One of the first things a customer will question in a downturn, is where they can cut or reduce recurring payments or OPEX. They will look for any reason, rational or otherwise. Licensing commitments aside, if you are a SaaS business and have been doing your job well, they should find only reasons to stay. Going forward, you can also do things to keep them committed.
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On the path to the cloud, just as in life (as the Buddha would have us understand), one must submit our most cherished assumptions to rigorous questioning. We would make better decisions if we were clearer about the foundations of our own thinking. Cloud technology is a vast subject and this post tackles just a few assumptions, in the spirit of the DharmaHacker.
I am not presuming to have all the right views by any means and this post is also not going to tackle all aspects of this vast subject. Just the right few based on some recent conversations 😁
Firstly there are three clouds to speak of and I will focus mainly on the one that is normally atop a pyramid or stack: Software as a Service. The other two are Platform as a Service and Infrastructure as a Service.
Do a search for more on this because there are many good views but I like this one from Giva because of its simplicity and my sympathy with their philosophy, notwithstanding the fact they accredit Rackspace with the original definition. For the sake of easy reference I’ve pasted it below:
“SaaS is on the top of the stack because users interact primarily with software hosted on the cloud, and not the platform or infrastructure on which it runs. PaaS allows users to create and deploy applications. IaaS is simply the infrastructure and hardware that powers the cloud.“
It also serves to make an important point I often emphasis with colleagues at the moment.
Where I work (Microsoft) there is a huge transformation underway on our journey to the cloud. There is much emphasis on our ever expanding set of cloud services that form part of Azure at Microsoft. Microsoft 365, the productivity cloud that fits into the top SaaS tier where I focus, sometimes gets short shrift because of the drive to expand usage of the underlying tiers.
I often emphasise the point made in the Rackspace definition about users.
Not only that, it’s the business. I don’t mean to underplay the importance of getting the foundational tiers up and running and operational for customers. This has to be properly in place.
But it is in the top tier where users are active and driving business outcomes that matter most. Whether on a pre-existing SaaS platform or on applications developed on top of the foundational tiers, you have to be focusing on what users are using, why and to what end. Everything else is secondary. Most importantly, this use in the top tier also drives use in the others.
And even when use is by a thing, as in IoT, it is still about who is using the output of all data generated in the IoT activity and to what business end is it being put that matters.
A separate view I have to address is based on another conversation I had. It was in relation to digital transformation and the role parts of the business need to take in making it successful, like HR. It was also about using SaaS platforms to support the transformation and the role they played. A quote from an article was used to kickstart the conversation with someone from HR – article here, quote below: Digital Transformation is a Workforce Transformation and HR Must Assume a Leadership Role.
“For digital transformation to succeed, internal processes need to follow the customer experience, not the other way around. This often results in radical changes such as the dismantling of processes and functional roles, as well as the demand for new skills and capabilities to meet evolving customer demands.“
Based on the persons recent experience, their view was that:
“HR processes have to squeeze into the new software configuration that due to high configuration costs can’t be modified to fit the desired process. Through implementation it becomes the tail wagging dog”.
My response, verbatim:
“Firstly, in terms of the customer experience and internal processes referred to in the article, I see it as a cyclical process – captured in a doodle below.“
“Then I think with cloud software (as a service) where you don’t run the software yourself, configuration (strictly speaking, its customisation) is not possible because all customers use the same version. This is opposed to when you ran an own version of the software on premise and could customise it to your hearts content to meet desired processes. That was costly and not just due to customisation effort.“
“The value in the cloud SaaS model is that you benefit from the feedback of many customers in frequently released versions of the software, with new features that meet the needs of most customers. Innovation can be focused on by applying technology to meet the majority of evolving business needs, instead of focusing on highly specialised solutions that take a long time to build and are costly to maintain and upgrade.“
Not all clouds are viewed equally it seems. Let’s hope all generally end up with a silver lining though, whatever your view.
Amazon.com recently announced financial results for its fourth quarter ended December 31, 2019 – Source: The Information.
Amongst all the announcements is the staggering figure referred to in the title, in relation to Prime membership. From the announcement:
“Prime membership continues to get better for customers year after year. And customers are responding — more people joined Prime this quarter than ever before, and we now have over 150 million paid Prime members around the world,” said Jeff Bezos, Amazon founder and CEO. “We’ve made Prime delivery faster — the number of items delivered to U.S. customers with Prime’s free one-day and same-day delivery more than quadrupled this quarter compared to last year. Members now have free two-hour grocery delivery from Amazon Fresh and Whole Foods Market in more than 2,000 U.S. cities and towns. Prime members watched double the hours of original movies and TV shows on Prime Video this quarter compared to last year, and Amazon Originals received a record 88 nominations and 26 wins at major awards shows. A huge thank you to teams across Amazon for their dedicated work to build, innovate, and deliver for customers this holiday.”
That’s pretty good affirmation if ever it was needed and more in the same vein in terms of As a Service updates that I am tracking below. That’s 20 more reasons its real 😁
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The automotive industry is scrambling to transform itself in various areas: green (move to electric); smart (move to connected), etc. Much is being driven by nimble startups like Tesla, unencumbered by legacy concerns. This post focuses on two two areas that could further drive the turnaround and may be even more important because they are in white space.
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I read this article the other day: 4 Reasons Why Salesforce Could Acquire Zuora.
I’m writing this trend report: As a Service Trend.
Two of the chapters I will be covering are Subscription Economics and Technology Ecosystems.
Point 2 in the first article linked above gets to the heart of and intersection between these two chapters and this post is a way to explore the topics.
As mentioned in the article: Zuora is an enterprise software platform that helps subscription-based companies manage and bill their clients.
Its a pretty unglamorous part of the subscription economy, another reason that maybe their stock price is a little low.
But it is a very necessary part of the subscription economy, that’s why I used the analogy of the engine 😊 That is, technology platforms (or ecosystems) are the engine that drive the subscription economy.
Zuora have competitors and new ones entering all the time. WordPress (the worlds most popular content management system and blogging platform) recently announced they are going to help users monetise by offering subscription mechanisms.
Salesforce it seems, have their eye firmly on the space, adding credibility to the claim in the first article linked above. Check out this recent post on their site: How to Move to a Subscription Revenue Model.
From that article this diagram below, which they propose are the key business capabilities for supporting a subscription model. They may be business capabilities but look closely and they are all underpinned by technology functions.
From this you also grasp that moving to an As a Service business requires that the whole company shifts or refines its various functions in unison. In the article, Salesforce offer a three phase strategic roadmap for getting there which at best, is transformational.
I love that Customer Success is also represented in this framework above which I will be exploring in a separate chapter.
In conclusion, the articles and points they make and I discuss here are good indications that this trend is alive and well. Especially for SaaS businesses like Salesforce that focus on business-wide software, I think there is going to be increasing attention on this.
This DanelDoodle pretty much speaks for itself but just a few added notes. The feedback loop is the critical element for success (aside from the obvious one – the customer/user being at the centre of everything).
A good feedback loop is not an easy thing to build so the simplicity of the diagram belies the effort. Feedback loops should incorporate many things, the most impart being, in summary:
It’s been a while since my last update and there’s been lots going on so sit down, grab a ☕ and enjoy reading about a host of new announcements and articles capturing the trend.
Apple has just come out with some expected announcements that indicate it’s moving to an As a Service company which this post neatly captures: The Powerful SaaS Platform No One Is Talking About — and It’s Made by Apple. And in a separate post that is pretty much in line with the views from this first article: Hardware-As-A-Service: Are We There Yet?
This post similarly shows how another large technology company is leading the charge on this trend: Has Amazon Prime Been Fueling The Growth Of The Subscription Economy.
A great treatise here on the evolution of and critical foundations for successful SaaS businesses: What is Product Led Growth? How to Build a Software Company in the End User Era. From the article, these companies in the image below have recognised that we are in the End User Era, and they’re all-in on product led growth:
Here is a good post capturing various different sources and documenting the trend well: Riding on the wave of the “Subscription Economy”.
Another excellent summary on the state of the subscription economy is this one from Userlane, on the bell-weather company of the subscription economy Zuora and their annual event: Gaining Traction in a Subscription-Based Economy: Zuora Event Recap
One of the key factors I will be exploring in my new trend report is how technology ecosystems (including being/running a platform) play a vital part in the success of an As a Service company. That’s captured neatly in this move: Starbucks wants to create the AWS for restaurants.
In a continuation of the theme, you could easily see traditional SaaS businesses that touch parts of their customers core processes with their platform, especially financial or payments, extending their offering. Captured nicely here: Forget About SaaS: Software-as-a-Lender Could Be The Next Big Thing.
Something else that’s a key factor and I am exploring in my new trend report is being data driven and how good views on that data (analytics) is fundamental. A company nailing that aspect here: The Value of Usage Analytics in the Subscription Economy.
Here is someone else that sees the As a Service trend growing and touching all businesses and companies: The ‘As-A-Service’ Economy Is Moving Downstream. Are You Ready?.
And in a good review from the book Subscribed: Why the Subscription Model Will Be Your Company’s Future – and What to Do About It, by Tien Tzuo and Gabe Weisert, these two summary charts:
Just a couple of scribbled views (#daneldoodle’s) on the things that go to achieving success, from customer or vendor point of view. Click an image to enlarge.
The latest and greatest posts and research on the subject and these are all being tracked with a tag here. I include Customer Success in this being a subset of the As a Service trend but I’ve added it under a separate section.
I’ve not had a chance to post for a while and there has been a fair bit of activity in the space so I have quite a bit to share.
I have also run a few numbers through the data visualisation machine and come up with the infographic at left – feel free to use and share.
So herewith some of the best posts from recent weeks.
New SaaS Delivery Models Require New Customer Success Delivery Models. A solid piece on how Customer Success roles need to change in the maturing SaaS space. Sticking with the SaaS space, this article does a really good job of explaining how to manage your vendor if you use a SaaS product: How to manage SaaS Vendors in the Subscription Economy. And for some other really good posts on these themes:
These include:
This collection of announcements above 👆 shows the sheer breadth of industries effected by the As a Service trend – nothing is off limits.
There were a batch of articles and new research:
Here is a good summary of the trend which includes commentary on all the different industries being effected by the subscription economy: Subscription Services Draw Companies Closer To Customers. As with so many of the posts that I reference to the subscription economy, this one points to its darling Zuora, as you can see from the source of the chart. But their standing at the top of the subscription economy heap (as a company that powers the economy) may be under threat as new entrants join the fray: Stripe billing launches in Europe to power subscription companies across the continent.
There are other signs of a growing consolidation and integration in the Subscription Economy and Customer Success industries with the announcement by Medallia of their Strikedeck acquisition. Also Customer Success leader Gainsight’s announcement of the broadening of their portfolio into a “Customer Cloud”.
Stephen Danelutti