SaaS Entrepreneur: The Definitive Guide
to Succeeding in Your Cloud Application Business
Professional Services in SaaS
The Perception of Professional Services
by Your Customers
In professional services , the change in revenues generated is driven by several factors:
- The perception that SaaS is quick and easy for a company to subscribe to, implement, and train staff on new on-demand solutions. Contradicting this belief are expensive bills received for professional services; these introduce serious ‘cognitive dissonance’ in the buyer’s mind. Upper management is not interested in seeing swarms of sales engineers and implementation specialists camped in company cubicles and empty offices after a SaaS subscription has gone into effect.
- Subscribers have expectations that the value of their subscriptions flows directly from the software, not from the professional services rendered. The mindset of the typical SaaS customer is that professional services ‘tidy up’ the subscription commitment, not provide its ultimate value.
- Maintenance is almost impossible to charge in a SaaS environment. In and around 2005, as the SaaS industry began to revive, some firms attempted to include maintenance fees in their pricing models but quickly did a turnaround in the face of fierce subscriber pushback. Why? Because there is nothingto ‘maintain’ in a SaaS system. Annual usage fees are possible, but they should not be associated with the word ‘maintenance,’ which must be eliminated from the corporate billing vocabulary.
- Increasingly, SaaS subscribers expect that advanced support will be delivered from a customer community that coalesces around the SaaS system.
- Many corporations have subscribed to SaaS systems because they wish to regard the expenditure as an OpEx and not a CapEx expense. Large expenditures in professional services confuse CFOs, who are the ones that tend to monitor CapEx vs. OpEx calculations.
Key Differences in Professional Services Teams and Practices
Traditional classroom training for SaaS subscribers is disappearing. Empty classrooms are now the norm. Training has become an online entity, often with both instructor-led and self-paced delivery options.
Many SaaS companies are choosing to provide customized training through partner organizations that have specialists on staff.
Professional Services Delivery
Today with SaaS, the delivery of professional services is far more commoditized and standards-based. Contracts are typically a fraction of the length found in larger on-premise implementations, and terms are far easier to understand. Key areas of differentiation are comprised of the following:
- After initial set up, companies offer simple packaged services with increased functionality.
- A typical project timeline may include four weeks of billable work accomplished over an eight-week time span.
- Initial fees are often only 25% of traditional on-premise implementation; plan for revenue from ongoing managed services, business, consulting and training.
- There is no single rule of thumb to determine the initial implementation and set-up fees for the services package.
- Projects are normally measured in weeks, not months.
- In terms of meeting budgets and timelines, project goals often shift to focus more on increasing subscriber satisfaction and utility of the software.
Read the rest of this chapter in SaaS Entrepreneur: The Definitive Guide to Succeeding in Your Cloud Application Business, 2nd Edition