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Archive for August 29th, 2007

Is Support a Cost Center or a Product? (If you do SaaS or Open Source, It’s a Product!)

Posted by Bob Warfield on August 29, 2007

I always find the RedMonk blog interesting, and this time it has to do with his post on Making Money in Open Source on Support.  Coté says some things that got me frothing at the keyboard again. 

Developers Need Support, But It Is Seldom Offered With Enough Bandwidth

First, on the likelihood you can make money selling support to ISV’s:

“In general, I’ve found that ISV programmers (people who write applications [packaged or SaaS delivered] to sell to other companies, not “corporate developers” who write in-house applications) are less prone to use support for software, closed or open source.”

and:

“This is the kind of mentality I encounter among programmers quite a lot: it’s insulting to them to suggest that they need help.”

Let me explain about the ISV perspective, because that’s the world I’ve lived in all my career.  This has amazingly little to do with machisimo, being too cheap, or being insulted.  Rather it has everything to do with bandwidth.  We’ve all used Tech Support.  Who do you know that loves it?  Sitting for hours on an 800 line being tortured by music and that painful interruption that’s worse telling you how important the call is to them.  So why don’t they answer then?  How would you like to be waiting on some Tech Support guy to tell you all the standard stuff (take 2 reinstalls and call me in the morning) while some high dollar Enterprise customer is chewing your CEO’s ear off about why your mission critical software doesn’t work?  You know its going to take 3 escalations to more senior folk before they even understand what you’re trying to tell them and meanwhile your CEO is ready to fly your entire team to Nowhere, Iowa to work at the customer’s site just to placate them.  Been there, done that.

The insult is not that I need the help, it’s that you think you’re helping by doing that to me! 

If you want to make money selling support, treat it as a product, not a cost center.  Don’t send me to Bangalore.  Don’t put a guy on the phone with my architect that can’t carry my Alpha Geek’s jock strap.  Get somebody real that can go toe to toe.  But is that really a viable model?  Can you afford to hire Alpha Geeks to deliver support?  Probably not, because they will only do it if they have that rare combination of Alpha Geekdom and craving human contact so much they’ll take it under the duress of Tech Support.

SaaS companies come off better in this respect because its easier for them to put their Alpha Geeks onto the problem.  The Alpha Geeks watch the problem as it unfolds and directly access the data center to fix it.  They don’t have to struggle to remote control the customer through an On-premise fix.  Service for SaaS vendors is a product, not a cost center, but it’s also a product that is cheaper for SaaS companies to deliver because the service can be delivered in many cases without them leaving their desk and sometimes without the customer even knowing.  The latter is a problem too if you want the customer to value the service, but we’ll save it for later.

Despite all that, Enterprise ISV’s still spend time on the phone to companies like Oracle and Microsoft trying to get help, and they keep their maintenance paid up because you never know. 

Support Types

Coté offers a good list of types of support provided:  bugs, scaling, configuring, upgrades, finger pointing (or proving who’s “right”: the software or the user), re-setting expectations (the software actually won’t scramble an egg inside it’s shell like the sales guy said), and your million dollar nightmare (customizing and supporting out-of-date deployments).

He goes on to suggest some other types peculiar to open source:  Updates, Platform Certification (“Stacks”), Product Improvements and New Features.  Yup, been there and delivered those.  There are two that deserve more discussion: being an advocate to the community, and professional services customization gigs.

On being an advocate, this seems so far removed from the realm of what Tech Support does, that I wouldn’t even include it here.  I’ve seen this work best when Marketing or Sales handled it as part of customer relationship management.  Yes, Tech should be able to do that, but I’ve rarely seen the skillset and mentalities located there to be succesful.

On professional services to customize, yes, this is a very real opportunity to sell more product.  It isn’t really a support issue though.  Yes, many open source consumers will just modify the code themselves, but I would hesitate to speculate that this happens the majority of times.  See my thoughts on Professional Services end runs though, as it is something you must guard against.

I want to cover a few types I’ve run across that are also biggies for support but aren’t mentioned:

Education.  A tremendous amount of Technical Support calls boil down to the customer needing to ask a question.  The question may be so complex or confusing that it gets escalated all the way to the Chief Architect, but its still a valid role.  Answering questions is important, and I would think even more so for Open Source where the questions may have to do with how the code operates.

Professional Services End Runs:  This has been the source of more bad feelings all around than any other phenomenon I’ve seen.  Here is the scenario.  The customer buys the product, but for a variety of reasons they do not have the money to get it properly installed:

–  They picked a bad VAR (low cost bidder, anyone?) who spent the budget without delivering.

–  They never could get enough budget internally for a proper engagement, and choose to finesse it this way because they’re cheap.  Don’t laugh, I’ve had customers ‘fess up that this is exactly what’s happening and persuade CEO’s to deal with it in the interest of future business.

–   The absolute worst:  Your own professional services people failed.  It may not even be their fault, but now the Customer has Righteous Indignation on their side and you will get that software installed or else!

–  Almost as Bad:  Your organization measures performance and pays on those measurements in such a way that one organization throws another under the bus to make their bonus.  Professional Services throws Tech under the bus.  Or its implicit, and Tech hires cheap people who can’t deliver and everything is escalated to Engineering.  Yuck!

Companies that make Services a Product instead of a Cost Center are much better set up to think about these problems and deliver a better experience to their customers.

All your tech support are belong to us!

I didn’t see much rumination about Oracle’s attempt to steal Red Hat’s business.  One of the problems of basing your model around selling support for an open source product is differentiation.  Perhaps you can achieve better focus, but someone else can take a credible shot at stealing your business.  At the very least this will exert downward pressure on your pricing.

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Posted in business, Open Source, saas, strategy | 4 Comments »

Luddites Need SaaS Too (Or Don’t Get Stuck On the Far Side Of the Chasm!)

Posted by Bob Warfield on August 29, 2007

I want to share an anecdote today that is a ringing endorsement for SaaS, and that made me think that Geoffrey Moore’s Chasm can hang you up whichever direction you’re trying to cross.

This morning, I wanted to share my slide presentation on SmoothSpan with a friend who is remote.  Without thinking about it too much, I simply emailed him the presentation and arranged a time to get on a conference call with him.  The fun began shortly after the call started when he announced that Windows couldn’t find an application to open the files with: Doh!  My friend has been out of Tech for awhile, and spends most of his time messing with digital photography.  He hadn’t bothered to buy a copy of Office 2007, and the file formats are incompatible.  “No problem”, says I, and I guided him through the process of downloading Microsoft’s file format converter, which lets the old versions read the new files.  Several megabytes of small talk later, he was ready to try, but there was still an issue.  The majority of my friend’s time on a computer is spent in PhotoShop, and so he has a Macintosh.  The Windows utility didn’t work on the Mac! 

Now we were really getting frustrated, we’d wasted the first 10 minutes of the call, and I was tired of it.  My first thought was to get him a PDF, but darn, I hadn’t installed the PDF converter yet.  So, I resaved the files in the old Office format and resent them to my friend.  Two minutes later we launched into the slideshow.  But wait, there’s more, and it’s much worse than a set of steak knives.  My friend immediately starts critiquing all sorts of visual problems with the slide that were completely invisible to me on my machine.  It seems that Microsoft has a few problems saving to the old formats.  Drat!

Ironically, one of the earliest slides in the presentation mentions SaaS, and so my friend wanted to know why people like SaaS.  I was running 20 minutes late, was very frustrated by the obstacles we’d encountered, but suddenly, the light went on.  We had just lived through one of the best examples of why even my friend (who isn’t a Luddite at all, but just doesn’t have a reason to keep up with Office apps) could have benefited had I been using a SaaS service like WebEx to deliver the slides rather than exchanging files and asking him to run an application on his desktop.

SaaS would have been up-to-date with the latest versions without my friend even having to know about it, there would have been a lot fewer steps on his end even if everything had worked out well from the beginning, and both of us could’ve focused on the meat of the discussion instead of fooling around trying to make software work.    We were able to laugh about it, but the experience really drove the SaaS point home to my pal, who had basically gotten stuck on the far side of Geoffrey Moore’s Chasm. 

Moore talks about companies having to cross the vast chasm from early adopters (the hipsters who like everything new because its new) to the mainstream to achieve mega success.  Sometimes the mainstream gets stuck a little too far to the right and misses out on some really good stuff like SaaS and Web 2.0.  Stepping back across that chasm can really help.  After this experience, I almost think SaaS offers even more value the less forward looking your organization may be.  After all, you’ll be the ones staggering under the load of layers of software that hasn’t been updated in an age.  It’s shades of disadvantaged countries who’ve found it easier to make cell phone networks work than to install all the copper needed for a full land-line based telco infrastructure.  Maybe that’s the way to abandon antiquated IT infrastructure and jump a couple of generations ahead by letting the SaaS guys keep you up to date.

Read/Write Web had an interesting post recently on Rethinking the Chasm.  The thesis is that change is coming so rapidly that its hard to attract and hold the attention of enough early adopters to establish your idea before they’ve moved on to the latest Shiny New Thing.  Perhaps there are a few Luddites stuck on the far side who have enough pain that they’d make an interesting target market.  This was certainly our experience selling Enterprise Software at Callidus.  The best customers were at both ends of the Chasm Spectrum.  Early Adopters wanted it because it was new.  The Luddites wanted it because their infrastructure was so old and broken it was causing tremendous pain to the Business.

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Web 2.0 Personality Types

Posted by Bob Warfield on August 29, 2007

There’s a Facebook application called Personal DNA that I came across recently.  It’s like a Myers Briggs personality test.  When I took it, I found my personality was “Encouraging Leader”.  It’s a fortune cookie, but at least the fortune was good for my aspiration set.  

For a long time I was pretty skeptical about these personality tests, but after I took the Myers Briggs test twice and realized what it said about the teams I was involved with, I became more interested.  The first time around, I learned that a person I’d partnered with through more startups and other jobs than anyone else had exactly the same personality type except that he was the “Introvert” and I was the “Extrovert”.  Talk about having each other’s backs!  It was actually perfect.  Because our learning styles were the same, our communication was extremely high bandwidth and very effective.  The risk would be that we could be blind-sided when dealing with people far different from that personality type.

I’ve seen that happen too.  The second time I took the test, it was with an entire executive team.  After, we were presented with a map that showed how everyone fit in relative to one another and relative to the center of mass for the whole team.  I remember my first reaction to it was to say, “Hey, that’s like a seating chart for who everyone sits with at lunch!”  Needless to say, those individuals who were far away on the “seating chart” presented difficulties.  It was harder for us to communicate our ideas to one another and collaborate.

One of the important points they teach you on these personality tests is that there is no “best” personality trait.  They are all effective (its great fun to look up who the famous people are from your type!), but the value is in understanding how to communicate with someone who has different traits than yours.

This got me to thinking about the Web and whether there might not be some sort of “Personality Type Test for Web 2.0 Software”.  Let me give you an example.  Guy Kawasaki recently announced he was going to Twitter.  I’m not a Twitter guy.  I like Instant Messenger-type software because it lets me know when people are online that I may not otherwise reach out to, and because it can be faster than a phone call.  Random tweets having nothing to do with anything of immediate importance seem like noise to me.  In fact, one day I had a blog post opened that had an embedded Scoble Kyte video.  Kyte includes a chat capability, and this thing was on a browser tab that wasn’t my current tab while I worked on something else (I’d planned to read the post shortly).  The constant beeps and squawks were so distracting I finally stopped what I was doing to deal with it.

This brings me to the first of several “Web 2.0 Personality Dimensions” one might define.  Let’s call it your “Interruptability”:

Interrupted | Deferred

If you are the “Interrupted” type, you love multi-tasking.  You crave feeds.  You want data feeding you constantly and driving your day.  The “Deferred” type wants to be more in control of their time.  They want to take time out to focus on things without interruption.

Let’s continue with the Scoble example, because it generated a lot of comments on his site from people who complained they don’t want to have to watch videos to get his messages.  They wanted him to go back to writing.  We’ll call this one “Media Preference”:

Text | Video/Multimedia

I can see the test questions already:  “Do you prefer voicemail or email for quick communications with colleagues?” 

Note that if there is, in fact, a pronounced personality trait here, then Scoble is risking a lot if he plans to focus on more video and do less writing.  I say that because he grew his audience through the medium of text so he has a self-selected audience of text lovers who may or may not like video.  If people tend to polarize, there will be trouble and he’ll have to deal with rebellion and rebalancing his readership towards folks that like the new medium.  OTOH, maybe there’s just a business trend issue, such as ReadWriteWeb talks about in their Will Podcasting Survive post. 

There are a couple of other obvious “Web 2.0 Personality Dimensions” one could posit:

Free Form | Structured

Some sites bring a lot of structure, while others are very free form.  Facebook is much more structured than MySpace, which many have argued is a good thing, particularly for those who want to socially network professionally.  LinkedIn is even more structured than Facebook.  There is a continuum.  I remember when I first came across Dave Winer’s ThinkTank outline processor.  I was enthralled because this is the way I think.  When Lotus shipped a word processor called Manuscript that was totally structured around a very rigid view of outlining and styles, I loved that too.  Eventually I discovered that a lot of people, indeed most people, don’t write by outlining first.  In fact, they may never choose to look at an outline.  Hence Microsoft Word has truly useless outlining functionality.  It’s just good enough to demo, and little more.

What about the desire and tendency to become involved with the information associated with the Social Network?

Watcher | Participator/Shaper

I’ll always remember the Peter Sellers line, “I like to watch”, from the movie Being There, but I digress.  A Watcher is just that.  They prefer to absorb.  One of the things the personality trait tests try to determine is whether you respond immediately and interactively, or whether you want to take the information away and process it for a while.  This category is all about how you want to process the information you receive from the web.  A Watcher is pretty happy with a search engine and perhaps a reader.  A Participator wants to get involved.  Perhaps the involvement is fairly passive: they’d like to tag the information or attach private comments to it for their own use.  Perhaps they keep a book mark on del.icio.us.  There are increasingly aggressive ways to get involved however.  Perhaps you will post a comment to this blog post.  Or, slightly more aggressive participation would be to publish your del.icio.us bookmarks.  You may be such an aggressive participator that you write an entire blog post or series of posts about someone else’s presentation.  This can get dicey if the other guy is also an aggressive participator and you disagree, but it’s what makes the Web go round.

Since the primary value of Web 2.0 is collaboration, the Participators play a key role.  With no Participators, there can be no Web 2.0.

How about this one:

Clean Simple UI | Rich Internet Applications

Much has been said about Google’s clean user interface.  Microsoft’s Tafiti goes to the opposite extreme.  Note that the page I linked to for Tafiti belongs to a person who has chosen a blog look and feel that even match’s Tafiti’s scheme pretty well.  They stopped short of calling it a Google-killer, but you do have to ask yourself where you come down on a love or hate of AJAX and Rich Internet Applications.

I could go on pulling these dimensions out of thin air, but my point is really that folks thinking about creating or adopting Web 2.0 in whole or in part should think about whether the audiences they want to collaborate with are likely to prefer one style or another, or whether they need to open all channels of communication to make sure some corner of the Web 2.0 Personality Space doesn’t get disenfranchised.

It almost makes me wonder if being able to “skin” your Social Networking Experience by taking some sort of preference test wouldn’t also be helpful.

This isn’t as far-fetched as you may think.  Savvy marketing and sales people have been using personality traits for a long time to understand how best to reach and influence their customers:

–  How to think about Brands vs Personality Types

–  Know your audience’s Personality Traits

–  Decide whether to show it or tell it in a presentation based on the audience’s traits

–  Here’s a great link on the subject from a social network:  LinkedIn

Why not Web 2.0 interface design too?

If nothing else, a “Web 2.0 Personality Traits” theory explains why such a diversity of Web 2.0 experiences seems to be successful, and it may point the way for how to make future Web 2.0 efforts even more successful.  If Mark Cuban is right that the Web has stabilized, it simply means that there is an offering out there to tickle the full spectrum of personalities.  What remains to Digest the Web 2.0 is to formalize this thinking and understand how to efficiently leverage it.

(Subscript:  I started out life in this business doing UI design.  The design for Borland’s Quattro Pro spreadsheet is one example.  The notebook tab UI for spreadsheets originated with Quattro, and Borland eventually won a substantial sum suing Microsoft over its use in Excel.)

Related Articles: 

Check out Part 2 of the Web 2.0 Personality Series where we slot existing services into the model.

Part 3 of the Web 2.0 Personality Series tells how to target the various personalities.

Also see how Fred Thompson and Twitter Leverage Web 2.0 Personality Styles.

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Posted in Marketing, ria, user interface, Web 2.0 | 25 Comments »

 
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