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Posts Tagged ‘SAAS’

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…..

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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.

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