Wednesday, April 18, 2007

What's Great for the Customer is Great for SaaS Adoption (AKA one neck to choke)

Just finished up a two day stay in Santa Clara for the SaaScon conference. Although there were definitely the standard mix of boring infomercial speeches by some of the event sponsors, overall I found the event to be very stimulating and I’ll blog a few of the highlight insights later. For now, I’ll mention one particular takeaway I had at the conference which I think will be important for SaaS adoption.

To take a step back, a theme that came up again and again during the conference is that, because of SaaS, all the complexity, risks and costs of software implementations, delivery and ongoing maintenance have been shifted away from the customer to the provider. This includes what we normally think of when we think of SaaS – the application architecture, etc., but also the delivery architecture. Combined, this includes everything from having an intuitive application logic to fast performance (improved by the likes of Akamai if necessary) to seamless updates. Whereas back in the day, it was the customer’s headache to deal with these things, SaaS makes it the ISV’s headache.

Steve Lucas, VP of On Demand Software and Services for Business Objects, explained it best when he recounted the sleepless nights he has had since launching “You take on ALL the pain of supporting your customers that your customers used to have to go through.” Stressful for the ISV but great for the customer!

From the company’s perspective, if you’re the person making the vendor selection decision, this is extremely important. And to explain why, I’ll take a tip from Kathy Sierra (whose discontinued blog I am still mourning) and hope that a picture explains everything I ever learned in management consulting:

What does this mean? What SaaS provides to the company, specifically to the IT staff of a customer, is the emotional increased peace of mind. The CRM system goes down? Call Salesforce. The recruiting system is not working? Call Taleo. Of course the business case for SaaS still must derive from the rational – i.e., cost, SLA's, etc.. But when you are the decision maker, and (I’ll caveat), have already had an implementation with a SaaS vendor that has saved you many sleepless nights, that emotional element of the decision making process I think will be too much to ignore. And I don't think that's a big caveat. Do you? Perhaps a more interesting question is -- how does the political factor in?