Date Published May 25, 2012 - Last Updated 7 Years, 287 Days, 15 Hours, 20 Minutes ago
In IT technical and customer support, the only constant is change. And nowhere is this more evident than in its tool set. Since the very first commercial case and knowledge management systems replaced steno pads, three-ring binders, the “shouter base,” and an incredible array of homegrown resources twenty-five years ago, the industry has come a long way. Today’s tools allow for an issue that was opened in a local office to be worked and resolved during the night by different members of the same team on the other side of the world. What could only be imagined a few years ago has become commonplace. Now we are facing another huge development in the support technology suite: the transition to the cloud. There are significant advantages to be realized from that transition, but the journey is not without its risks. As with everything else in technology, the keys to success are careful planning and execution.
What Is This Cloud Thing? And What’s In It for Me?
When electricity replaced hydropower over one hundred years ago, every business built its own electric generator plant to meet its power needs. After a while, centralized power companies made investing in private generators largely unnecessary. It was simply cheaper and more reliable to buy electricity from a central supplier, than to own and operate a power plant yourself.
The advantages of the cloud, of having your computer hardware, software, and data located on a central resource, are like those of the power plant. It’s both cheaper to buy and faster to implement computing resources from a company that, like the centralized electric utilities, sells them by the month as its business. The subscription model motivates vendors to get their customers up and running as fast as possible and to keep them going, for if the customer leaves, the income stream dries up. The cloud is also more scalable–when you need more server horsepower, the provider dials it up. When demand subsides, dial the resources back down. You pay only for what you actually use. Perhaps the best news of all is that the payment is an operating cost, which is much easier to get authorized than a huge capital investment.
If this were all the cloud had to offer, it would be more than enough to justify the move. However, beyond the advantages of lower system costs, faster implementation, and significantly increased scalability, the cloud offers a range of other potential benefits. SaaS/cloud-based tools tend to be newer in design and offer more features and functionality than the traditional onpremises products. The application vendor can monitor the use of features and functionality across all customers in real time, enabling the identification of best practices, the delivery of tailored training and consulting services, the provision of packaged groups of features, and a variety of pricing plans. In some case, the vendor may offer access to metadata, aggregate usage information from across the entire customer base that can help you generate highly accurate benchmarking statistics and other analytics.
The rapid implementation typical of most cloud applications has another benefit: Vendors may offer free trials of their technology. If you like it, keep using it. If not, try another vendor’s product. The cloud also tends to encourage the creation of optional enhancement products from a range of vendors, so customers can assemble their own suite of applications, if they so desire.
Fear of Flying: What If?
Some common concerns about moving to the cloud include security, reliability of access, and vendor viability. Can my data be compromised? What happens if the vendor’s infrastructure goes down? If the vendor goes out of business, will I still be able to use the product? While all of these risks apply to on-premises systems as well, the lack of a physical presence on site seems to significantly raise the level of worry for some decision makers. Security vulnerabilities exist–and are constantly being invented–regardless of where systems are located. The rapidly growing numbers of companies using cloud-based systems for even the most sensitive financial operations show that concerns about security can be adequately addressed by taking proper precautions, doing your “due diligence” research, and dealing only with vendors that have been fully audited and certified.
What if the system goes down? All systems, whether located in your own data center or in that of a cloud vendor, are subject to failure. A reputable data center vendor is more likely to have invested in extensive failover and recovery resources than the average company. This should definitely be on your list of questions for potential vendors.
But what if the vendor goes out of business entirely? What you are buying from a SaaS/cloud vendor is a license to use their technology for a specified period, rather than the traditional perpetual license. While many perpetual licenses require the source code to be held in escrow, to protect the customers if the company fails, the reality is that even with the source code, the most likely outcome is that the customer will transition to a different product and vendor. Companies fail, and their customers need to be prepared for that eventuality. For a cloud vendor, prospective customers need to be sure that there are specifications in the contract for data migration and for guaranteed continuance of the service for some set time after the vendor goes out of business.
To set your organization up for success, there are some key questions to ask at the start of the planning process. What do you want to make happen? Why? What’s driving the desire for change? What is it actually worth, in dollars, to the group and company? How will you measure its success?
The days when support executives and managers could hope to succeed by cobbling together a long list of “absolute must-haves” features into a request for a proposal/quote/information and blasting it out to every vendor in the industry are long over. Most, if not all, of the features of standard support technology suite tools have become commoditized, available for free as open-source software and in all of the competing products. It’s not about the software anymore. While many technology developers are caught up in the usual game of adding ever more bells and whistles to their products in the hopes of attracting prospective new customers, savvy SaaS/cloud vendors have realized that what they are actually selling is a relationship. The essence of that relationship is the expertise that can make a customer more productive and profitable, expressed both in the quality of the software and in the ongoing professional consulting and support that goes with it.
Building a Partner Relationship
Identifying and choosing a SaaS/cloud partner takes time and diligence. Consultants who know all of the vendors in the market can be valuable assets, but be sure that they are completely vendor-neutral. (A number of vendors have special commission programs for consultants that can pose conflicts of interest if those programs are not fully disclosed.) The litmus tests for a relationship are transparency and consistency, and they should be applied to everything about the vendor, from marketing materials to organizational structure and the behavior of the people you deal with. Does the vendor walk its talk?
How transparent is the vendor? What is their uptime guarantee? Is the guarantee only about uptime, or are response levels also given for screens, etc.? Do they publish their actual operational performance statistics? Most vendors offer service level agreements, but what do those SLAs actually include? What happens when a breach occurs? Does the vendor automatically notify the customer and issue a rebate, or is the customer responsible for detecting the breach and asking for recompense? What certifications are offered? Is there a documented and road-tested disaster recovery plan, with trigger points and specific failover resources identified?
Who actually owns the ongoing customer relationship on the vendor side, and how is that ownership expressed in authentic accountability? Sales teams are traditionally hunters, skilled at turning prospects into customers–but what happens after the contract is signed? Who is responsible for keeping the relationship going, and what authority do they have? Does the company disclose its customer retention rate?
How does the vendor define “support”? What access channels are available for the submission of support cases? The first option on the list should be the vendor’s application itself, followed by telephone and e-mail.
What resources does the vendor offer for training and ongoing mentoring and coaching to help customers get the most from the technology? Don’t assume that the presence of a “customer success” team is a guarantee of best-practices assistance; in many SaaS/cloud companies, the customer success team is only there for implementation, or to “save” at-risk relationships.
Finally, keep in mind that nothing lasts forever. Most SaaS/cloud companies seek to make the “on-ramp” to their service as smooth as possible. A good partner will also frankly discuss the “off-ramp” resources they offer. With this truth in mind, don’t throw away your vendor candidate list after signing a contract—you may very well need it again later.
SaaS/Cloud Product Pricing
One of the two key differences between the SaaS/cloud sector and the traditional customer support technology market is in how you pay for the product (the other being the physical location). The SaaS model offers a variety of possible revenue conduits, and vendors will often offer a range of payment options besides or in addition to the standard monthly subscription fee.
The basic approach is to charge a monthly subscription fee per user or seat. Most vendors require a year’s commitment in advance, and some offer a price break if you pay for an additional year or two up front. There may be one per-seat price for entry-level versions and a different per-seat price for enterprise-level usage. Be very careful to clarify this point, for the price jump on the enterprise level can be very steep indeed.
You may also be charged according to your organization’s bandwidth or storage capacity usage, and this, too, can trigger that bump up to enterprise-level pricing. Be sure to forecast your usage levels as accurately as you can, and try to lock in prices wherever possible. Keep in mind that your ability to change vendors is just about your only major defense against steep price increases, so keep your exit strategy current.
Be aware that SaaS/cloud vendors often charge for support as a separate item; ditto for training and a full range of professional services. Embedded advertising is another revenue generator that may be in play. As mentioned earlier, vendors may also offer sophisticated business intelligence services based on their access to aggregate metadata. And a few companies have expanded into the outsourcing sector by offering the hourly services of skilled employees who are familiar with the vendor’s application.
Preparing for Takeoff
Several support groups have very successfully used beta-testing with small teams as an integral part of the vendor/product selection process. Not only does this approach allow time to fully evaluate vendors as a potential relationship partners, it also encourages testing of design and customization options. SaaS/cloud vendors will often offer free or very low cost access to their products for such testing, and some even are willing to provide data migration services as well. “Try before you buy” is one of the best advantages of the new model.
This ability to test ideas, approaches, and products has another benefit. Along with subscription pricing, testing tends to discourage the “big bang” style of implementation where a company or department tries to apply everything at once. As a result, the incidence of “shelfware” is much lower in the SaaS/cloud market.
Will the SaaS/cloud model completely replace the traditional approach? Opinions and estimates vary, but all across the industry, more and more vendors are shifting to the cloud. Most of the new firms aren’t even offering perpetual licenses or on-premises products anymore, and this trend is likely to increase as time goes on. Support executives and managers need to become comfortable with selecting and deploying cloud resources. It isn’t a question of if you will be using a cloud-based solution in your support center, but when.
Author's Note: Thank you to the SaaS/cloud vendors that provided much-appreciated introductions to their customers for research interviews: Giva, Salesforce, Service-Now.com, and Zendesk.
For over thirty years, Mikael Blaisdell has been closely involved with the strategy, process, people, and technology of customer relationship architecture, retention, support, and profitability management. Beginning in early 2006, in response to the development of the SaaS/cloud sector and aware of its effects on the technology industry, he began advocating the redefinition of customer support as a profession. His online publication,
The HotLine Magazine
, is available in more than a dozen languages and is read in over 120 countries.