SaaS: Focus on value rather than features


I’ve talked with many companies trying to decide whether to move to a SaaS model for CRM and HR applications or to stick with on-premise.

In some recent cases, several were frustrated that after lengthy selection processes that they had run, they were no closer to coming to a decision then when they started.

The sophisticated weighted scoring that they had used had failed to come up with conclusive results.

In my view, the heart of the issue is that the traditional software selection process is broken.

There is heavy emphasis on feature-function analysis and that is increasingly becoming less relevant – on balance, features/functions are becoming comparable and the roadmap often moves so fast that gaps are resolved much more quickly than in the past.

Beyond the feature-function analysis, I often hear the comment that the models are tough to compare, like “apples and oranges”.

At this stage, some decision-makers defer to make a decision and resort to parallel trials – Proof of Concepts (PoCs) or “Pilots” – hoping that they will identify some distinguishing factors when using the tools. I’m actually very supportive of PoCs and pilots when they are set up in the right way.

However, too often they also focus on features and functions or generic capabilities that are well proven elsewhere. For example, can SaaS tools integrate with legacy, or can they be tailored for some unique processes?

Successful Proof of Concepts have very narrow scope to hone in on the truly “showstopper” issues; successful pilots focus more on “value” vs. “capability” delivered.

This means that piloting CRM capabilities like contact or opportunity management are sometimes a waste of time unless they demonstrate real value delivered (i.e. what specific efficiencies have been gained, how is win rate improved, cycle time reduced, etc.).

Accenture has a pilot approach called “proof of value” that clients have utilised to help move the needle on specific metrics that they want to validate prior to scaling for the main implementation.

What is interesting is that the SaaS model is particularly well suited to cases where the business case is fluid (i.e. where a hypothesis for the value exists but where iteration is necessary to “fine-tune” the capability). The agility of the SaaS model makes this fine-tuning a reality.

I think that this point is reinforced in Richard Firth’s recent post on SaaS and competitive advantage.

Firth sets out that competitive advantage is a factor of responding to market change and the ability to innovate both as a SaaS provide and as a SaaS consumer. I think that’s right.

As companies are comparing the “apples and oranges”, there is a material difference in the philosophy applied in a SaaS model to shift an organisation around a business process where adaptability is ingrained as a core requirement vs. a “nice to have”.

Firth goes on to promote risk-based billing methods for SaaS. While unlikely to apply to the mainstream SaaS vendors in the short-term, it is encouraging to see greater emphasis on value and risk vs. just features and functions.

In this way, successful companies start to focus on what changes are necessary to fully exploit these new models rather than getting hung up on the selection process.

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