Since the beginnings of the software industry, Sales has claimed to own the customer relationship. Under the traditional premised-based model, the connection between company and customer is almost invariably transactional in nature, an exchange of up-front money for software licenses. Sales gets their commissions, and has but little interest in the customer afterward. The burden of extracting value from their technology purchase remains entirely on the customer, although software manufacturers have grudgingly been compelled to offer various forms of Break/Fix support. But while the SaaS/Cloud tsunami has swept away most of the traditional need for customer support, SaaS ISV management should think hard before rejoicing. The succeeding waves of change are redefining the product along with the nature of the transaction, opening the door to a new ownership of the customer and the relationship product — and that new owner could well be external to the company.
The accelerating shift to SaaS brings far more than just a new way of selling the same old technological features and functionality. The growing demand for interoperability will result in the plug & play ability to rapidly assemble modules from different manufacturers to create application suites. What is only starting to be recognized is that SaaS applications under this scenario are inevitably headed towards commoditization, where the features of product A are recognizably much the same as those of product B. The prices customers will be willing to pay for those module software licenses will decrease as competition exerts its force, and the remaining barriers to migration, almost eliminated by the removal of the required up-front bulk investment, are necessarily falling fast. The future profit picture for the sellers of software licenses is bleak indeed if code is all they have to offer.
The demise of the old bulk up-front profits-realization strategy took away much of the ability or motivation for a software manufacturer to field large sales forces. When the new strategy calls for the emphasis on sales via the web, where the contact between salesman and customer is minimized and the profit is both relationship-based and spread out over the long term, the old pattern of ownership is lost. Who is accountable now for maintaining that ongoing relationship, and whose performance review is based upon successful retention? In most SaaS companies, the accurate answer is: no one.
There is an ownership vacuum, and it will be filled by someone. Perhaps that someone will be a new form of what was once a channel partner, capitalizing on both proximity to the customer and specific expertise in their vertical. Or it could be that Support finally comes of age within the company, reinventing itself as an authentic profession. The key to success in this fast-paced game is in addressing what the SaaS sea-change has not touched, the burden of responsibility for making productive and profitable use of the technology. That value, not the code, is what the customer truly wants to buy, and will pay well for.
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Mikael Blaisdell & Associates Inc. have been conducting specific research projects for a variety of clients for all of the company’s history. In every Assessment engagement, we include carefully designed conversations with the client’s customers. One of our first major commissioned research projects was in the mid-1980’s, when we were asked to conduct an extensive study of the community built around a particular computer operating system, analyzing the needs, interests and motivations of its business users, VARs, ISVs, hardware manufacturers and distributors. Our tracking and analysis of the contact center management technology sector has been continual from its inception. As new players arrive, and existing ones merge or depart, keeping up to date with what is technologically possible and authentically available is a key aspect of our practice.
A New Focus
In the spring of 2006, we recognized that the advent of what has come to be known as the Software As A Service business model represented a tectonic shift in the high technology industry. Microsoft’s Bill Gates described the change as a tsunami, a tidal wave that had the potential to sweep away old fundamental concepts and approaches to software. (If anything, his perception was an understatement.) Since then, we have refocused our ongoing research and analysis program on the SaaS ecosystem, zeroing in on the needs of the ISV sector as it continues to develop.
Contact Center Management Technology
There have been a number of significant transitions in the CCTECH community since the early days of its beginning, and we are now entering another one. By January of 2008, a number of software companies were beginning to offer technologies for the customer contact center market that were SaaS-based. We conducted a specific evaluation to determine the status of the change in this sector, with particular attention to the availability of enabling technologies for the authentic operation of a contact center on a P&L basis.
The SaaS & Support Project
Customer acquisition is only the beginning of success in the on-demand world. Winning requires customer retention and increasing profitability — and the key to both is found in mastering Customer Retention. The purpose of The SaaS & Support Project was to begin to build a foundation of knowledge about the best practices of Service & Support in the on-demand sector, and then to use that insight and data to design the future of the profession of customer relationship management Click here for more information about The SaaS & Support Project.
The Redefinition of Customer Support
Mikael Blaisdell & Associates have been at the forefront of advocating a complete redefinition of the profession, role and practice of Customer Support since the late 1980′s. In published articles in the technology industry trade press and in delivering professional conference presentations, the case for the necessity of change has been consistently made. Break/Fix support offers no real economic value to either company or customer; it never has, and never will. Unfortunately, the traditional product-centric perpetual-license business model of the software industry has largely been resistant to the idea that Support could play a strategic corporate role. The emergence of the SaaS/Cloud business model, however, has opened the door for something new.
The coming shift in the profession of Support will be a sea-change, touching every aspect of strategy, process, people and technology.
Revised: August 5, 2010