Chefs and Grocers (SaaS Models)

1
© 2008, Enthiosys Inc, www.enthiosys.com, 650.528.4000
Grocers and Chefs:
Service-Model Thinking for
Product-Model Folks
with
Rich Mironov
CMO, Enthiosys
rmironov@enthiosys.com

2
An Unapologetic Product Guy
• CMO at Enthiosys, a product mgmt consulting firm
– Innovation Games®
and customer needs assessments
– Market-driven roadmaps
– Business model analysis and pricing strategy
– Interim executive / Agile PM coaching
• Early brand name experience
– HP, Tandem, Sybase
– MBA Stanford, BS Physics Yale
• Repeat offender at start-ups
– iPass, Wayfarer, Slam Dunk, AirMagnet

3
Product Bytes Newsletter
• Monthly thought piece on the secret life of
product managers
• Focus on technology, organizations and start-ups
– “Parenting and the Art of Product Management”
– “The Accidental Agilist”
– “The Roadmap Less Traveled”
– “So Your Product Wants to Be a Service...”
– “Avoiding the Post-course Correction”
– “A Planetary View of Agile Product Management”
• http://www.Enthiosys.com/insights-tools/

4
Service-Model Thinking
• Most of us have grown up as “product” product managers
• Shift to hosted services is led by consumer online and
social networking players
• Service model is more than just hosting an existing
desktop or server-based application
• Responsible for end user’s positive experience
• Most of what we’ve learned from product managing
licensed software is different in the SaaS world

5
Licensed Enterprise Software
…is like delivering groceries
Enterprise IT customers are responsible for:
• Choosing the right items
• Combining them correctly
• Managing hours and uptime
• Serving and helping users
• Producing tasty results

6
Hosted Software-as-a-Service
…is like running a restaurant
• Serving complete meals
• Many simultaneous customers
• End users interact directly
• Hours and availability matter
• Need repeat buyers (WOM)
• One bad experience is
never forgotten

7
Product & Service Models
• Licensing (Product) Model
– One-time or annual fee
– With or without maintenance
– Pay before you play
• Subscription Service Model
– Monthly fee per user
• Transaction Service Model
– A la carte
– Per fax, per download, per transplant,
per report, per hour, per update…

8
Five Service-Model Lessons
Being a chef, not a grocer:
1. Presentation (UED) really matters
2. Build (rent) multi-tenant infrastructure
3. Daily, not annual, releases
4. Expect slower, incremental sales
5. Do continuous marketing

9
1. Presentation Matters
• Traditional IT product customers buy via
second-hand experiences
– Demos, data sheets, feature lists, references,
development specs, futures, salesmanship
– “Let me tell you how good it’s going to be”
• Service-model prospect try your service
– End users, not through intermediaries
– Immediately, anonymously
– Skip tutorials, FAQs, marketing text
– Is free version compelling?
– 5 second rule, easy enough for Mom

10
UED is Your Friend
• User Experience Design
– a/k/a UX, UXD, UI, information architecture…
– Maps out exactly how user interacts with your app
• Product managers are not UED professionals
– More than just “arts and crafts,” “taste” or button color
– Detailed, thoughtful application-wide design for how users
interact, how ideas are shown, how data flows
• Consumer online service set the standard
– Social networking, online email, user communities
– Corporate software vendors have arrived late
– Corporate user expectations are defined by off-hours apps

11
Read Your Logs
• Enterprise PMs are used
to having no usage data
• Web activity logs tell you
exactly what’s happened
• Did a navigation change
improve feature usage?
• Test, measure, adjust,
test, measure, adjust…

12

13
2. Multi-Tenant Infrastructure
• Personalized experience,
menu of options
• “No excuses” availability
• Privacy and security
• Usage reporting and billing
• Helpful written help with
human back-up and user
forums

14
Not a New Idea
Well-designed software should be host-able,
but typically is not set up for…
• Massive scalability, data distribution
• Multi-level self-service (user, admin)
• Reporting, billing, invoicing
• Complex user/partner hierarchies
• Third party data security obligations
• Automated alerts, capacity planning
See Luke Hohmann’s
“Beyond Software Architecture”

15
New Kinds of Service Metrics
You need an Operations team and new skill set
• Uptime SLA (“Application up 99.95% of the time except…”)
• Response Time (“98% of log-ins take <1.5 seconds…”)
• System Capacity (“Add CPU when usage >60%...”)
• Support Escalations (“P1 first response
within 15 minutes…”)
• Reporting (“Billing reports showing
all customer transactions…”)
• Software Updates (“Push
software weekly at 1AM
Sunday with roll-back…”)
Most licensed software companies
lack these skill entirely

16
Get Yourself a Platform?
• Dozens (hundreds) of companies offer flavors of
SaaS hosting and platform services
– Blending of traditional “managed service” and
“software-as-a-service” labels
• New kinds of application hosting
– Cloud computing (Amazon, 3tera), email (gmail),
social networks (Ning), BPM (Cordys)…
• Determine your strategic value
– Unique application knowledge and time-to-market?
– Will you compete with your platform partner?
– Assess business risk, switching costs

17

18
3. Daily Release Cycles
• Product folks traditionally think about quarterly updates
and annual feature releases
• Agile creates 2-4 week release opportunities
– Continuously move small features off backlog
– Multiple teams can produce daily updates
• SaaS deployment means you control production and
staging versions of software
– Users get new code with every browser refresh
• Operational process burden to make updates perfect
– Data integrity, UED consistency, failover, rollback

19
The Opposite of Release Trains
• “What’s the smallest possible change I can serve
up today that will improve user experience or
application function?”
• “Can we create operational procedures to safely
push small changes daily or hourly?”
• “Taste test: let’s assign 2% of users to the new
version and compare results.”

20

21
4. Incremental Sales Cycle
Initial subscribers sign up more quickly, but…
• Easy/free trial is #1 benefit of service model
• Pioneers are really in extended trial
• First taste must be great
Revenue ramp is slower
• Upsell to more users
• Upsell premium features

22
No More Shelfware
• Shelfware = purchased but unused software
• Product model: sell extra licenses now
– Get revenue/commission now
– Lock up the customer
– Screw future revenue
• Much harder with service models
– Easy to count users
– Discounts last forever

23

24
• “Drop-and-run” licensing model
– Ship CD, recognize revenue, move on
• New “shared success” service model
– We can’t grow your account
until you are happy
• Constant upsell  continuous marketing
• Touch users early, often and honestly
• Good news: you have actual user names
5. Continuous Marketing

25
Frequent, Helpful Contact
Friendly, low-pressure tone
• Topic of the month
• User profile (success
story of the month)
• New features
• FAQs
• Support contacts,
sales contacts

26
Dare to Taste Your Own Food
…use your own service.

27
Take-Aways
“Wrapping It All Up”
• Service model adds new
responsibilities but gives you
direct user feedback
• User experience is crucial
• Software happens continuously
• Revenue ramps more slowly,
so installed-based marketing
never stops
• Have your cookbook and
chef’s hat ready!

Q&A
Rich Mironov
RMironov@Enthiosys.com
CMO, Enthiosys

Chefs and Grocers (SaaS Models)

More Related Content

Similar to Chefs and Grocers (SaaS Models) (20)

More from Rich Mironov (20)

Recently uploaded (20)

Chefs and Grocers (SaaS Models)

Editor's Notes