SaaS Product Management – 5 Key Changes

(This post is intended for senior audiences)

There is a well known diagram of a software stack that describes the differences between SaaS, PaaS, IaaS and on-premise deployments. Among other places, you can see it on Microsoft's Azure Learning site and on BMC's blog site. I have modified it a bit to show the role of business product managers in SaaS applications.

Looking at the diagram below from left to right, you can see how business cost and value for the customer is shifted from owning to renting, or Cap-ex to Op-ex. Additionally, in SaaS, the only experience layer the client's users interact with is the application layer. And given the tiny footprint of the rented SaaS application, clients can no longer access the remaining layers.

However, every client still has business requirements that must be addressed, including Security, Standards Compliance, Availability and Business Capability. So, for product managers and directors looking to deliver business value from features and capabilities, here are 5 changes to keep in mind:

• Customer Journey and User Experience(UX) is paramount

 The user experience of your SaaS application is bench-marked against every other web property. It is no longer possible to have navigation that is broken, or clicks that go nowhere. For a consistent user experience, use UX templates. Customer journeys must be created and designed for the smoothest user experience assuming that every touch point is accessible in real time.

• Real time interactions are key

Because user engagement must be similar to the web or mobile app experience, it is important to have real-time feedback for every action. A wizard or widget must actively engage a user, let him complete his task and show feedback. At the same time,features related to real time user to user interaction, such as a chat widget or an IM become important even for SaaS applications. These are in turn managed either by the application support team, by the service provider, or by a 3rd party vendor. Product managers must consider how to handle and prioritize such features.

• User privacy and security require new features or extra efforts

With SaaS, you are essentially handing over all data and meta-data about your company and employees, vendors and users to the service provider. Consequently, system architects managing the complete stack will figure out a solution to meet business and compliance requirements. This depends on the application's security posture, and time and investment planned for compliance and risk management. This activity either leads to backlog requests for adding new features related to privacy and security to your bucket, or it leads to investing time and resources to make sure that your features are compliant with the final architecture.

• Internal teams are critical to deliver high application C-SAT

As a PM, you are pretty much looking at the top layer of the cloud stack. However, internal teams such as delivery, support, training, pre-sales, marketing will also have their own application stacks, without or without access to a live customer deployment. If as a PM you do not include features to make their work life easier (e.g. delegate access to customer environment) it will impact their capabilities on the application, which will hit your C-SAT objectives.

• Agile development is commonplace, so are Product Owners

So you talked to dozens of key clients, identified all top features and prioritized the business requirements. This is no longer the end of the product specifications handover to engineering. 
You must breakdown the requirements into technical specifications and continuously track their delivery into the cloud application. With a CI/CD pipeline, the Product Owner takes care of this aspect of inward product management. However, the product manager still owns the UX and customer feedback. Net result, it is common place to find both roles in a cloud organization, with the PO reporting to a PM or a Director.

Strategic Business Unit - On-premise or Traditional vs. Cloud Based

Here are two organizational charts that indicate how product business units have evolved in line with business strategy. [These organizational charts are based on conversations with clients and people in the industry, but do not represent any actual business unit]

The cloud business unit is mainly about the product

The traditional business unit was about the complete Marketing Mix, including the 4 Ps or sometimes the 7Ps.

This change has also impacted the way other departments now engage with the new SBU structure. Some points to note:

1. Finance, HR, Ops are usually centralized functions in a cloud SBU
2. Service delivery, configuration, customization, support, integration and other monetization possibilities have changed dramatically in the cloud. It is no longer possible to have year long delays in installation and configuration contracts, which did occur in on-premise installations. These teams now get fixed contracts and upgrades occur automatically.

3. Subscription pricing is very different from pricing for on-premise or app type products. Unless you are very careful in your pricing models, it is easy to occur losses. In fact, pricing is also getting centralized and moved under finance or corporate strategy teams.
4. Marketing is another function impacted significantly, with SEO/SEM gaining a big share of marketing spend.

In my next post, we will see how these, and other changes, have impacted the role of Product Manager and the Director, PM.