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Adopting a SaaS model needs proper implementation, change management

Successful SaaS model adoption requires a lifecycle approach, but if properly implemented, it can boost customer experience.

While many companies have moved to the cloud, they haven’t necessarily realized the full business value in migrating applications there.

There’s little doubt that companies have embraced cloud models with vigor: According to recent Deloitte data, 93% said they are adopting or considering the cloud, and a majority (54%) expect to use cloud software for mission-critical applications within the next three years.

Software as a service (SaaS) is a delivery and licensing model in which software is accessed on the Web via a subscription rather than installed on local computers. With SaaS, companies need not manage applications or invest in hardware to run their applications. As a result, SaaS models enable companies to reduce costs and minimize IT management challenges.

While cutting costs and complexity initially drove companies’ migration to the SaaS model, one of the most important benefits of a transition is the ability for companies to better align services and experiences to customer expectations.

SaaS-based customer experience management focuses on cultivating relationships throughout a customer’s buying cycle, from the initial phase when customers become aware of and consider buying products, through to purchase and adoption, then beyond to implementation of products, upgrades, additional product purchases and so on.

“If you can’t support [sales] growth with the necessary resources to nurture your customers through a mapped and intentional journey to success, it won’t be sustainable,” wrote Renee Schaefer on the Higher Logic website.

SaaS adoption without successful SaaS implementation

But while companies see the virtues of adopting a SaaS model, successful implementation can be another story.

SaaS-based customer experience management focuses on cultivating these relationships throughout a customer’s buying cycle.

 

Indeed, according to recent data, survey respondents that moved to a SaaS model for applications have realized about 10% to 30% cost savings. But nearly 60% of those respondents say they haven’t seen “measurable business-value improvements” from SaaS use.

That’s because many SaaS implementations involve integration between existing—often legacy—systems and new SaaS technologies, which can be difficult to achieve. Further, IT infrastructure staff need to be trained to manage these SaaS-based applications. Without proper follow-through, SaaS adoption may fail.

“The primary cause for attrition [from SaaS] . . . is that a cloud implementation is not what [customers] were expecting it to be, so they only use the product at 20% of its capability,” said Thimaya Subaiya, senior vice president of operations and renewals at Cisco. “80 percent of attrition challenges are due to implementation. If you solve implementation, adoption becomes more meaningful,” he said.

Companies are hesitant to make changes to mission-critical applications, for example, because they worry they will break these apps and the business will suffer costly downtime. With SaaS, upgrades, patches and so forth can be much faster and companies don’t have to tolerate this downtime and business loss.

“If we do the right implementation, you can have an always-on environment,” Subaiya said. Further, he said, that is the kind of business ROI that improves customer experience for a company; costly disruptions can be averted. “That is the key behind driving a truly valuable customer experience.”

As a result, successful SaaS adoption should focus on implementation, as well as helping customers to maximize value throughout the lifecycle of the product.

Connected devices and customer experience

To take this more holistic approach, companies increasingly have turned to Internet of Things-connected devices (IoT). IoT devices are crucial to a lifecycle-oriented approach.

IoT devices, for example, can provide critical analytics about how customers use products. They can indicate whether a car needs tire repair or a fridge needs a water filtration system—before a customer knows there is a problem. But Subaiya says that IoT can also help SaaS-based provider companies create proactive customer experience by providing real-time data on product usage to indicate where customers need help and training.

“It gives us much better insights into whether customers are progressing, whether they are using the product as it’s meant to be used,” Subaiya said.

80 percent of attrition challenges are due to implementation.

Thimaya Subaiya, senior vice president of operations and renewals, Cisco

 

With that insight, SaaS providers can understand if customers are blocked, or even attriting, because they need more product education.

“It’s supercritical to tell us whether customers have turned on all features, what they haven’t turned on,” Subaiya said. “It gives us real-time information on whether someone is stuck, whether they are fully realizing what they bought from us. We can connect with those customers to make sure that they are getting over those hurdles.”

Data supports this. According to McKinsey data, 60% of survey respondents said that IoT devices provide significant insights, such as data on customer demographics or shopping patterns. But an almost equal number—54%—claimed that companies used 10% or less of this IoT-generated data.

SaaS offerings also enable customers for SaaS providers to provide tiered levels of support. Phone and email support care often complemented with other less-costly web-based sources of customer support, such as online frequently asked question segments, online communities, video demos and other resources.

Active learning in implementation

Another key aspect of cultivating relationships with customers throughout a product lifecycle is providing education and active learning opportunities as they adopt new products that are more technical. Customers likely need to work with a SaaS provider, and often its implementation partners, to develop institutional knowledge and product understanding.

“As you think about a new project . . . we want to be with you, helping you all the way, from the planning phase, when you’re building your roadmap to the point when you want to build new capabilities,” said Maria Martinez, executive vice president and chief customer experience officer at Cisco Live 2019. “A lot of these new projects require you  [as well as your team] to learn some new capabilities.”

At the conference, Cisco announced various learning modules it had developed to enable customers to learn about key technologies to prevent stumbling blocks or attrition.

This kind of active learning means that customers and providers need to work more closely together, as do customers and partners. “The relationship is becoming more enhanced,” Subaiya said.

Making it through the SaaS transition

The transition to SaaS is often ultimately fruitful. But in the short term, a company’s revenue—and operational stability—can take a hit. Given the influx of change, processes, culture and morale may all be vulnerable.

Companies often need to re-architect their technologies, find new models to recognize revenue, train partners and customers for the new skill sets required and work to transform company culture to address change management issues.

In the end, the transition to SaaS goes far beyond technology to encompass how the organization operates and its culture. The transition includes moving from a reactive interaction model to a proactive one, on the way to becoming a prescriptive organization that is able to anticipate and deliver services before customers need them.

That’s why the transition to SaaS models is about “getting over the way the company is structured and having a blueprint to allocate resources at the right time,” Subaiya said. It’s also about helping employees through and helping them “deal with the emotional investment” in old practices and technologies that are changing, Subaiya noted.

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Lauren Horwitz is the managing editor of Cisco.com, where she covers the IT infrastructure market and develops content strategy. Previously, Horwitz was a senior executive editor in the Business Applications and Architecture group at TechTarget;, a senior editor at Cutter Consortium, an IT research firm; and an editor at the American Prospect, a political journal. She has received awards from American Society of Business Publication Editors (ASBPE), a min Best of the Web award and the Kimmerling Prize for best graduate paper for her editing work on the journal article "The Fluid Jurisprudence of Israel's Emergency Powers.”

Brent Leary

Brent Leary is a CRM industry analyst, adviser, author, speaker and award-winning blogger. He is cofounder and managing partner of CRM Essentials LLC, an Atlanta-based CRM advisory firm covering tools and strategies for improving business relationships. He is the chair of CRM Evolution 2019, CRM magazine’s annual industry event. Leary's blog, Voices Carry, focuses on how voice-first devices and interfaces are changing the rules of customer engagement. Leary writes regularly for CRM magazine and the Atlanta Tribune, where he also serves on the editorial advisory board.  Leary also hosts the weekly One on One conversation series for Small Business Trends and is writing a book on the impact of online retailers.