The Biggest Challenge Software Companies Face this Year: Adopting a Services Mindset
January 13, 2014
Think your biggest priority is producing an incredible product? Wrong. It’s delivering it to your customers along with the speed, support, and reliability of an incredible service.
Up until very recently, many software and technology companies have largely operated with a product-focused mindset — and for good reason. After all, competition for customers’ attention has been fierce and technological advances so swift that for any business to keep up it needed to focus on delivering new, innovative features and function that exceeded what their current market provided.
Today, however, things have changed.
Businesses still need to deliver innovative products and solutions, but more and more companies are discovering that modern customers don’t want software that’s bloated with needless features or complexities. Instead, they want products that “just work.” As a result, companies today are rapidly adopting a new mindset that requires them to sell not just a product, but also a service.
3 Keys to Adopting a Services Mindset
That might sound easy enough, but as three Software-as-a-Service experts reveal below, building a services-focused organization actually requires several significant changes in the way you think about building a software company — and not all founders and senior execs are prepared for those changes.
1) Ditching the Manufacturing Mentality to Deliver More to Your Buyers
In order to be truly services oriented, serial entrepreneurs and AKF Partners co-founders Marty Abbott and Mike Fisher explain in this video that tech founders need to stop viewing their business as just manufacturers of the products they build. Instead, they need begin adopting a mindset that mimics the commitment of a municipal utility.
After all, a utility’s customers don’t just expect it to produce electricity or gas, Fisher says. Those customers also expect that the “products” will be delivered with a certain level of service, speed, and reliability.
For product-focused software company founders, that can be a difficult shift in thinking.
“We are no longer simply producing software. Software happens to be a raw material consumed in route to producing what the end customer buys — and that’s a service.”
— Marty Abbott, Managing Partner at AKF Partners
2) Getting Everyone to Buy in to a Services-Focused Mentality
If you think your company’s customers really care about the fancy technology behind your product, you’re wrong. What they really care about, AtTask CTO Ted Hoy says in this video, is that your entire company is capable of delivering a full-service solution and seamless customer experience that solves their biggest business problems (without them having to think to much about it).
As a result, Hoy says software companies shouldn’t view their buyers as individual transactions. Instead, they should be hell-bent on creating an organization that’s so obsessed with this services-focused mentality that customers repeatedly walk away wowed by their experience.
— Ted Hoy, CTO at AtTask
3) Maintaining Line of Sight to Your Bottom Line
Unlike product-based businesses, it can be difficult to track the impact that every activity or investment has on a services-focused organization’s bottom line. For instance, SaaS companies must often invest in features or functions that improve user experience of an existing user base and reduce churn, but don’t necessarily contribute directly to revenue. Needless to say, deciding which of those investments are worth continuing to make can be challenging.
The key to doing that, AtTask’s Hoy points out in this video, is to create a process that allows you to track the end-to-end impact of specific investments in your product infrastructure, and prioritize which activities to invest more heavily in. That’s not easy to do, but Hoy lays out a process that has helped his company accomplish it.
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Image by Dennis Skley