5 Observations; 1 Complex Question

December 10, 2019
7 Minutes
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In SaaS businesses, operating results are earned every single day; and good businesses are made, not found. Writing here about building organizations, learning from the experience, and appreciating the ride.
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One of the benefits of the SaaS delivery model is that it enables an iterative approach to product development. Because of the relative ease with which software updates can be delivered, SaaS solutions evolve fluidly and organically, with small improvements, enhancements, and fixes introduced often in a seemingly steady stream. But this does not mean that major upgrades are a relic of the past or that big-ticket development initiatives are obsolete. Rather, even with the most thoughtful product planning, time has a way of cruelly revealing ill-advised feature choices, scale-limiting technology decisions, and ever-changing market needs. In this way, each incremental release of new code propels SaaS businesses along a predictable path toward a crucial and somewhat unavoidable question:

Whether to continue building onto an existing solution (with all its pros and cons), or to re-think the whole approach, with the benefit of invaluable knowledge learned over time?

Such initiatives come in many flavors and go by different names, such as: re-platform, major upgrade, re-write / re-build, next-generation development, future proofing, and addressing tech-debt, to name just a few. Nearly all successful software companies contemplate such an effort at some point in their life cycle; and it is a fraught decision with existential ramifications. While the benefits of these types of initiatives can be positively transformative, they also represent significant potential costs and risks (e.g. large investment of time and resources, opportunity costs for projects not pursued, freezing new client sales, brand-damaging disruption and alienation of existing clients, and loss of critically important subscription revenue). Having participated in a number of these major initiatives as an operator over the years, I’ve come to appreciate that these are extremely complex and there are no silver bullets. Likewise, every one of them is unique; and yet, these situations share numerous characteristics and dynamics, with applicable lessons to be learned from each. With that in mind, below are five quick observations and takeaways relating to this common, yet extremely high-stakes, situation.

Note: For simplicity’s sake, I’ve used the term SaaS throughout this article, although these principles apply to any number of modern software delivery models. This raises the important strategic decision of how to utilize cloud services while modernizing the architecture of a SaaS solution. I don’t intend to address that topic here, but will plan to tackle it in a future post.

  1. Strategic Clarity: To quote Simon Sinek, “start with why.” Be very clear on precisely why you are undertaking such a monumental endeavor in the first place. What specific results / benefits do you expect to achieve and how will those benefit your customers and prospects? If you can’t concretely answer these questions and communicate them honestly and with conviction to customers (no spin!), then the whole initiative may warrant re-thinking. Likewise, be very explicit about your strategy, and don’t compromise on it. At a high-level, what is the approach and the thinking behind how you seek to achieve the goals identified above? Tactical and execution questions will arise, but don’t blur them with strategic questions. Moreover, don’t confuse strategic risks (those that are inherent in your strategy and cannot be meaningfully controlled or managed) with actual risks that can and should be mitigated. Once the strategy has been set, focus maniacally on controlling those execution risks that can be actively managed.
  2. Beard-scratchers Welcome!: Projects such as these bring big, messy, strategic decisions that impact all parts of the business. Accordingly, it is important to make plenty of “white-space” in people’s schedules to allow for extended and unbridled debate at all stages of these projects. Moreover, these debates need to include a wide range of constituents with different perspectives. In some ways, this is counter to the “get-done” culture at most small-scale SaaS businesses, where the inclination is more “to do, than to think.” In these companies, we try to protect people’s schedules, in order that they can crank out the important work on their plate. Likewise, we tend to strive for efficiency in our meetings, with tight agendas and a minimization of any wasted time (“let’s get back to actually doing stuff!”). It is critically important to fight this urge and to get in a room and debate. These are almost never “30 minute” decisions; they need to be given the room to breathe and the benefit of many people breathing life into them.
  3. Landing the Rover on Mars: It is paramount that the whole organization understands the long-term product vision as early as possible. The far-reaching vision impacts not only near-term product decisions, but also virtually every supporting operating decision across the entire organization. This will ensure that decisions that are made today at all levels of the organization actually support ultimately arriving at our envisioned destination for the future. And, make no mistake, every seemingly small decision will have a material downstream impact. We’ve used the following metaphor to help drive home the implications of this point: “If you want to land a Rover on Mars…be precise in your trajectory. Because, the distance between here and there is so large that if you are one degree off target…you will wind up on Pluto.”
  4. All-In vs. Modularity: This point refers to the concept of a platform, environment, eco-system, or suite of solutions — terms that SaaS businesses tend to use to describe their product sets. Most SaaS providers contend that customers will derive disproportionately large benefit from holistically adopting all parts of a “platform” in concert, versus cherry-picking one-off products or functional modules. In this way, 1+1+1 should equal 30…not 3. At the other end of this spectrum sits “modularity,” which connotes (among other things) freedom of choice. Specifically, customers can elect to mix best-of-breed products or point solutions to address their business needs. Each of these approaches has strengths and weaknesses; and I’m not here to argue one over the other as being universally superior — as always, context matters. However, it is absolutely worth examining the goal of a given initiative through this lens. Where on this spectrum does your company expect to position its offerings at the successful conclusion of this initiative; and how will you convey value to prospects and customers? Whatever that point is…identify it, embrace it, and own it. So many product and go-to-market decisions will be driven by this decision; and the only truly bad decision is no decision at all.
  5. On-Ramps and Highways vs. Parallel Surface Roads: Because the dangers of negatively impacting current customers with any kind of disruption are so scary, we tend to be risk-averse in these efforts. It can be helpful to compartmentalize these risks with the help of the following metaphor: The current / legacy solution represents surface streets for clients. Those windy, narrow streets get them where they want to go, but the routes are often slow, fuel-inefficient, and require local knowledge. Our revolutionary new solution represents a super-highway — high-speeds, easy navigation, and clear line of site to desired destination. Clients understand the benefits of the highway, and they want to travel on it; but making the cut-over from surface streets can be intimidating and treacherous, so they are reluctant to make the switch. Their concerns can lead us into playing it safe, by minimizing change and simply recreating / replicating existing functionality in the new platform. Don’t succumb to this temptation — doing so is analogous to paving parallel surface streets — ultimately no better and no faster than the existing ones. Second, on-ramps describe how clients gain access to the new solution. SaaS businesses need to provide clients with multiple different “on-ramps” so that clients can choose WHEN, HOW, and HOW FAST they choose to move over and adopt the new solution. Paying close attention and investing heavily in providing many different on-ramps (not just one-time or one-size-fits-all) are the best ways to ensure that all clients ultimately elect to get on the highway.

While these concepts are applicable in many ways, they are just that — concepts. They need to be applied in pragmatic ways that make sense for each unique reality that SaaS businesses face. As stated above, there are no easy answers to solving to these supremely complex issues; but hopefully the tenets above will help folks navigate these major initiatives as they arise.


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