Initially published as the first of a series by SupportWorld, the magazine of The Help Desk Institute, in the July/August 2010 issue, this article identifies issues and challenges confronting both external and internal Customer Support professionals alike. Access is limited to Members of The HotLine Magazine (Free registration and log-in required.)
Software-as-a-Service (SaaS) / Cloud computing is clearly here to stay, and is predicted to become the industry standard in the coming years. More and more software companies are offering cloud-based subscription software products or have announced plans to do so soon. But is there a dark shadow looming in that Cloud for those who consider themselves as customer support / help desk professionals? Could there be a silver lining in it as well?[private]
By: Mikael Blaisdell
Generations of technical/customer support representatives (CSRs) and help desk staff members have long complained about being accorded less status than “illegitimate red-headed step-children” by their employers. Those who respond to the phone calls and emails for the support/help desk can have little doubt about the underlying message in historically being the first group to be affected when budgets are reduced and headcount must be cut, and the last to benefit from better economic times. Support is often seen as a necessary evil in the eyes of many Senior Management members. But while it’s true that as long as breaks and outages in technology occur, there is a need for people to fix them; what will happen to a profession built upon a break/fix role when/if the need for its services is sharply reduced?
The question is not academic. Research conducted by The SaaS & Support Project over the past few years has identified two vital aspects of the essential change of the SaaS/Cloud model that have the potential for significant impact upon the profession of Customer Support. The first is factor is economic, from the new way that companies generate and recognize profits from the sale of their products. The second is technological, from the shift in location of applications and data from local to the cloud. If the indications are accurate, these two factors are bringing a turning point for support professionals and their companies alike. One path leads downwards into obsolescence and ultimately extinction. Another is towards a redefined profession and a role based on true economic value. Which path will your company choose for its support resources? Which way will you go?
Support and the Economics of The Cloud
In the SaaS/Cloud model, there is a fundamental change in how companies define their products and take their profit from the sales. In the traditional technology market, the product is viewed as the sale of a perpetual license to the customer to use the software, and the bulk of the company’s profit is taken up-front from the license fees. The infusions of large amounts of revenue in this licensing profits-realization strategy has often encouraged vendors to focus the most attention on their Sales teams and fueled the hunt for new customers. The bursts of cash at the beginning of the customer relationship have also tended to overshadow or downplay the longer-term contributions of the Support group.
In the accelerating on-demand world, however, the rules have dramatically changed. The profit from the product now comes incrementally over the life of the subscription rather than primarily as a burst at the beginning. There’s good news and bad news in that change for software companies and support professionals alike. The good news is that the subscription income model has an advantage in that it tends to make a software company’s revenues and profits more stable and predictable. The bad news for support teams who define their purpose as being predominantly about break/fix is that the absence of the up-front large infusions of bulk profit forces cloud/SaaS companies to pay far more attention to operating costs. “Lean and mean” is the necessary principle governing staffing levels and the development of human resources. The costs of maintaining large support groups and training inventories can’t be afforded in face of the new market realities. Where headcount can be reduced, it must be.
There’s another effect from the change in profits-realization that many companies have yet to fully understand, and it represents a potentially huge opportunity for support professionals willing to reinvent themselves. Because the profit from a software subscription comes incrementally over time, if the customer chooses to end their subscription early, the income and profits stream quickly dries up. As a result, Customer Retention is the key to success in the SaaS era. Where it can take almost all of the first year to recoup the costs of acquiring a new customer, keeping the relationship going for many years is vital.
The Product Support Burden in the Cloud
The second major aspect of the SaaS/Cloud model that has the potential for significant impact upon the profession of Customer Support is technological, and begins with a reduction in the product support burden from the shift to the Cloud.
As veteran support professionals know, difficulties with the desktop operating system of the user or other supposedly compatible software products can cause a high volume of calls for help. In the on-premised market, where every customer has their own separate copy of the application, resolving database difficulties, revision level incompatibilities, and customization inconsistencies are all a very large part of the work of traditional model support teams.
Because a SaaS solution has only one copy of the software that is used by all customers, and one common database, and both are under the direct control of the vendor, the myriad problems stemming from multiple copies of the code simultaneously in play and multiple databases are removed from the support equation. When all that is required to access the product is a compatible browser and a connection to the Internet, the impact of the desktop operating system and associated software is all but eliminated. The removal of such traditional sources of customer requests for help from the support burden of a SaaS application significantly reduces the overall volume of incoming cases — and therefore the staffing requirement for the team as well.
The SaaS & Support Project research has consistently shown strong indications that the support burden for cloud computing subscription solutions can be as much as 2/3rds lower than for equivalent perpetual-licensed on-premised based software. Overall, SaaS-only companies consistently reported lower staffing levels in their Customer Support departments than did equivalent traditional firms. Another factor that strongly favors a reduction in the overall support burden is basic economic reality: inadequate product design isn’t an option; customers will walk away from buggy or confusing applications. Good design means fewer calls for support, and in the profit margins of the subscription model, there is no room for any unnecessary calls.
The SaaS & Support Project began a series of online research surveys and in-depth follow-up interviews in 2009, producing a ground-breaking Report at the end of the year. The work of the Project continues in 2010 with the introduction of further online research and direct analysis with a range of companies.
Challenge/Opportunity: The Redefinition of Customer Support
If the move to the Cloud truly results in a significantly lower need for break/fix resources in a company and across the industry at large, what effect will this bring to support professionals? What will the economic necessity for “lean & mean” operations do to staffing levels? The handwriting is on the wall; the day of break/fix support is passing. There is, however, a very definite silver lining in that Cloud for those savvy enough to take advantage of it.
The key to the opportunity starts with using the emerging economic and technological realities to reinvent the profession of support. It’s time to move away from the old reactive role of being about responding to breaks in the technology and toward a new purpose, one that is soundly based in business fundamentals. The new role must be clearly defined and closely tied to the essential necessity of customer retention in the SaaS/Cloud model. It needs to use the leverage of the existing professional knowledge and skills of the team’s members to achieve directly measurable economic results. And it needs a new name that will reflect the new purpose, one that is readily understandable inside the company and to the customers.
In many SaaS/Cloud companies, a new box in the organizational chart has already appeared: Customer Success. The charter of the success team is to see that the customer gets maximum value from their subscription so that the relationship will continue for as long as possible. It’s a good beginning, and has the potential to become far more important to the company, the customers, and to the professionals of the customer support community.
Support @ Lithium = Customer Success: an expanded role
Lithium is a leading provider of Social CRM and Customer Community solutions. The company has redefined the traditional vision of customer support to create a “concierge-like” comprehensive Customer Success Program. While Lithium’s Success Managers have immediate and direct access to the entire history of a customer’s community, as well as to a real-time dashboard about the status of membership, activity, interactions, and their community health index to use in answering questions, that’s only the beginning of the expanded role. According to the company, “Your Customer Success Manager will help you to:
* establish your success criteria,
* launch and configure your community,
* oversee usability improvements,
* provide technical support, and
* meet with you at regular success checkpoints, as well as deliver any customization requirements.
In addition, your Customer Success Manager will consult with our network of subject-matter experts to make sure your community goals are achieved. Our Customer Success Program is offered as a standard part of every subscription, and includes access to a private area of our own online community of practitioners, the Lithosphere.” [www.lithium.com ]
For a SaaS/Cloud software vendor, a properly architected and managed Customer Success team offers the advantage of pulling together silos of common skill sets and knowledge so that they can be fully utilized. The result can be significant savings from the elimination of unnecessary and wasteful duplication of skills and resources. The new group can also resolve a large organizational problem that has long plagued software companies of all kinds. In too many software vendors, and especially SaaS/Cloud companies, there is no clearly designated and accountable owner of the ongoing relationship with the customer. By formally taking over the responsibility for customer retention, and therefore the ownership of the relationship itself, the Success group can establish itself as the key component of the company’s long-term profitability.
The shift to the Cloud not only enables the success team to see how the customer is actually using the application’s functionality in real time, it also allows for the business or domain expertise of the members to be made available to the customers. A technology vendor can provide both the application and very specific coaching on best practices for getting the maximum return from the investment for the customer.
The Last Tech Support Rep
Newsflash: John Q TechRep Retires.
[ Silicon Valley, California. December 31st, 2016 ] The very last Tech-Support Rep retired today, after taking a final “screamer” call from a disgruntled customer.
A living legend in the industry, ‘Grandpa Geeky’ John Techrep had a uniquely long contact center career spanning 4 decades. Now looking back on all that time spent talking to customers about a wide assortment of software problems, Geeky claims that he’s glad to see it finally come to an end. “Stress and boredom were the main issues,” he explained. “Solve one problem, and here came ten more. Deal with those, and still more are on the way, while Management is constantly pushing you to close cases, close cases and keep the talk-time shorter. After all, where’s the significant or meaningful contribution in a job about fixing things that should never have broken in the first place?”
The Road Ahead
For the support professional willing to evolve and to grow, the Customer Success role has several key advantages. It offers a clear connection to essential business metrics so that the direct economic value of the professional’s skills and expertise can be easily and authentically demonstrated to both employer and the customers. Beyond the linkage to the main income stream generated by the continuance of the customer subscriptions, the success role also offers significant potential for generating substantial additional profitability for the company. Best of all, the new profession fully utilizes both the technology skills as well as the domain expertise in the vertical business specialty often found in senior support reps.
As every support rep knows, the only constant in the high technology game is change. That the advent of SaaS and the Cloud, described as an industrial tsunami, is having powerful effects upon every corner of the market is something that can’t be ignored. What that major shift will mean in practical terms to the industry’s professionals has yet to be determined.
- The SaaS & Support Project
- SaaS & Customer Success, the (new) Definition of Customer Support
- The Redefinition of Customer Support
- Services for SaaS/Cloud Firms
–The SaaS Customer Retention QuickStat