are best employed as this directly impacts performance (but you probably didn’t need me to tell you this!). For this an API structured architecture that allows you to add (and remove) any form of functionality or extension by way of a service or API will give you the best foundation from startup.

Most companies, SaaS or otherwise, end up selling a variant of what they started out with, natural evolution. The point here being that the more modular (or “pluggable”) you make your architecture the more agile you can become in responding to trends and opportunities. It also allows you to easily manage performance bottle necks. (Remember bugs tend to affect a small proportion of your customer base where as performance tends, more often than not, to affect all of your customers).

Spend time planning an architecture roadmap that supports (not leads) the overall business roadmap. Remember for any software business to be successful it must be sales led. There’s little point in having a pure SaaS architecture that can support thousands of users if the business isn’t likely to get thousands of customers in the coming 3 years. Only go straight to pure SaaS if you have the cash in the bank to fund it. If it’s not in the bank, evolve your architecture through the “hosted, hybrid, pure” path and concentrate resources on more tactical development priorities. Do plan on having pure SaaS architecture though – if your business succeeds you’re gonna need it!

Open your doors in the cloudThese days everyone states they have an API, and when you’re evaluating a new application that you need to integrate, it’s easy to fall into the trap of thinking “OK, they’ve got an API so it must be do-able”. Generally I tend to steer clear of applications that don’t have publicly available API and user documentation as you end up with a bias view of applications.

All too often software businesses get a little protective over information surrounding their “baby”, for fear of the competition stealing ideas or other unscrupulous acts. Well here’s the thing, all the time your competition are looking at what your product can do they’re not innovating, they’re just playing catch up – good news for you!

Without exception all successful software companies, great & small, run a common philosophy – let people in (to document libraries) and innovation through collaboration is accelarated far faster than you can push it alone. So what’s the strategy I’m extolling here?

Open up all of your product literature to the world online. Run an online user guide, a wiki, forums, detailed API documentation. Sure require users to register, but don’t insist on some draconian screening process, just a simple registration process that allows you to collect a little user info and manage access. Now you’ve got the foundation for a collaborative user community, and one of the key benefits you’ve just created is dropping hurdles for your sales team. Your prospective customers will want to do some research on your application, so let them.

Next you need to start engaging with this community. Start by creating blogs aimed at the different audiences (e.g. Business Users & Developers). Don’t make the mistake of making a blog the responsibility of one author, it will become stale very quickly, get a range of people from across your organisation contributing. Publicise all of these resources through your own website and out on the web. As your community grows encourage customers, partners, and others who interact with your software to blog about it.

The high level lesson you’re learning here is, you can’t do it all on your own, you will need help, and there’s no better help that the people who want to interact with your software on what ever level. And it’s a lot faster and cheaper way to benefit than using external ‘consultants’.

Open the doors to documentation and watch your ability to innovate accelerate,  your customers start helping each other, your credibility rise, your adoption rates increase, and your competition constantly play catch up. If you believe in what you do let everyone know.

Yes it's a plantWinning a new deal is always a buzz. The client signs on the dotted line, you smile inwardly, knowing that here’s another deal you don’t need to explain as to why it went wrong. Now here’s the thing; most new startups struggle or even fail because they make 2 fundamental mistakes:

  • They spend too much time analysing weaknesses and no time at all on the strengths.
  • They replicate problems by rolling out too much too soon.

Analysing your strengths in winning deals highlights all the things you need to replicate. Analysing the losing deals only serves to understand mistakes, and remember when you’re going through all of this analysis it has an impact on morale. The lesson here is spend as much, if not more time on analysing the winners, it pays greater dividends all round.

Leave no stone unturned when analysing the winners. Go through each stage of the sales cycle right from how the customer heard about you through to ink drying on paper, and keep asking yourself the why and what questions. Look at every aspect, what the client might have been thinking, what external events may have influenced certain stages of the deal,  did playing golf cement the relationship, everything. Try and recant all the little detail too, had the client just come back from holiday with renewed vigour, etc. Be clinical in your analysis.

The more you analyse the good stuff, the more good stuff you’ll replicate in your roll out plans. Always better to spend time on the positives, if you don’t you’ll never know the full story behind your successes, instead you’ll just keep knocking items off your “mistakes list”.

Now roll out the same principle across other functions in the business and enjoy the benefits!

As the name suggests SaaS is all about Service. It is very easy to get over excited about Software to the detriment of service and as such leave customers hanging in the cloud.

Most SaaS businesses are started by technologists with great enthusiasm for their product and all the fantastic widgets they have to offer. This is usually followed by a frenzy of new functional releases aimed at showing off technical prowess and “staying at the bleeding edge”. Now there really is nothing wrong with this, however……..

The fact you’ve actually managed to get funded or at least off the ground means you have a software offering that is fulfilling a need. The whole nature of the SaaS business model means you need a lot of cash (or resource) upfront in order to get your business established and staying afloat, and many companies surge ahead spending money on technology, sales and marketing – oh dear!

Technology spend tends to be driven by the founders, whilst Sales & Marketing spend tends to be driven by financial backers. This tends to leave no champion for the Operations and Customer Service functions of the business and therefore the poor relation, and this is why it’s extremely important to pay special attention to these functions as they hold hidden treasure, and if left unurtured can drag a business down.

“Scalability” is one of the buzz words synonymous with SaaS businesses and scalability of Operations & Customer Service (or Support) is more challenging than technology, sales or marketing, so worthy of careful planning. Now for the treasure!

The greatest sales force you’ll ever have is your customer base. Word of mouth, the grapevine and the viral phenomenon is all powerful. In the past I have managed 70% market penetration in vertical sectors through customer assistance. By employing the right strategies and tactics in your customer services function you can make huge financial strides. Only employ people in your customer services team that have some sales experience and have that “go the extra mile”  attitude. “sales experience” doesn’t necessarily mean “sales success”, remember there is a distinct difference between hunters and farmers and you’ll find those with some sales experience will have a more positive effect on revenues than those with no experience.

Also make your Customer Service team proactive.  Most software products are hugely under utilised by customers so the more of your software you can get your customers to use the more you’re going to protect your existing revenue, and you’ll unearth new revenue opportunities. Reward your customer services team (I don’t mean incentivise). It will pay dividends.

Every SaaS business I’ve been personally involved with, I have always prioritised reducing & automating the internal processes that affect customer satisfaction (e.g. Order -> Delivery, Communication Turnaround). Get this right from the outset and the odd software glitch or minute or two of downtime gets little airtime in customers’ minds.

Whenever I’m involved in any M&A activity the first things I always look at in any target business is their operations and customer service function.  Have they got the right people looking after customers? Support logs can reveal everything you ever need to know about a business when you’re acquiring it; are the customers happy & committed?, where the additional revenue opportunities lie?, are these being exploited?, what the state of internal communication is?, is the operations function bloated?, is pricing realistic?, is the technology any good, and so much more! I once got involved with a business post an acquisition that had one of  the most successful sales operations I’ve ever seen (new business wins), but appalling operations, technology & support functions. It’ll take a significant amount of time and effort to turn the business around. (bot I’ll leave those lessons for another post)

Champion the services functions of your business and the rest will be championed by your customers.