services strategies for saas software companies

Services Strategies for Saas Software Companies

Andrew Marks

Professional Services◦ Challenges & Benefits◦ Implementation Location & Roles◦ Implementation Methods◦ Pitfalls To Avoid◦ Professional Services Sales Considerations◦ Professional Services Staffing

Education Solution Partners Customer Support Customer Success

Agenda

Saas PSO Service Challenges & Benefits

Challenges and things to consider

Limited services involvement◦ PSO typically viewed as a “necessary evil”◦ Primary focus of a Saas company is subscription

revenue◦ Services generally required to support the sales

process ◦ Focus on customer “enablement” and education◦ Opportunities for “Value Added Services”◦ Focus is more “Pull vs. Push”

Rapid deployment customer expectations◦ Expectation that cloud = fast◦ Fixed Bid PSO Prevalent

Requires very well defined methods and procedures

Challenges that face a Saas PSO

Solution Adoption◦ More difficult and critical with Saas◦ Services & Education in more critical role as “enablers”◦ More challenging with remote deployments◦ Education strategy just as important as PS

Customer Relationships◦ Trusted advisor status is critical for adoption◦ Try to get some regular “face-time” with the customer

“Distress” is hard to pick up over the phone◦ Impact of delivering value shouldn’t be overshadowed◦ Results in committed customer and more enhanced

ongoing revenue stream


Expectation Management◦ Scope creep management is critical

It’s not your “fathers” enterprise software◦ Can’t overlook change management aspect

Remote Implementation◦ Requires exceptional project management

communication plan execution◦ Recommend an on-site “Discovery” meeting ◦ Remainder of work performed off site

UAT & Training◦ Very important part of implementation process and

challenging but doable remotely◦ Key to driving user adoption


Simultaneous Projects◦ Need to be careful not to overload consultants◦ Too many projects will reduce efficiency◦ There is no “right” number of projects

Needs to be analyzed and determined based on the solution Typically not more than 3 at once is recommended

Rock Solid Project Management◦ Careful planning and coordination are critical to mitigate risk

with a remote Saas implementation◦ Should be staffing with PMP or PMI certified PM’s

Internal pressures for rapid time to market◦ Customers may request to not start “paying” for their

subscription until implemented◦ Maximize Saas MRR (Monthly Recurring Revenue)


More efficient use of PS resources◦ Configuration and customization over the internet

Compressed time schedules Little travel cost and resource impact associated with heavy

travel schedule◦ Easily and effectively assign multiple resources at will

Geographically distributed work force◦ Implementation consultants can be anywhere in the world

they have internet access◦ Opens the pool for new hires◦ Ability to align staff with customer time zones regardless

of Saas company location◦ Home-based office work incentive

One of those non-comp related incentives

The benefits of Saas PSO

Ability to address issues quickly◦ Issues found during UAT can be applied almost

immediately Standardized Methodology Documentation

◦ Majority of work is configuration◦ Provides for consistent look and feel to

implementation documentation Downstream support team will have access to baseline

specifications that is the same for different clients Post Implementation PS Services Revenue

◦ Opportunity to easily provide ongoing PS services on a pay-per-need basis


Reputation Development◦ Minimized travel opens up non-billable utilization

opportunities to build PS brand reputation Frees up resources to:

Contribute to practice development Continually evolve methodology Develop and publish whitepapers and articles


Implementation Locations & Roles

Remote vs. Onsite and the key players that should be involved

Implementation Cycle:◦ Sales Process, Planning & Close - Remote◦ Discovery & Brainstorming – On Site

Key to establishing customer relationships and rapport◦ Solution Development & Design - Remote◦ Implementation – Remote

Possible Exception: Training & UAT◦ Project Closure/Handoff – Either

Sometimes a good excuse for more face time with the customer to celebrate the success of the project

Driven by the client culture along with what comfort level you can provide ◦ Sound, well defined and communicated implementation

methodology is critical

Remote vs. On-Site Implementations

Key Roles:◦ Project Manager

Should staff with PMI or PMP certified Close oversight of the project is critical with distributed team Requires top notch organization and communication skills

Generally required to handle multiple concurrent projects◦ SME

Key resource for establishing “trusted advisor” status Lowered implementation risk – Increased customer

comfort level◦ Implementation Consultant

Well versed in the solution configuration and extension via integration to third party cloud of on prem systems

The Key Roles on a Saas PSO Team

Executive Sponsor◦ Staff member responsible for bringing in the solution◦ Can be tapped if there is a conflict or decision needs to be made◦ Can clearly articulate the measurable business results expected

from the solution Project Manager or Coordinator

◦ Point person responsible from the client side Business Power Users

◦ Involve mix of people from heavy use to light use◦ Try to staff with individuals who are well respected in the

organization to assist with adoption◦ User acceptance testers

IT Representative◦ Even Saas solutions have to comply with desktop security

requirements

The Key Roles on the Client Side

Implementation Methods

Why they are important and key components of successful ones.

Establishes a consistent & repeatable delivery◦ Consistent customer delivery experience◦ PSO reliability and dependability

Provides Visibility◦ Everyone involved understands their role◦ Sets expectations with the customer

Controls Costs◦ Better understanding of time & cost required to

implement the solutions◦ More accurate scoping and pricing in the sales

process

Why a well documented implementation methodology is so important

Defined Roles & Responsibilities◦ Crucial piece of the puzzle◦ Every actor needs to understand:

Their individual role The other actors roles How they need to work together to accomplish the tasks

◦ Should cover both the PSO and customer actors Prescriptive yet Flexible

◦ Prescriptive for short and fixed bid expectations◦ High-Level activities that flex at the task level◦ Every client and implementation is different◦ Need to trust your consultants to do the right thing◦ Drives better behavior, empowered team members, and

more successful implementations

The key components of a Saas implementation methodology

Customer Communication◦ Can’t over-emphasize this enough◦ One of the primary reasons implementations fail

is due to poor communication◦ Communication plan should be a well

documented part of the methodology◦ Critical also to establishing and maintaining

expectations Feedback

◦ Methodology should be imbedded with mechanisms to encourage feedback in order to continually improve it


Change Management◦ For the implementation:

Must not be afraid to manage scope creep Critical to maintaining customer expectations Help ensure project profitability

◦ For the Methodology: Methodology should be constantly evolving Always learning new aspects of a deployment Need to ensure to not lose the mindshare of a team who has

“done it different” or been more “effective” Typically the project “Post Mortem” is a good tool to use

Methodology Approach◦ Waterfall vs. Agile

Really depends on the solution although for Saas, 99% of the time IMO it should probably be Agile based


Saas Implementation Pitfalls

…and how to AVOID them.

Lack of Project Definition◦ Absence of measurable business objectives◦ Undefined or missing business requirements◦ Allure of Saas simplicity breeds the “A successful

implementation is easy!” myth

“Saas will get the customer to their final destination, more quickly and effectively than traditional enterprise solutions, but the destination itself still needs to be locked in along with a plan of action to guide them there.”

The pitfalls to avoid in a Saas implementation

Lack of Project Definition◦ Best Practices to avoid this pitfall:

Identify and agree upon the client’s measurable business objectives for the deployment BEFORE the start of the project

Ensure the business objectives are achievable within the time and budget constraints, otherwise, reset expectations with specific data points to back it up

If scope changes occur during the implementation that could affect the measurable business objectives, make sure to CLEARLY document and communicate with the customer to reset expectations

Insist on business requirements before starting configuration Identify the test environment options and measures of

success and define your testing strategy around them


IT has been overlooked◦ Customer should engage IT to review any applicable

requirements early in the project lifecycle including: Desktop Application Requirements IT Security Requirements

Esp. for Financial Services, Healthcare or Utilities subject to external compliance requirements

Typically Saas solutions require clearing additional hurdles

“Understanding IT requirements at the start of a Saas project will help ensure that the vendor and the customer have sufficient time to overcome objections and address any unique requirements that aren’t already built in to the Saas offering.”


IT has been overlooked◦ Best Practices to avoid this pitfall:

Inquire about the clients desktop and security requirements early on in the project as part of the formal requirements definition process

Anticipate questions that will be asked by IT and have documentation prepared to address any queries or concerns

Identify any gaps or unique IT requirements early on in the project

Request and CLEARLY document any necessary approvals from the person or organization responsible for desktop security


Integration has been oversimplified◦ Saas has increased demand for “integration” services◦ Critical if the business has on-prem homegrown

solutions that are part of the “core” business operations◦ The simplicity of Saas sometimes sets an expectation

that the integration will be easy

“When integration is required, it’s critical to understand security requirements, roles and responsibilities of the integration effort, and be prepared to adequately accommodate and monitor the ongoing upgrade path of the Saas solution as to not disrupt customers with integration points.”


Integration has been oversimplified◦ Best Practices to avoid this pitfall:

Anticipate additional IT security requirements when your Saas system will connect with applications behind the firewall

Identify roles and responsibilities for development and support of the integration – if something breaks, who gets the call.

Ensure you and your client understand and have a strategy to address your Saas solution’s upgrade path; pay attention to the manner in which upgrades are applied and the impact on any integration points


Lack of planning for post deployment management◦ Customer needs to have a plan of action to manage the

deployment once live◦ With the ease of end-user access, the traditional role of the

IT organization on application management is typically minimalized

“Since the client is generally responsible for ongoing management of their SaaS deployment, the implementation team (and methodology) must ensure that the client is well prepared to manage the application in production. SaaS implementations are only successful when they deliver a sustainable value to the client – the client is unlikely to renew their subscription if the solution no longer works for them.”


Lack of planning for post deployment management◦ Best Practices to avoid this pitfall:

Ensure the client has appointed an app administrator who will be responsible for the day to day maintenance Recommendations:

Provide the client with a job description outlining the roles and responsibilities

Work with the client on developing a plan for ongoing administration if they don’t already have one in place

Make sure that all application dependencies (i.e. integrations, customizations, business rules, etc…) are well documented and understood

Provide a documented application configuration as a baseline that the client can record changes against (and roll back to if needed)


Services SalesThings to Consider

Establish a rate card and stick to it◦ Work with Finance to understand FBC◦ Establish utilization expectations

100% utilized is not realistic Assume for PS staff contributions to methodology,

ongoing product development, pre-sales, etc…◦ Develop pricing strategy in line with executive/board

revenue and margin expectations Service business profitability expectations Typically Saas services command 20% - 30% premium

over traditional PSO◦ Share your rate card with your partner community◦ Value added services command higher rates

Some tools to leverage in order to drive services sales

Value Added Services◦ Due to the nature of Saas and the limitation to

“customizations”, customers are buying based on the functionality available “out-of-the-cloud”

◦ Saas vendors are therefore inherently viewed as SME’s for their particular service offering space Salesforce knows CRM and SFA Intacct knows Accounting Coupa Knows Spend Analysis Marketo knows Marketing Automation

◦ Depending on the subject matter Saas PS organizations may be able to offer “Value Added” services to its menu of offerings i.e. Marketo may offer marketing and advertising agency-like

services above and beyond the traditional configuration and training


Develop tools to aid sales◦ FAQ’s

Delivered by Sales and/or Services Consumed by Services Should embody the most frequently asked questions or variables

that effect the length and cost of an implementation Used to steer the services discussion during pre-sales scoping

◦ Pricing Tool Used by Services When possible, try and automate the services pricing process Especially useful with Saas tools that offer pre-packaged

workflows, integrations, etc… Chinese menu type of pricing calculator


Packaged Service offerings◦ Complete end-to-end deployment scenarios◦ Pre-defined and prescriptive SOW templates◦ Very strong definition around what will and won’t

be delivered◦ Requires very strong project management to

manage scope creep◦ May require more up-front scoping during the

sales process◦ Typically Fixed Bid

Key to success is a well defined execution plan to maximize efficiency of the delivery team


Pre-Paid Services◦ Allocate a “bucket of hours” for as needed post-

implementation PS work◦ Customer pre-pays for a set number of hours over

a given time frame Use it or lose it Negates the need to write SOW’s every time

incremental work needs to be performed◦ Need to clearly delineate Support vs. Education

vs. Professional Services Clearly communicate what constitutes each services

offering internally and to your customers


Services StaffingYou don’t need to have an organization the size of SAP to be effective

Efficiency through process◦ Driven by prescriptive and well documented methodology◦ Repeatable approach = predictability and appropriate

expectation setting◦ Automate where possible◦ Reusability where possible

Document & Educate◦ Processes should be well documented◦ All members should be well trained

Professional Services as a profit center◦ While it doesn’t have to be a significant contributor to

revenue, it can and should at least pay for itself◦ A well structured and managed PS business should produce

margins in excess of 35% if desired

You don’t have to have a large and costly staff to execute an effective Saas PS strategy

Tools to manage the business◦ Cloud offerings available to manage services effectively

OpenAir, QuickArrow, FinancialForce Non-Comp Incentives to acquire new talent

◦ Saas implementation supports geographically dispersed workforce

◦ Large pool of talented traditional enterprise implementation consultants who are tired of travel

◦ Non-comp incentive of “sleeping in your own bed every night” very appealing to a lot of experienced talent

Offshore Development◦ Well organized and managed offshore PS team

Comp Incentives◦ Bonus structure dependent upon services strategy

Efficiency – Utilization – Practice Contribution – Customer Sat


Keys to rapid scalability:◦ Tools in place to manage the business that can scale with growth◦ Well defined and documented processes and procedures◦ “Meaningful” and well documented methodology

More than just slide-ware Tools and templates to aid in everything from pre-sales through

implementation to hand-off to customer support◦ Packaged service offerings where possible◦ Education programs to support scaling activities

Deliverable to both internal and external audiences◦ Large pool of accessible talent

Offering non-comp incentives to lure top talent◦ Behavior driven Compensation◦ Well defined and supported partner program


Bid To Win Ratio: 5-8 Saas PS Target Utilization: 71% Project Margin (FP or T&E): 35%+ PM Concurrent Projects: 3-5 IC Concurrent Projects: 2-3 Maximum Discount: 15%

Target Revenue = (# of Consultants) x (2080 Hrs.) x (Utilization Target) x (Target Bill Rate)

Target Metrics

EducationThe glue that holds it all together

Glue that holds everything together◦ Effective education plan supports internal

organization, partners and customers Self service as much as possible

◦ Customers expect ease of use and ease of access◦ CBT’s Pre-recorded webinars and pre-recorded

webinars with live Q&A◦ “Certification” tests to measure effectiveness

Requires a solid LMS◦ Ability to “search” for specific topics via Kbase

Give the customer the option “Show Me” instead of reading it

A sound education strategy is important internally and externally

Education Roadmap◦ Internal Corporate Training◦ Basic Product Training◦ Advanced Product Training◦ Implementation & Methodology Training (for PSO and Partners)◦ Best Practices (for PSO and Partners)

When applicable, break down training modules in to short, consumable snippets◦ A set of “snippets” comprise a “module”◦ A set of “modules” comprise a “course”◦ At the end of each “course” provide a test to validate the

learning’s When applicable, provide workflow or user-type based

training modules◦ i.e. “Our Saas ERP Solution for Accounts Payable Clerks” or “Our

Saas ERP Solution for the CFO”

A sound education strategy is important internally and externally

Solution PartnersExtending the Sales and PSO Bench

Services organizations should embrace the partner model◦ Excellent source of quality resources to extend bench◦ Extend the reach of the sales organization◦ Many partners offer “value added services” that your

Saas services organization may not want to offer Partner strategy must incorporate education,

certification and oversight◦ Just having a partner plan is not enough◦ Third-party firms represent your company◦ Even more important with Saas that implementations are

well executed◦ Failure will compromise your Saas brand offering

Embrace and enable your solution partners for your success

Mitigating Risk:◦ “Open the kimono” and share your best practices and

implementation methodology Involve your partners and invite their input

◦ Establish a leveled and branded certification program Set both education and successful implementation completion

guidelines Offer (or mandate) internal services team involvement Being a “Certified” partner needs to mean something Don’t give it away for free; partners should be willing to make an

“investment” in time and $$$’s◦ Offer implementation and methodology education programs

specifically for partners “Enabling” partners is just as important as enabling your

customers

Embrace and enable your solution partners for your success

Customer SupportSaas customers expect support as well

Leverage standard support tools (embrace Saas)◦ SFDC◦ RightNow◦ SugarCRM

Establish Realistic Support Level Agreements◦ Based on the nature and criticality of your service offering◦ Access types (phone, email, etc…) and SLA’s based on

maintenance levels (i.e. Bronze, Gold, Silver)

Customer Self Service◦ Drive to provide customer self service as much as possible:

Give your customers access to: Knowledgebase Customer Forums (make sure they are moderated) Trouble ticket creation

Keeping your customers happy and using your solution

Customer Management &

RenewalsDon’t just sign them up and forget them

Customer success transcends all groups in the company

Need to determine where the “power core” is in your organization

Silos must be broken down◦ Cross functional teams need to be established◦ Groups need to be instructed and motivated to

work together Goals of the company should not include

just customer acquisition but also customer retention

Customer success needs to be thought of as the key strategy for your company achieving success

Customer Account Management (CAM)◦ Proactive customer communications◦ Scheduled 30 days after deployment and then every 60-90

thereafter◦ “Check In” to ensure effective use of the solution◦ Cross-Sell/Up-Sell Opportunities◦ Education and Services sales prospecting◦ Results in higher renewal rates and lower customer attrition

Renewals◦ Saas’s Low barrier to entry = low barrier to exit◦ CAM program helps to mitigate risk of non-renewal

situations◦ Don’t “Get Married” and then check in a year later asking

for another check

Maintaining your customer base and extending subscriptions

services strategies for saas software companies

Business

remote saas implementation

implementation cycle

saas services education

ps customer relationships

committed customer

customer enablement

customer distress

services focus