Demystifying SaaS – Software as a Service from a Product Management & Engineering Perspective
For more than half a decade, the entire industry talks SaaS and I believe it’s well described and defined what it is from a customer perspective, but I have rarely seen the description from a Product Management and Engineering perspective.
The world turns at an unprecedented pace of change. Change happens in a time lapse, things that took half a decade in the early days, now happen in ONE financial quarter or less.
The industry moved from
- mass production to mass customization,
- from products to services
- from buying items to using items
- from data that creates chaos to data that drives decisions
Each company strives for hyper-individualization and mass customization of services with a consequence of much higher throughput across all corporate functions. However, this creates a challenge for companies; In order to ensure profitability and drive proper decisions at lowest possible working capital, processes have to be processed in real time and as “zero touch transactions”.
SaaS is a vital catalyst for many companies to adopt innovation and ground breaking technologies much faster. From a definition, it´s rather technical: SaaS is a method of service delivery and licensing in which the service is accessed online via a subscription, rather than bought and installed on individual computers.
Having been around that topic for a while, I´d like to demystify it from an Product Management & Engineering perspective along some tangible examples of customer and engineering situations.
My focus is on SaaS ERP, Enterprise Resource Planning. Nowadays often also called NRP, Networked Resource Planning as the Supply Chains become more and more integrated into the overall demand driven planning and fulfillment process.
I will share with you our experience with transformed market conditions resulting in transformed expectations towards product management and engineering roles across the organization.
What makes SaaS so different that it needs a new success recipe?
Take an everyday example. Consuming apps on a Smart-Phone is like consuming a SaaS Business service, though the hardware obviously also plays a role. As a user, we know by heart where to click for which information. If someone wakes you up in the middle of the night, you will still seamlessly navigate through the system. But what happens if there is just one app that goes missing, accidentally moved to a different place? This highlights the importance of the end user experience. Regardless how superior an APP/feature is, if the experience is bad, it is not desirable.
There are fundamental differences in expectation & delivery between
- Consumption as a Product and
- Consumption as a Service
In the “Consumption as a Product” scenario, customers buy and own software, so they get it started, run and upgrade it. Upgrades are planned at the customer’s pace, with large IT teams being responsible for preparing upgrades from both angles: technology and business. Extensive documentation is appreciated, the more the better. It’s the project team´s job to be prepared and they do have the capacity to consume it.
Customers used to practice a larger ERP upgrade every 1-4 years, because the effort doesn´t allow to catch up faster.
In a “Consumption as a Service” scenario, we talk about a business service activation. Why would a customer even consider an upgrade as a relevant event? A solution provider can NOT expect the customer to take care of any aspect to keep it running. That´s what they pay the solution provider for. The provider does not only provide the infrastructure, but gradually steps into the role of the customer’s IT organization.
And the SaaS customers react to that. They reduce IT capacities accordingly and run in an agile set up.
The reduced IT capacity on customer side faces a higher upgrade frequency and cadence at the solution provider side. In fact, we are moving towards continuous delivery.
There is a natural consequence resulting from it: Updates must run at a high velocity and zero to very low risk and in small increments. Customers expect continuous and seamless delivery of value and that the solution provider takes care of business value, availability, integrity, security, upgradability.
Upgrade knowledge that was a key differentiator for few, high specialized teams, need to become ubiquitous as the specialized teams are streamlined and reassigned to serve other needs.
The upgrade experience is only one litmus test. The entire SaaS experience needs to be inclusive for the end user, not only the contract holder, to win the hearts & minds beyond the initial subscription period.
Designing and operating a business service requires focus on:
- Software Code
- Delivery & Configuration Content
- Test Scenarios
- Easy Process Monitoring & Maintenance
- Ensure non disruptiveness & Life Cycle compatibility
- Support & Customer Experience
The Mandate moves from efficient coding to managing a complete business service
Taking a look at the differences between traditional and SaaS-native views, it´s worth doing it line item by line item. I believe the WHY if always the most important question. Only if one knows WHY, the essence of something can be understood. Customers don´t act differently because of a whim, there are fundamental differences that trigger this change.
- Profitable at Renewal is the most important credo. We talked about it already.
- (No) Upgrade at solution provider pace
- Think small agile teams on customer side. No option to consume extensive documentation. A solution provider needs to rather provide focused documentation than extensive documentation.
- Instead of: Here are the 700 innovations from the release: Here are the 11 innovations that are relevant to you.
- Put the lens on the end user, rather than decision maker, and how to drive adoption. Address businesspeople and adopt their language instead of technical communication, think digestibility
- Besides features, look at the experience: Digestibility, ease of use, simplicity are key capabilities.
- Being a technology provider isn´t enough, you need to be a reliable partner to the business. Ask yourself: How easy is it to do business with us.
- Bringing results faster to the end-user requires the provider to ship more often and with less effort on all sides.
- Definition of success is no longer by shipped releases and deals closed, but adoption and usage.
- The focus goes towards broader responsibility and highly collaborative environments. Finally,
“Every single person is responsible for the overall result. In SaaS, there is no competition amongst teams. We lose together or we win together.”
In the traditional world there were sometimes years between a contract closing and a productive consumption. In SaaS ERP, we set customers live in 30 weeks on average. A reliable business partnership is key to success.
The New Rules Of The SaaS Economy Drive Different Capabilities
Looking at the SaaS native focus aspects element by element, there is a different capability for the Product Manager, the Engineer, The Dev Ops, the Architect, the UX and the UA
The core element that drives the entire process, is creating value-add for the customer. The customer´s value is in the focus and NOT the technical solutions and processes. Understanding the customers’ outcome is at the core of our work and daily routine. Listening carefully uncovers the difference between how you intended the customer to use the service and how they actually use it in practice.
“Customer Empathy Is A Guiding Principle In SaaS.“
- Is it easy to understand?
- Is it easy to digest?
- Is it easy to do business with us/me/my work?
A new innovation does not need to be polished to perfection. It is shipped early and iterated ruthlessly under the trustful eyes of the customers, but with the confidence that the fundamentals are set and customers don´t need to fear disruption.
Leverage usage measurement to truly understand the customer´s behavior and strive for the highest possible transparency makes it a home run for both the provider and the customer
Win Your Customer Every DAY
SaaS has raised a new promise nobody can deny, and it is on the solution provider to deliver on promise and expectation. As a solution provider in SaaS, you should focus on a few key elements to succeed in your market.
- Measure usage / Data driven decisions. Guts feelings lead to subjective decisions. If you can’t measure the success of the features you are providing to your customers, you are flying blind.
- Design and prioritize with a large number of customers on mind.
- E2E Ownership. Think beyond any silo. In SaaS, there is no competition amongst teams. We lose together or we win together.
- Customer Empathy / Listen & Learn & Listen & Learn. Ensure the in-depth process of capturing customer’s expectations, preferences, and aversions.
- Product Thinking. Think product & solution, not snippets. For SaaS, experience is key
Put digestibility of all elements into the center of every deliverable and each daily routine. Foster agility, flexibility, speed and scalability as integral attributes of a continuous value delivery.
I am looking forward to your feedback and thoughts. You can also follow me on Twitter https://twitter.com/beschulze or LinkedIn https://de.linkedin.com/in/bert-oliver-schulze
Hi Bert, this is a very inspiring blog - thanks for sharing your thoughts about this tremendously important topic. I'm looking forward to reading more from you about that.