Hi there, I am Szu and I am part of the executive search team in EO Executives who identify and place the best and brightest talent for the C-level/VP roles we have. Previously, I worked with IT Services companies in solutions & product development. At HPE, as part of my MSc in IT, 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.
Early this year, EO Executives 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 theme blog “Are Sales and Technology Pulling in Different Directions?”
From this EO article, I started a spin-off series of blogs talking about why alignment between the Sales and Technology leads is so crucial the at all stages of the SaaS life cycle:
• The Service Development stage,
• The Service Go-to-Market stage,
• The Service Implementation stage, or,
• The post-implementation Service Enhancement stage
Just to recap on the 1st blog, I touched on the initial Service Development stage (in the context of SaaS), and shared from my experience working for a couple of IT Services companies, how success does indeed depend on excellent communications and a good working relationship between the Sales and Technology/Technical product leaders and managers (http://blog.executivesonline.co.uk/blog/saas-development-why-sales-and-technology-need-to-be-aligned).
Often smaller & medium-sized SaaS companies do often start as a 2-man band, with the Founder/CEO and the technical supremo (aka the CTO) who came up with the SaaS idea and strawman. Developers are often recruited as the next step, to build out the SaaS features and functions. Where required, the initial marketing & technical pre-sales promotion of the beta SaaS product(s) often falls on the CEO shoulders, with the help of an online marketer/UI UX designer. These are all typical parallel activities in the early SaaS service development stage.
Often the Sales lead (and team) are recruited in the later stages, after the SaaS start-up has gained a certain momentum. As a result of this organic order of adding key contributors to the start-up, the Sales leads eventually hired may find themselves walking into an already entrenched way of selling to customers spearheaded by the Founder CEO & CTO. For example, for smaller SaaS vendors and start-ups, where resources may be limited and budget is tight, the technology lead/CTO may want to focus more on a commoditised & online customer self-service purchase model – where the selling is automated, low capital-investment and low touch – targeting the selling to smaller, less complex customer businesses (low-touch/automated, low-priced, high-volume transactions) where a generic SaaS service will meet a smaller customer company’s business needs without any product customisation.
A highly popular sales model among start-ups is to aggressively automate the sales process via a fast & easy online purchasing site – where no sales people are required, or only a remote telesales person is required However, this automated & online self-service customer purchasing model requires a very effective and efficient marketing machine to reach out to the myriads of smaller SME’s in highly-dispersed geographical regions and industries. However, this ambition is not as easy to achieve as hoped for. Customers do not simply show up and sign up online. Moreover, customers may often have more complicated queries where an online sales chat assistant or an online FAQ may not be able to help on. As a result, the customer does not bother to subscribe to the SaaS product.
It’s at this stage that the SaaS vendor may decide to bring on a Sales lead/team into the business.
However, the new Sales Lead or CSO (Chief Sales Officer) who walks into a SaaS business with an already established CTO, may face some hurdles challenging the status quo, and may get internal friction on how he wants to do things.
Example friction 1 – Who to sell to & how to go about it?
An example friction could be in deciding what kind of customer companies to target (e.g. smaller companies or larger enterprises), and how to go about it? A potential tug of war for company investments could be, to:
• Spend more money on the product/service itself - to make the product even more feature-rich and more attractive … and so it can pretty much sell itself? (low-touch, high-volume transactions with smaller/less complex customer companies). In this case, only online sales support may be required as the CSO’s team. This sales model will work well if customers can be found with strong targeted advertising, and it’s easy enough to subscribe without talking face-to-face to a sales person, if they can learn more about the product through online tutorials/webinars, great documentation (both user manuals & easy-to-understand technical documentation).
• Invest more money in bringing on board more good salespeople into the SaaS vendor company – sales people who can sell up the value-chain, or, provide customers with business solutions to their problems (instead of giving them just the tool) … which will in turn enable the SaaS vendor to make bigger sales or obtain higher profits. A team of good sales people can also target the selling to larger, more complex customer enterprises - where the SaaS product will need to scale to more users size-wise and across diverse departments/regions, and larger enterprise customers may need customisation and/or integration to meet enterprise-level needs and/or integrate with multiple existing systems and data sets. In this case, technical pre-sales or consultancy support will be needed for this target market.
Whether to go with more of the same commoditised self-service purchase model, or more value-added selling by professional sales team, both the CTO and the CSO will need to work together to find the sweet spot for their sales model approach that will maximise profitability and obtain faster ROI’s.
Example friction 2 – Not including sales people in the product development/update stage
Another common issue at the SaaS Go-to-Market stage, whether it be at smaller SaaS vendor companies or larger IT Services enterprises, is that the Sales lead/team may not always be included in the latest product upgrade or enhancement discussion. In a rapid cycle Agile development process, the Technical lead and the developers may be continually improving the SaaS product at a highly rapid pace, and in the midst of all this exciting activity, unintentionally left the sales team out of the loop.
This means that the sales people may not be selling the full updated capability of the SaaS product to the customers, for example if a potential customer wanted a particular feature in the SaaS product (which wasn’t originally available), but the sales person told the customer that the feature isn’t available yet (not realising that in the last 2 weeks that that feature had already been added) – a potential sale may be lost for this very simple reason. So, the Tech team does need to communicate and coordinate with the sales team early and very regularly to ensure instances such as the above does not happen (or keep happening).
Additionally, the Product/Technical Leads must never underestimate the need to train (and continually update) the sales team adequately to ensure that they can sell the full capabilities of the SaaS product well to their clients, can demo the product expertly, and have everything they need to be successful. Not adequately preparing the sales team can result in a lack of sales closure, or SaaS subscription cancellation.
Example Friction 3 – Underestimating the integration effort and costs
In most cases, when a customer considers implementing SaaS, they will still have some of their legacy or existing on premise applications running in parallel with their intended new SaaS services. This means that it is highly likely that the customer will need to integrate the various on premise apps and cloud SaaS services together, so that they can work together to meet business needs.
Additionally, the SaaS product may need to scale up much further to service more users across different business units & regions, or it may need customisation and/or integration to meet enterprise-level needs and/or integrate with multiple existing systems and data sets. This may not be a straightforward process and can end up costing the customer a lot more then they initially budgeted for.
In these cases, a specialised technical pre-sales capability and/or a technical feasibility support will be needed to run alongside the sales team in the sales pitch to the customer. If not, this can result in complication (and an unhappy customer), where the product is sold by the sales person to the customer without understanding the systems/apps/data integration needed. Or, not having the capability internally to do the integration – and therefore cannot get client to “sign on the dotted line”.
This particular point goes further to show the importance of continued collaboration and alignment between the Sales and Technology leads.
All the examples given above illustrates that any significant voids between the commercial and technology departments within numerous organisations can be detrimental to the business, and cause the negative business impacts highlighted in our original EO survey “Are Sales and Technology Pulling in Different Directions?”
Recommendations going forward
We received a very good recommendation from a senior executive working in a similar IT space, that management ought to consider the merits of combining Technology and Marketing as one function. I think this could be a very good suggestion both at the leadership level and downstream.
• For example, there are benefits to hiring sales people from a technical or technical consulting background. This concept is not new, with more and more companies in the IT and SaaS space hiring Technical Sales Consultants who actually understand their clients’ IT landscape, and what could be the clients’ opportunities and limitations in deploying a new technology solution. This would increase credibility of the IT/SaaS vendor in the eyes of the client, and inspire confidence that the SaaS solution would indeed be right for their business.
• Additionally, it is recommended that at the hiring stage (whether it’s at start-up new-hire stage, or replacing an incumbent), a thorough assessment and screening be done on the new candidates’ viewpoint, personality and approach - to see if there is a strong alignment to the current leadership’s agreed go-to-market strategy and sales model. Whether it be hiring a new technical person or a new sales person, the interview panel should consist of senior representatives from both the sales and technical department, to ensure stakeholder buy-in from both camps are nailed from the start for the new hire.
• In fact, in terms of day-to-day working and collaboration, key technical development sessions/workshops should have a sales representative providing input (or just to be there to keep updated and feedback key development to the rest of the sales team). Vice versa, an appropriate Technical Lead should also be invited to participate in and contribute to key sales strategy sessions.
Doing the above may help to ensure seamless working & communication between both the technology and sales departments, and avoid some of the pitfalls highlighted in this blog and from our EO survey.
For my next blog, I will cover both the SaaS Service Implementation stage & the post-implementation stage, and wrap up the blog series for this particular topic.
EO will also be running a webinar on “Are Sales and Technology Pulling in Different Directions?” on Thursday 8th June 2017 and we also look forward to sharing the discussions coming out from our panel of CTO/CIO’s and CSO/Sales Directors with you!
Stay tuned for more information on the webinar!
In the meantime, the following may be of interest to you:
- Are Sales & Technology Pulling in Different Directions
- SaaS Development- Why Sales & Technology Need to be Aligned