Regardless of whether you’re a partner or a competitor, Microsoft’s Bill Gates’ view of the high tech industry is something to take seriously. In a late 2005 “confidential” inside memo to his company, he spoke of something that worried him — as it should. “The next ‘sea change’ is upon us,” he wrote. What he described as a “services wave,” acknowledging it as a very disruptive force, is already making itself felt, and the continuing effects of this virtual tsunami will be profound. The title of the memo, “We’ve Got To Get This Services Thing Right,” signaled his concern over what some analysts are expecting to reach a level of 10.7 billion dollars per year and involve 50% of all applications sales by 2010. The SaaS — Software As A Service, On-Demand — wave is indeed upon us. Which players will manage to ride that wave and who will sink beneath it?
When the applications you use and your data reside out on the web somewhere instead of on your own computer, that simple shift in location carries enormous implications. For the customer, life is easier. You pay for the use of the application as you go as a subscription. You subscribe only to the functions you need, so it’s cheaper — you’re no longer buying bloatware. And if/when a competitor offers a better deal, the only thing that may hold you back is the difficulty in migrating your data.
At the company end, however, as Gates clearly foresaw, it’s not so simple. To be successful in the On-Demand marketplace, a software manufacturer must have SaaS thinking embedded in the very DNA of the company. The deep level facets of that genetic shift are beginning to be apparent in the realms of Development, Sales and Marketing, but there is an even more important group yet to be considered. In the brave new SaaS world, Customer Retention will be a basic survival issue, for when the customer leaves, the income stream immediately stops. To “get this services thing right,” Support is going to require a complete DNA recoding as well, changing every aspect of its strategy, process, people and technology. For a function long regarded as an afterthought or at best as a necessary evil, recasting Support for its vital new role may turn out to be the greatest challenge of all.
In a SaaS company, Support can’t be about Break/Fix, because the customers won’t put up with an application that breaks — they’ll exercise their new freedom to switch. Support therefore has to be about added value, to be perceived by the customer as adding value in every interaction. Don’t wait for me to call you to ask how the application works — you call me to suggest ways in which I can use it to be more productive and profitable in my business. I’m willing to buy an advisor or a business consultant/coach/partner. I won’t pay for somebody to tell me why the application broke.