Reason for an as-a service company

A great article at Joel York’s SaaS Blog (Chaotic Flow) titled “SaaS Marketing Tips – The Truth Shall Set You Free”, explains the critical difference in the sales process between selling traditional software and Software-as-a-Service. This distinction is transparency, or lack thereof on behalf of the software company and an element of sales that could be applied to many as-a-Service businesses, including SaaS hosting companies.

Traditional software companies instruct their sales representatives “to avoid disclosing any more information than the minimum required to conclude the sale”. Due to the one-time payment structure of those deals this creates a temporaryChange failure rate focus on both the deal and the relationship with the prospective customer. However the advantage of SaaS services one can “try before buying” and, based on the length of contract it is possible to walk away at any moment should the service not be to their liking. This allows for a longer-term view that makes trust and transparency between the two parties more normal.

As Joel says, Google AdWords is a great example:

“Ask yourself how much you’re spending today on Google AdWords without ever having spoken to a sales rep. How does this compare to your personal typical selling price for online transactions? Ask yourself why. The answer is transparency from company reputation to cost-per-click.”

While Joel talks about the software industry, this is true for all goods that can also be considered services, including SaaS hosting. This is seen with big cost items such as houses and automobiles and also with everyday purchases like books and music. The more expensive the purchase and commitment, the more risks involved and the less trustworthy the two competing parties become. Full transparency becomes the only logical play when dealing with Product-as-a-Service businesses, just as it’s the only feasible option when dealing with SaaS hosting companies.

Anyone familiar with”the Prisoner’s Dilemma” (a game that is similar to a negotiation) recognizes that it is not a game that is played one time (like buying a product like cars) each party has the motive to “defect” or lie (it is the rational strategy). When the game is played many times for an amount of time that is unknowable to the two parties (like an online subscription service) the best strategy should be “cooperate”. This repetition in “games” can create the need to make the leap of faith into a collaborative strategy. If one party defects then the other one will follow for the remainder of the negotiations and vice versa. With just one defection, there’s no trust, and everyone is in worse shape for the rest of the series of games.

The model of as-a-Service is based on that “repetition of game” trust and cooperation; although you may gain in the short-term in the event that you lie about the facts, in the long term you’ll have destroyed the trust of a valued relationship. This dedication to openness is one of the less talked about advantages of not just moving your company to an as-a service company , but also buying from these kinds of SaaS hosting firms.

Many SaaS hosting companies see and experience this every day. When companies recognize the value of transparency, they will engage with all of their prospects to try to understand their requirements. If the prospects’ needs do not match with what the SaaS hosting service offers it will inform them know. There’s no reason for an as-a service company to promote a client that they don’t require. That’s not an ideal win-win situation. The customer will soon realize that they don’t require your help and decide to move to another company. This causes unproductive work for both the client and the company. This is something that all companies that offer as-a service should follow.

Think about this: Have you seen an As-a-Service-based company succeed that isn’t built on transparency and trust?

Online Tech owns and manages SAS-70 secure and reliable multi-tenant data centres across the Midwest. Offering a wide range of colocation and managed dedicated server services for SaaS hosting services, Online Tech reduces IT data center costs operating risks, downtime and operational risk and insures their SaaS clients that their servers are always available active, always available, and always safe.

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