SaaS: More Fundamental Change Than We Realized?

[More in a series of posts inspired by the "PM in an on-demand world" research that I've been doing. Here's the link to yesterday's thought du jour.]

During the research interviews about PM and SaaS, I was struck by how philosophical the conversations got. To the interviewees, SaaS was not merely a delivery vehicle, but a fundamental decision about their business. Bringing technology producers and consumers closer together forced many vendors to admit that they had a vague, incomplete idea of who adopts their products and services, why they do it, and how they do it. The subscription model led to many hard questions about how the company makes money. Marketers had to deal with a significantly modified value proposition, while simultaneously knocking down some new potential objections (most notably, security). 

But those are just the most obvious consequences. The deeper we got into the research, the more I felt that we were talking about other ripple effects of SaaS, PaaS, and the other aaSes. At least a couple of Big Industry Trends – the kind that Very Serious People spend a great deal of time talking about – owe a great deal to SaaS. Without the success of SaaS, many organizations would not have been as open to embracing other changes. I'll mention just two of them, Agile and social media, among several that we'll discuss in the final report.

We might deliver faster, but can we?
It's no accident that SaaS adoption preceded Agile adoption in the technology industry. SaaS had already made significant progress in the middle of the decade. Among SMBs, SaaS adoption increased 57% from 2006 to 2007. From 2007 to 2008, SaaS adoption in bigger organizations increased substantially, in spite of bad economic conditions, demanding requirements for integration and customization, and objections from the IT organization.

As I mentioned yesterday, the fast delivery opportunities of SaaS led many tech vendors to ask themselves, How can we deliver value faster to our customers? Some of the impediments lay at the beginning of the value stream, within development teams delivering big, complex releases on long, unpredictable schedules. Lucky for them that a competitive development methodology, Agile, provided an attractive option.

Agile didn't go mainstream until after SaaS did. (By mainstream, we mean the 35% or more of development teams that, in 2009, were at some stage of Agile adoption.) That timing is no accident: SaaS added significantly to the momentum for Agile adoption.

We can make it easy to sign up, but who convinces them to do it?
Among the stakeholders who decide what technology to evaluate, purchase, and adopt, their use of social media for business purposes jumped dramatically between 2009 and 2010.  A VP of Sales, a research director, and a branch manager didn't start using social media to make technology decisions because their sons and daughters spent a lot of time updating their Facebook pages. Instead, they encountered real business value in social media outlets where businesspeople like them were facing business technology decisions like theirs.

A lot of this valuable, business-relevant content would not have existed without SaaS. If you launch a SaaS product, you'd better have a plan for building and supporting a community around that product. Tech vendors as diverse as Eloqua, NetSuite, and Sonic Foundry realized that, without a vocal, active community of customers and partners, their success as SaaS vendors would be limited. Having a community of fellow users one click away from the tool itself added substantial value to SaaS vendors' offerings.

SaaS shook the industry's foundations long before we started talking about the cloud
In the final report, I'll cover the other aspects of the technology business, such as portfolios and channels, that SaaS helped redefine. In all cases, SaaS was a fundamental change that triggered or contributed to other transformations. In every case, the conversation shifted quickly from, Is SaaS a good vehicle for delivering value to our customers? to What exactly is the value we deliver to our customers?

Comments

Product Marketing vs. Services Marketing

Tom, It has been fascinating to listen to the questions and observations about SaaS coming from the product-led world.

I got my start in marketing in a service industry and shifted later to software.
When I entered software I was astonished to see the strong attachment of most product marketers to the features and technology while they had blind-spots related to customer experience, and even to sales and the buying process.

In the services world (which SaaS definitely is), features/benefits still have meaning. However, you fight for your customer's business every day primarily on the basis of their experience with your service, rather than the technology that provides your service. This paradigm forces an intimacy. There is no technology to hide behind.

I think some of your points in this post highlight how product marketers are becoming service marketers and what a difference this will make.
/Kathleen Schaub