Szu Hill, EO Technology Researcher, April 2017
Hi there, I am Szu and I have just joined EO Executives as part of the executive search team to identify and place the best and brightest talent for the C-level/VP/EVP roles we have. Prior to this, I worked with a couple of IT Services multi-nationals as a business analyst within their solutions development teams. At HPE, I worked in the global cloud services team to help design a cloud Integration platform for small & medium-sized independent software vendors. At CSC, I led the R&D part of the solutions development function to deliver new IaaS/SaaS offerings.
EO Executives recently surveyed over 100+ industry leaders who were mainly a mixture of CTO’s and Commercial Directors to understand how aligned sales and technology teams are in modern business, which resulted in a follow-up blog “Are Sales and Technology Pulling in Different Directions?”
To add to this, I can share from experience on how some SaaS/IaaS solutions departments I worked with had been rather successful in addressing this discrepancy, and yes, the success does indeed depend on excellent communications and a good working relationship between the Sales and Technology/Technical product leaders and managers. These vital elements lead to a productive cross-exchange of ideas and approaches - to mature the SaaS/IaaS solutions to a point where they are fit-for-purpose for their customers’ business, whether it be at:
• The Service Development stage,
• The Service Go-to-Market stage – The Launch,
• The Service Implementation stage, or,
• The post-implementation Service Enhancement stage (eg adding new features and functions, or integrating new datasets, etc).
At the top of the chain (within the solutions development function I worked in), the Technology Lead and the Sales Lead function together as one unified team, and as co-equals. All key elements concerning the product were broadly agreed (and issues ironed out) at this very important top level. As a result, a unified message can be cascaded top down to the solutions development teams who do the actual solutions building and rollouts; and to the sales teams who are mandated to sell and generate revenue.
For this first blog, I will talk about the initial Solutions Development stage (in the context of SaaS), and why upfront alignment between the Sales and Technology leads is so crucial.
Broad cross-sector SaaS functions vs more value-add customisation
No product can be created in isolation, and at the solutions development stage, the Technology/Technical product lead does need to rely on the Sales leads/managers to reach out to their beta customers to obtain the more specific requirements that will make their SaaS products more relevant (and therefore more sellable) to their target market.
In most instances now, using the ubiquitous Agile development approach, the software development team actually does sit alongside the end-users on the customer side and co-develop the product with their beta-customers directly.
However, the Sales/Commercial leads will still need to keep a hand in this process to help ensure that the SaaS product created doesn’t become too customised for any specific group of customers to the point that it cannot be a broad-based enough SaaS service to address other broader target markets.
Competitive pricing vs “Cost to serve”
Moreover, the Technology/Technical/Product lead also need to work closely with the Sales lead to price the software service optimally, whether by per subscription, or per use.
To sell at the optimal price so as to be commercially viable, not only must there be a good knowledge of what competitors are pricing similar SaaS services at, but also both the Tech and Sales leads have to be unified in the range of features & functions provided by their SaaS service (e.g. what is core service within the set price, and what is optional and needs to be charged extra as add-on features). This is needed to contain the “cost-to-serve” and prevent margin erosion in an already competitive market space.
The Service Level Agreements (SLAs) T&C’s to the customers
This SLA area may get less attention in the excitement of launching a new SaaS product and bringing it to the target customers in the market as soon as possible. However, it is critical that the Chief Commercial Officer and the CTO/Technology Product leads continue to work closely when producing the SaaS SLA’s, as properly thought-out and agreed SLA terms are important to protect from potential customer-related complications down the line which may be costly to rectify, or may lead to a service breach. This is because with every SaaS product, key elements such as data security, information & records compliance, service up time, disaster recovery RPO (recovery point objective)/RTO (recovery time objective) needs to be thoroughly thought through, and built into the SaaS contract to the customers – fleshing out all possible assumptions when providing the service, as well as meting out the parameters of what the customer responsibilities are and what the SaaS service provider responsibilities are.
This SLA element is an especially crucial area for CTO’s & the Chief Commercial Officer to work together and be aligned on, as there can be instances where potential new clients may want to amend the T&C’s before signing the contract to buy (e.g. demanding faster response times than stated on the SLA, or pass on additional data compliance responsibilities on to the SaaS provider, etc), and it will be a natural tendency for sales teams to want to accommodate customers’ additional requirements to close the deal and make the sale.
However, it will the technical teams’ time & resources that will be impacted down the line to accommodate additional and/or more demanding client requirements. An overstretched technical support team can lead to both client and internal team dissatisfaction, and low morale internally for the SaaS provider’s team. Moreover, provisioning to a client’s more demanding expectations may lead to margin erosion, and any potential non-compliance for additional data responsibilities taken on can lead to costly fines.
As highlighted in the very brief overview above, it is critical that the Technology and Sales Leads are aligned from the very start, as this may save any grievances and unwanted impacts down the line.
Now that you have read my views, in response to my blog, please do share your experiences on this topic with us? It will be great to hear from as many of you as possible to further shape our thoughts and provide supporting information to our EO Survey “Are Sales and Technology Pulling in Different Directions?”.
For my next blog, I will talk about why Technology and Sales Leads should continue collaborating and working in alignment the next phase – the SaaS Go to Market stage: The Launch.