Tuesday, August 17, 2010

VP of Trust and other new SaaS titles

When I was an analyst with IDC, a very long time ago, I sat in on lots of vendor presentations on their products and strategy. Too many of them started off with a slide that identified precisely where the presenter and his group fit in the organization. It usually included a detailed topography, indicating the various direct and dotted-line reporting relationships within the department, within the division, within the group and eventually within the overall company. Managers reported to directors, reported to department vice-presidents, reported to division vice presidents, reported to group vice-presidents, ad infinitum.

The slide (actually an overhead foil) accompanying this discussion of "where we fit in the organization" usually depicted a complex "box and lines" organization chart. But for all its vastness and complexity, a 3-D model of the entire solar system situated within the Milky Way galaxy would have been more appropriate.

Having been exposed to this mind-numbing ritual so early in my career, you might understand why I'm afflicted with a bad case of MEGO ("my eyes glaze over") when it comes to corporate titles and organizational structure.

A Vice-President of Customer Experience

But my interest in corporate titles was piqued recently. Moderating a panel of cloud and software-as-a-service (SaaS) industry CEOs at the AlwaysOn Summit at Stanford, the moderator, Jeff Kaplan of THINKstrategies, asked the participants to discuss cultural and organizational issues particular to SaaS. Swayne Hill of Cloud9 Analytics talked about the need to build a culture and organization that delivers a positive customer experience every single day. In line with that goal, he explained that, even before he hired a VP of Sales or a VP of Marketing, he brought on a "vice president of Customer Experience."

Given that for most SaaS companies, customer satisfaction and retention is vital to success, putting an executive in charge of delivering a high quality customer experience makes perfect sense.

In fact, the SaaS business model may require re-working a few other titles:

  • The "Vice President of Customer Support" could be more aptly titled the "VP of Customer Retention." An important part of the job, after all, is about keeping customers satisfied so that they renew at the end of their subscription term. Most SaaS companies that can't renew a high percentage of their customers can't succeed.
  • The traditional "Vice President of Marketing" role might be better re-labeled as the "VP of Trust." In a SaaS company, the job of marketing is essentially to build visibility and credibility among prospective customers in order to attract their interest and win their trust.
  • The "Vice President of Product Development" role could be re-labeled as the "VP of User Experience." SaaS customers aren't buying just product features. They're signing up for the entire experience and they expect satisfaction throughout the entire life-cycle from purchase through deployment, configuration, use, and renewal.
  • The "Vice President for Legal Affairs" or "Chief Counsel" might be better called the "VP for Expeditious Purchase." A good part of their role when it comes to contracts is keeping the purchase process simple and consistent.
In the SaaS model, not only should certain titles change as job functions change, but some departments might best be merged into others or eliminated entirely. This whole issue of org charts is getting a whole lot more interesting.

Monday, August 9, 2010

Putting Marketing in "The Pit" is bad for SaaS

I used to work in a place called "The Pit." I wasn't serving ribs and pulled pork at a barbecue joint that wandered north into New England. I was actually with one of the large mini-computer companies they used to populate the ring between Route 128 and Route 495 around Boston. The company put all of us marketing types into the far end of the building into a cube-filled area that was a 1/2 level below grade. I walked down 8 steps to get there, and the windows looked out directly into mulch and tulip stems.

Before it was occupied by the mini-computer maker, the building housed a brewery; I suspect "The Pit" was the loading dock.

Not only were we half-underground, but we were isolated from other departments. Sales was on a different floor. Customer support was in a different building. Product development was in a different town.

Isolating marketing from the rest of the organization surely didn't help the prospects for the mini-computer company. (They disappeared years ago, and the building is now occupied by a medical device manufacturer.) But that kind of organizational separation would be especially bad for a software-as-a-service (SaaS) company.

Marketing connected to Sales and to Product Development

The need for a close connection between marketing and sales is critical to cost-effective customer acquisition. This will likely be a SaaS company's largest single on-going expense and efficiently converting leads into opportunities into wins is essential to success. That requires close coordination between marketing and sales.

But there are other necessary connections beyond the obvious one between marketing and sales. SaaS companies typically enhance their solutions more frequently than on-premise solutions, so a closer relationship is needed between product development and marketing. Marketing needs to know what's coming through the pipeline. For one thing, that helps them handle the accelerated product introduction calendar. But it also lets marketing share the product roadmap as part of the effort to win the trust of prospective customers.

Product Development connected to Customer Support

And there are groups besides marketing that need to be tightly wound into this web. The SaaS model works better when the product development group is well-connected to the customer support group. They'll have a better understanding of customer needs and can respond more quickly and accurately with product enhancements. It's one of the key benefits for companies moving from on-premise to a SaaS subscription model.

Sales connected to Legal

The sales group would do well to be closely connected to the legal department. Under the SaaS subscription model, sales delayed through protracted contract negotiations amount to lost revenues. Sales executives should clearly understand the standard contract and know which items are negotiable and which aren't.

I could draw out other connections across different departments, but you get the point. Successful SaaS companies requires close coordination across the entire organization. Isolating groups from one another is a bad idea, especially if you shove one of them into "The Pit."