Posted by Tom Grant on November 8, 2010
A recent conversation with executives from Clarizen, a software company in the work/project/task management realm, shows how profoundly SaaS can change the innovation process in technology companies. However, you won't get the most beneficial changes unless you're willing to make an investment.
During our briefing, I asked the CEO of Clarizen, Avinoam Nowogrodski, and the VP of Marketing, Sharon Vardi, whether being a SaaS vendor made it any easier to resolve the sort of questions that vex technology vendors. Their response: "Of course it does."
Here's one of those vexing questions: Why don't more customers move from a pilot to full adoption? The usual first answers blame someone else's department for the disappointing conversion rate: Your product stinks. Your leads stink. Your salespeople stink.
Round-robin finger-pointing like this thrives in an informational vacuum. If the only hard fact available is the conversion rate, marketing can accuse sales of presumed incompetence; sales can claim that the current bug count might have an effect on customer satisfaction; development can claim that it's bogged down in too many special requests from strategic customers; and so on.
However, in a SaaS world, facts can start filling this informational vacuum at an unprecedented rate. You can compare, month by month, the bug count and the conversion rate to see if there is any relationship between the two. Analytics might suggest other reasons that no one had considered: For example, SMB customers might follow a different project timeline than enterprise customers. Therefore, the conversion rate among SMB and enterprise accounts might be the same, but it might appear to be worse among bigger organizations because they take longer to reach a decision. Alternately, the company's marketing material might speak better to an SMB customer. Improving the content should have a measurable impact on adoption, with an emphasis on measurable.
Therefore, in a SaaS world, it's harder to start the stink-a-thon, and just as hard to sustain it. No single fact ever speaks for itself, but the accumulation of facts can eliminate a lot of the most popular but unfounded arguments during stink-a-thons.
You can't understate the importance of this development. Pre-SaaS, many critical business decisions depended on the scantiest information. How long is the typical pilot? How many people, on average, are involved? Is there a critical point where projects succeed or fail? How do people use the software? The only information available was largely anecdotal, imperfectly communicated.
This profound change does not happen automatically. Vendors have to choose to shelve new features so that they can develop the means to collect, synthesize, and distribute information about actual usage. People have to take the time to look at this information. They have to make the commitment to live in a fact-based world, whether or not they always like the results.
Many tech vendors rightly decide to make this commitment. The executives from Clarizen treated the question as rhetorical: Who would want to fly blind?