Accenture from on premise to the cloud

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Accenture from on premise to the cloud

  1. 1. SaaS Sales Transformation POV From On-Premise to the Cloud: Building the Sales Capabilities for High Performance in Software as a Service
  2. 2. 2 | SaaS Sales Transformation POV Executive Summary The rapid rise of cloud computing is enabling a wide array of new business models, including Software as a Service (SaaS)–the business of providing hosted software applications that customers access remotely and pay for on a subscrip- tion basis. Both traditional on-premise software companies and new SaaS pure plays are scrambling to stake their claim in this new frontier. The market for SaaS is certainly promising. According to the Infonetics Market Research Firm, SaaS and cloud-based security services will make up nearly half of the managed security services market by 2015. SaaS revenue will grow dramatically worldwide, with a CAGR of 23 percent from 2010 to 2015. And the overall managed security services market, which includes CPE, SaaS and cloud services, will reach nearly $17 billion by 2015.1 However, building a successful SaaS business is challenging and requires a business model that differs from the traditional software business. Recent Accenture research with senior executives from software, hardware, and technology- enabled companies confirmed that virtually all companies are struggling to deal with the operational complexity caused by anything-as-a-service (XaaS). In fact, in most cases the launch of new XaaS businesses strains a company’s operational ability to deliver and scale, and requires a completely new set of go-to-market strategies and operational processes. As the general manager of a cloud business unit explained to us, “We are going 100 mph and the cliff is 10 miles away. We go ‘kaboom’ in just a few quarters unless we get our operations functioning quickly.” Accenture’s previously published paper “Where the Cloud Meets Reality: Scaling to Succeed in New Business Models” highlights the findings of our XaaS research and offers recommendations for building and scaling the overall cloud operating model. The paper identifies eight distinctive XaaS capabilities (Figure 1) that are critical to building the SaaS business. This paper builds on that foundation by taking a closer look specifically at the sales capabilities—and their interface to service and support capabilities—required for SaaS. As on-premise software companies begin offering SaaS options, there are many dimensions of sales to rethink and redesign, from the sales model and incentives to sales process, tools, channel strategies, and pre/post-sales support. Based on our research and years of client experience, we identified seven recommendations for on-premise software companies as they rethink and redesign their sales capabilities to win in the world of SaaS (Figure 2). Redesigning the on-premise sales model to capture a fair share of the software-as-a-service market can be a significant undertaking. To create the sales engine to successfully serve both offerings, technology companies need a clear understanding of the differing requirements and a coherent design. This report aims to help technology providers address this challenge. 1 http://www.mspnews.com/msp/articles/161659-cloudsaas-market-near-17-billion-2015-according-infonetics.htm
  3. 3. SaaS Sales Transformation POV | 3 Figure 1. Critical Capabilities for SaaS Figure 2. SaaS Sales Recommendations Customer Insight Segment your SaaS customers: Leverage analytics and market research to segment customers based on specific SaaS criteria and their readiness and desire for SaaS products Agree on a sales model: Decide whether to leverage the existing sales model or design a new model for your SaaS business-each model has its own implications that needs to be carefully addressed Align sales talent: Hire and re-train talent to adapt to the fast and frequent changes in the sales cycle (including pre/post sales) Align sales incentives: Design an incentive model that is based on subscription revenue, renewals and customer retention Update sales processes and tools: Re-design sales processes and supporting tools to allow for flexibility that is required by the varying process and sales cycle (mostly driven by customer's current state and desired state) in the SaaS business model Design a comprehensive Channel Strategy: Design an optimized multi-channel approach that is inclusive of SaaS products and includes a value proposition for the partner ecosystem in the new SaaS business model Recalibrate on customer experience as an important responsiblity of the sales force: Update sales process to be inclusive of the support phase, so the seller is involved throughout the lifecycle of the SaaS product and takes accountability for nurturing the customer for growth Sales Model & Incentives Sales Process & Tools Partner Strategy Post Sales Support 1. 2. 3. 4. 5. 6. 7. Portfolio Management Product Development Ecosystem Management Customer- Centric Technology Delivery Selling & Channel Management Pricing, Contracting & Billing Financial Management Service and Support Applied Analytics Well-documented capability need Common capability blind spot Innovation opportunity Focus Areas Customer Experience
  4. 4. Making Big Bets to Win in SaaS Recognizing that the market for SaaS is promising, traditional software companies are making “big bets”, either by building their own SaaS offerings or by acquiring SaaS companies. SAP, Oracle, and Microsoft are just three of the largest software companies aggressively moving to SaaS— according to Oracle’s President Mark Hurd, time is of the essence. “I hate to say the ships have sailed, but if your ships aren’t in the water halfway across the ocean already, you’re going to have a hard time catching up.”2 While the traditional players are placing their bets to win in SaaS, the new pure SaaS companies are rapidly gaining market share. Salesforce.com posted revenue of $2.27 billion for the full fiscal year 2012, an increase of 37 percent over 2011. Or consider Google.3 In a recent investor call, Google executives noted that the company now has more than 5,000 customers signing up to Google Apps every day.4 The Backupify Blog estimates that Google Apps has 50 million total users and that roughly 30 million of those business users pay for Google Apps, as opposed to using the free version. At that rate, Google Apps is close to the $1 billion revenue mark.5 It’s no wonder that new entrants are showing success against the behemoths of the enterprise software market. The new entrants are building their operating models to be optimized for SaaS, while traditional software companies must make changes to virtually all areas of their existing organization—from R&D and innovation, to sales, billing, customer service, human resources and finance. Furthermore, traditional on-premise companies must balance the growth of their SaaS business against declining demand for traditional software. One area of significant difference between traditional software and SaaS pure play models lies in the cost of sales. In 2011, some of the biggest pure play brands in SaaS—including RightNow, salesforce. com, Success Factors and NetSuite—spent more than 40 percent of their revenue on sales and marketing (Figure 3). In contrast, traditional software behemoths SAP AG, Oracle and Microsoft averaged half that relative spending, hovering around 20 percent. While some of the difference can be attributed to the sales and marketing costs of building and establishing new entrants into the market, there are fundamental differences driven by the SaaS business model. The essence of the SaaS model is volume, speed, and continuous adds and renewals. As a result, scaling up the sales and support to capture more (net new) customers and driving volume is key. This increases the customer acquisition and retention cost of the SaaS model which is required for driving sustainable and profitable growth. Based on our experience working with industry leaders in both on-premise and SaaS models and deeper analysis of their sales and marketing functions, we have observed that go-to-market strategies and sales operations of on-premise companies are ill-equipped to serve both business models effectively. The fundamental characteristics of each business are too different and the existing sales model and sales force will struggle to serve the purpose of both businesses. Unlike a traditional software business driven by upfront licensing, the SaaS subscription model depends on a sales organization that continually nurtures customers and incrementally adds and protects revenue over time through seat licensing. Therefore as traditional on-premise companies expand their way into the SaaS market through acquiring other SaaS companies or building their own SaaS products, they will need to carefully and intentionally adjust their sales model and scale up their initial investment in sales and marketing to be able to drive sustainable growth for the business. Some of the most common questions that many companies are wrestling with as they enter the hybrid business model with on-premise and SaaS products include: • How should I build my target market and segment my customers? • What should my channel strategy be? • How should I build my sales model and sales team? • How should I organize and incent my sales force? • How can I reduce my sales cycle and drive higher volume/close rates? • How can I increase the overall profit- ability of my SaaS offering through lowering cost of sales? Through research and years of client experience, Accenture has identified seven recommendations to help on-premise software companies rethink and redesign their sales capabilities for SaaS. 2 Gallant, John, “Oracle’s Hurd brims with confidence about SaaS, social and cloud”, Network World, July 16, 2012. http://www.networkworld.com/news/2012/071612- hurd-260928.html 3 http://www.sfdcstatic.com/assets/pdf/investors/Q412_Press_release_Final_financials.pdf 4 http://www.crn.com/news/cloud/232600247/google-apps-a-1-billion-business.htm;jsessionid=IDSJ3pxTMj0qE2WwKHLr4Q**.ecappj03 5 http://blog.backupify.com/2012/01/26/who-uses-google-apps-are-large-companies-pushing-it-to-a-billion-dollar-business/ 4 | SaaS Sales Transformation POV
  5. 5. 1. Segment your SaaS customers Leverage analytics and market research to segment customers based on their readiness and desire for SaaS product. Most technology companies define their customer segmentation and coverage model by historic license spend and total on-premise product revenue by customer. They also operate a tiered sales coverage model based on customer size and spend, with larger businesses getting more dedicated coverage. However, Accenture has found that because customers are at very different stages of readiness, SaaS sales coverage models are best defined by customer’s readiness and desire for SaaS adoption, which is significantly different for large enterprise vs. small business Figure 3. Sales & Marketing Spend as a % of Revenue 2011 customers. In addition, SaaS providers will have new ways of accessing customer data through customer’s continuous usage stream once they have an initial set of seats. This data can provide valuable insights into customer motives, behaviors and attitudes in making the right nurturing and follow-up decisions for subscriber growth. Another consideration for on-premise software companies entering the SaaS world is the target market itself. While on-premise software companies typically focus on large enterprises to drive substantial software licensing per account, small and medium sized businesses (SMBs) are showing significant interest in SaaS, and the small business market for SaaS is projected to grow significantly in the next several years. For example, salesforce. com’s significant growth initially came from a strategy to focus on startups and small companies. Mark Benioff, Chairman and CEO of salesforce.com recommends, “Segment the market: [There is] huge opportunity in very small companies. Very small companies are progressive in supporting the new technology.”6 Therefore, the coverage model must be focused on each sales rep touching a large volume of customers to drive subscription volume, and replace customers lost through switching. This approach then must be supported by high volume lead generation, telemarketing, and telesales activities. SaaS Sales Transformation POV | 5 6 Behind the Cloud: The Untold Story of How Salesforce.com Went from Idea to Billion-Dollar Company-and Revolutionized an Industry, Marc Benioff http://www.amazon.com/Behind-Cloud-Salesforce-com-Billion-Dollar-Company/dp/0470521163 18% 20% 20% 22% 22% 29% 29% 30% 32% 32% 33% 35% 36% 37% 37% 38% 38% 42% 43% 47% 48% 51% Oracle Akamai Microsoft SAP AG Sybase Intuit BMC Dassault Mentor Graphics Mcafee Adobe Novell Taleo Corp Saba Red Hat Autodesk Citrix Symantec RightNow Success Factors Salesforce NetSuite Pureplay SaaS SAP Acquired Q4 2011 Oracle Acquired Q4 2011 Oracle Acquired Q1 2012 Attachmate Acquired Q3 2010 Intel Acquired Q1 2011 SAP Acquired Q2 2010
  6. 6. traditional on-premise licensing. However, as the company grew, the complexity of managing two very different business and operating models became a serious burden. So RightNow “flipped the switch” and became a cloud-only company.8 According to David Vap, RightNow’s chief solutions officer, three operating model issues were top-of-mind for RightNow’s management team when they made the switch: sales strategy and incentives, contracting, and revenue recognition. Having a mixed cloud and on-premise portfolio led to conflicting priorities for the sales force, and RightNow saw the recurring revenue provided by SaaS as allowing for a more effective sales compensation plan. Vap commented about having SaaS and on-premise offerings, “How do you incent a rep to sell both, and to have an equal incentive to sell on-premise perpetual versus hosted? It’s very difficult to construct a comp plan. Switching to SaaS gave us more power in the sales cycle. If we sold a deal last week versus selling it this week the revenue that accrues to us is that many days over 365 times the deal size. It’s all ratable revenue. There isn’t as much pressure to do unnatural things at the end of the quarter.” In addition to simplifying the sales model, moving completely to the cloud also helped to eliminate duplicative contracting approaches and simplified revenue recognition for RightNow’s finance teams. RightNow also found that, without the internal distraction of maintaining two operating models, it was able to serve its customers better and improve the overall customer experience. While many companies’ business designs wouldn’t allow them to make as bold a move as RightNow did, the challenges that led RightNow to move entirely to the cloud are broadly instructive on the challenges companies face offering their product through both channels.9 3. Align sales talent Hire and re-train talent to adapt to the fast and frequent changes in the sales cycle (including pre/post sales). Another significant area of change for traditional software companies is sales representative training. On-premise companies must develop a curriculum and training rhythm to allow sellers to always have the most up-to-date information regarding the SaaS product features, release cycles, value generated, and post-sales support. As SaaS products endure frequent change, the sales rep needs to stay educated on the features that are being added and how the product is changing. Thus, instead of an on-premise software seller getting educated once a year on average, tied to a product refresh cycle of one to three years, the SaaS sales reps must go through training multiple times per year to be able to keep up with faster product release cycles. The SaaS sales rep must be able to provide more pre-sales support to educate customers on the benefit of migration to the new SaaS offering and constantly demonstrate agility, scalability and flexibility of the product. Oracle has recently added 3,300 salespeople to offer a broad product portfolio designed to give customers the choice of SaaS, private cloud and on-premise versions of its apps. To help reps succeed in selling the full portfolio, Oracle is fortifying its sales force by process and subject area, such as human capital management (HCM).10 2. Agree on a sales model Decide whether to leverage the existing sales model or design a new model for your SaaS business. Each model has its own implications that need to be carefully addressed. Given that SaaS revenue generation occurs with each new or renewed seat subscrip- tion (and not up-front license fees), the essence of the SaaS sales model is seat volume and speed. According to Steve DeMarco, VP of Business Development at Xactly, “Selling and marketing an on-demand application is much different than selling on-premise solutions. The days of making multi-person, face-to-face sales calls are over; that approach is just too inefficient and costly.”7 Instead, Xactly is constantly looking to creatively market and sell its products in innovative ways, both over the phone and by using the Internet. While these subscription-based characteris- tics differ considerably from licensed-based economics, that may, or may not, warrant running two distinct sales models (one for traditional on-premise license sales and one for SaaS). In Accenture’s experience, the best approach is highly dependent on the individual organization. Creating two distinct sales models can be very complex and expensive to manage. However, if a single sales model is leveraged for both offerings, it’s challenging to effectively compensate the sales force without biasing them toward selling one offering over the other (Figure 4). RightNow Technologies, a provider of SaaS customer experience software, is a compelling example of how managing two conflicting sales models can add complexity a company’s operations. When founded in 1997, RightNow offered customer contact solutions across multiple channels, generating 15 percent of revenue from 6 | SaaS Sales Transformation POV 7 ”The 7 Secrets of SaaS Startup Success - saleforce.com whitepaper” 8 RightNow does maintain a few on-premises installations for government customers that require it, but this represents a very small portion of RightNow’s revenue. RightNow was purchased by Oracle. 9 To read the full case study on RightNow Technologies, see Accenture’s white paper, “Where the Cloud Meets Reality: Scaling to Succeed in New Business Models”. 10 Gallant, John, “Oracle’s Hurd brims with confidence about SaaS, social and cloud”, Network World, July 16, 2012. http://www.networkworld.com/news/2012/071612- hurd-260928.html
  7. 7. Figure 4. Benefits and Challenges of Sales Model Approach Description Benefits Challenges One sales model Scale and expand the on-premise sales model and sales force to also serve the SaaS business model • Faster to scale and setup • Less organizational complexities • Consistency of customer experience • Conflicting sales goals and incentives for sellers • Potential mismatch of sales talent to the specific needs of the SaaS business model Separate sales models Design a specific sales model for the SaaS business that is independent of the on-premise sales model • Direct alignment of sales goals and incentives • Clarity on sales objectives • Internal complexity and potential conflicts • Potential impact to customer experience • Additional time and Investment required to setup the new sales model SaaS Sales Transformation POV | 7
  8. 8. Salesforce.com recommends, “When it comes to motivating your sales teams with incentives that are not tied to large deals, the key is coming up with other metrics for measuring success. In defining what these metrics should be, look at those that support your most important goal: customer loyalty. Examples might include event participation, recruitment of reference customers, speed of implemen- tation, adoption rates, or low rates of attrition. Once you know what to measure you can decide what to reward. At that point, the typical incentives will do the trick.”12 5. Update sales processes and tools Re-design sales processes and supporting tools to allow for flexibility that is required by the varying process and sales cycle (mostly driven by customer’s current state and desired state) in the SaaS business model. The SaaS and on-premise sales processes share many characteristics. For example, companies must establish account plans and manage opportunities through the sales process in both operating models. However, in the SaaS model the sales process and sales cycle can have significant variability. For a small customer the sales process could be as quick as an initial sales call, a proposal, a contract and launch. But if a large company is moving its first application to the cloud, the sales process could be very long. Therefore, companies must transition from a universal sales process for all solutions to a differentiated sales process expecting shorter sales cycles for SMB customers and longer sales cycles for large enterprise customers. In creating new sales operations, efficiency and volume are critical design objectives. 4. Align sales incentives Design an incentive model that is based on subscription revenue, renewals and customer retention. As companies build their SaaS sales model, the structure of the sales incentive system is a critical consideration. The incentive system in the SaaS environment is significantly different than a traditional annuity-based model. Further complicat- ing matters, when traditional technology companies offer SaaS products as well as on-premise solutions, there are often conflicting incentives for the sellers who are accountable for selling both on-premise and SaaS products. When moving into SaaS, Accenture has found that traditional software companies must move from sales compensation paid on the basis of the unit price of the product to a seller incentive compensation model that is designed based on a subscription revenue model, renewals and customer retention (similar to Financial Services or Insurance businesses). A key basis for Xignite’s sales incentive model is lifetime value of the deal instead of unit price of the product (since there is no unit price). According to Joel York, “In a subscription business with a recurring revenue stream, the value of the deal is not as clear-cut as the price of a software license. The true value of a subscription deal is the present value of the future cash flows, which amounts to summing up all the recurring revenue over time, taking into account churn, and discounting it by your cost of capital. When it comes to designing our SaaS sales compensation plan, we can use ANY measure of recurring revenue (MRR, QRR, ARR) that is propor- tionate to lifetime deal value. We do not need to calculate the absolute lifetime value for the deal, because the commission percentage will scale up or down as needed to make sure we payout the target sales compensation.”11 8 | SaaS Sales Transformation POV Accenture Seven Design Principles for SaaS Sales Incentive Compensation 1. Incent cloud capture by making the cloud business a specific part of incentive compensation 2. Drive mix of cloud and CPE by using similar measures and pay mechanics for CPE 3. Plan measures that drive contract term, seat volume and revenue 4. Design simple, scalable, transparent commission mechanics (e.g. rate x volume = pay) 5. Align pay to commitment and deployment by having sales credit triggers that include multiple events 6. Support sales credit for both company hosted and partner hosted sales 7. Protect core business and profitability through prioritizing opportunities and measuring overall impact 11 http://chaotic-flow.com/ 12 ”The 7 Secrets of SaaS Startup Success - saleforce.com whitepaper”
  9. 9. interactions. Cloud Sherpas is among the largest consultants stressing Apps, and it claims to have moved over one million people to Google Apps.13 Overall, these resellers are pursuing a business that initially looks like traditional reselling, but in fact works along different lines. “Moving to the cloud is a whole different model,” says Michael Cohn, the founder and senior vice president of marketing at Cloud Sherpas, “Google is offering us a recurring revenue stream.” Mr. Cohn estimates there are about 2,500 independent companies and individuals involved in the Google Apps ecosystem.14 For companies that have traditionally sold extensively through indirect channels there is a risk that all channel partners will not be equally able to sell the SaaS value proposition. Until that gap closes, rather than reaching far and wide with channel partners, companies may want to consider being more selective about which partners they allow to sell their SaaS offerings and make sure those partners are fully enabled to succeed. Bart van der Horst of GigaOm recommends segmenting and rewarding partners for the role they play. “Some partners are more suited to influence (strategy consultants, for example), while others are more-trusted advisors because they have a technical capability like hosting. Technology partners can trial new solutions on the early- adopter market. Rewarding partners for developer activity is another segmentation. The developer partners can develop stickier, localized and specialized solutions. These are key differentiators for the partner as well as the vendor. Last but not least is to segment on growth potential.”15 There are numerous approaches available to optimize the in-direct sales channel in support of SaaS. But for companies operating in both the on-premise and SaaS markets two things are clear: It is a complex undertaking, and it is critically important to success. 6. Design a comprehensive channel strategy Design an optimized multi-channel approach that is inclusive of SaaS products and includes a value proposition for the partner ecosystem in the new SaaS business model. Most technology companies sell product in both direct and indirect channels making sales channel management a difficult but important challenge to solve for SaaS. In the traditional on-premise software sales model the reseller takes possession of the product, resells it, is compensated for the sale and assumes some accountability for its success at the customer. In the SaaS environment, there is no product to change hands. Therefore, the reseller should not be accountable for the specific terms and conditions, security, and risk management with the customer. In the SaaS world the provider must accept more risk and responsibility for such things as service performance, data privacy and security versus shifting that risk and responsibility to partners. In Accenture’s experience, companies must redesign their channel strategy from a comprehensive partner model to an optimized multi-channel approach that’s inclusive of SaaS solutions and includes a value proposition and incentives for the partner ecosystem regarding these new solutions. Consider Google for example. Google heavily leverages resellers for their SaaS offering distribution. They leverage partners to sell, implement and support Google’s products rather than internal- izing those capabilities. Among these are Dito, SADA Systems, Appirio and Cloud Sherpas. Each offers a somewhat different approach. SADA is reselling both Microsoft and Google products. Appirio offers Google along with a broad range of other cloud services for business, like salesforce. com. Dito is making much of moving companies to Google’s Chromebooks, which are lightweight laptops built for cloud SaaS Sales Transformation POV | 9 Case Study: Reengineering Sales Incentives A leading provider of electronic data storage solutions adopted a cloud-based recurring-revenue model. However, this change revealed serious shortcomings in the company’s approach to sales coverage and incentives. Perhaps most telling, more than 90 people were receiving sales credit on a typical deal. The company reengineered its sales incentive program following an analysis of its coverage model, sales-credit rules and governance in the context of key sales engagement scenarios. Over the course of three years, incentive spend decreased from 5.5 percent of revenue to less than 5 percent, while revenue grew by 60 percent. Note – above case study taken from Accenture POV “Boosting the Effectiveness of Sales Compensation” 13, 14 http://bits.blogs.nytimes.com/2011/11/25/consultants-in-the-cloud/ 15 van der Horst, Bart, “How the cloud is disrupting the software distribution channel”, GigaOmPRO, July 11, 2012.
  10. 10. 10 | SaaS Sales Transformation POV 7: Recalibrate on customer experience as an important responsibility of the sales force Update sales process to be inclusive of the support phase, so the seller is involved throughout the lifecycle of the SaaS product and takes accountability for nurturing the customer for growth. Maintaining customer trust and satisfaction is key in retention and renewal in the SaaS environment given how easily customers can switch to another provider. Companies must move from customer experience as a secondary measure for business performance to customer experience being the primary measure for business performance–unhappy customers equal lost customers. In SaaS, customer experience is central to how support and service are designed. They are no longer “nice to have” for driving customer satisfaction. They are fundamental to driving customer renewal and loyalty in all segments. Thus, Accenture recommends that the sales process be updated to be inclusive of the support phase, so the sales person is involved throughout the lifecycle of the SaaS product and takes responsibility for nurturing the customer for growth. Furthermore, a well-defined customer experience management model is required to enable SaaS businesses to achieve the customer satisfaction and retention they desire. Joel Book, ExactTarget’s Director of eMarketing Education, credits his company’s commitment to customer service as the major reason for ExactTarget’s consistently high annual renewal rates. He describes ExactTarget’s success as hinging on its ability to serve its customers better than its competitors. To accomplish this, ExactTarget invests heavily in its customer service and support infrastructure, which includes account managers, customer Case Study: Sales Transformation at salesforce.com One of the distinguishing factors of a SaaS business from the on-premise model is the ease with which a customer can choose to no longer be a customer. That ease signifi- cantly heightens the pressure on a SaaS provider to continually satisfy customers. “We have to earn the customer’s business again and again,” explained Hilarie Koplow-McAdams, President, Commercial/ SMB Business Unit at salesforce.com.18 Salesforce.com employs similar sales roles as most large software companies. It still must set and retire quotas, design compen- sation plans and calculate commissions, and establish account plans and manage opportunities. However, salesforce.com also has developed a relentless emphasis on the success of the customer and has instilled this customer emphasis in its culture, to the point that salesforce.com’s service and support organization is called “Customers for Life”—a moniker designed to emphasize the point that salesforce.com’s well-being hinges on customer retention. support representatives, implementa- tion specialists, deliverability consultants, integration specialists, and strategic services professionals.16 Steve Singh, CEO of Concur believes so strongly in the importance of the customer experience that he says investors should focus on a SaaS company’s customer retention rate, not contract lengths. “I think it is a false sense of security to look to three to five year contractual commitments. If customers are dissatis- fied with your service, they will stop using it and stop paying the bills. Revenue recognition becomes simple. Zero.”17 Salesforce.com finds that customer service and support has taken on a very different character than what is commonly seen in the on-premise world. In the latter, companies spend most of the time answering technical queries or determining why the software is failing to perform as expected. Conversely, in the SaaS model, with fewer technical issues to sort through, organizations devote the majority of time helping customers run their businesses more efficiently. Customers are expecting salesforce.com to be prescriptive in its advice, which has additional talent acquisition and development implications for the customer service organization.18 As a final note in the design of the customer experience, companies must consider the role of channel partners in the mix. Often technology companies rely heavily on channel partners to provide support to customers. While this may still be desirable in the SaaS environment, companies must have a rigorous performance management process for support and services partners since an unhappy customer has few barriers to switching. 16 ”The 7 Secrets of SaaS Startup Success - saleforce.com whitepaper” 17 http://smoothspan.wordpress.com/2007/10/01/interview-concur%E2%80%99s-ceo-steve-singh-speaks-out-on-saason-demand-part-3/ 18 Salesforce.com case study, Accenture, 2012
  11. 11. Conclusion Redesigning the on-premise sales model for SaaS can be a significant undertaking. It requires a clear understanding of the SaaS business requirements, and a coherent sales model design that considers sales processes, tools, incentives, channel strategies, and pre/post-sales support. Yet, as on-premise firms invest to become real players in this new SaaS market, the right sales capabilities are paramount to success. Leading on-premise companies are realizing that by effectively aligning sales processes with the specific characteristics of the SaaS business model and market needs. With a clear strategy and transition path from selling on-premise to SaaS or a strategy to prioritize one product over the other (aligned to customer’s needs), these companies can close and deliver SaaS in a way that rivals their pure play competition, meets customer expectations and begins to build customers for life. SaaS Sales Transformation POV | 11
  12. 12. Other paper indications and bar or QR codes align to the bottom margins and columns. About Accenture Accenture is a global management consulting, technology services and outsourcing company, with more than 257,000 people serving clients in more than 120 countries. Combining unparalleled experience, comprehensive capabilities across all industries and business functions, and extensive research on the world’s most successful companies, Accenture collaborates with clients to help them become high-performance businesses and governments. The company generated net revenues of US$27.9 billion for the fiscal year ended Aug. 31, 2012. Copyright © 2012 Accenture All rights reserved. Accenture, its Signature, and High Performance Delivered are trademarks of Accenture. About the Authors Additional significant contributors to this report: Tim Jellison is a Managing Director in Accenture’s Communications, Media, and Technology management consulting practice, focusing on software and other high tech clients. Tim has more than 20 years of consulting experience, advising clients on new products and services, operational processes, and organizational change. Tim is also Accenture’s global software industry sector lead. He is based in San Francisco. This document is produced by consultants at Accenture as general guidance. It is not intended to provide specific advice on your circumstances. If you require advice or further details on any matters referred to, please contact your Accenture representative. Sanaz Namdar is an Executive in Accenture’s Management Consulting, Customer Relationship Management practice in the Communications, Media, and Technology industry segment. She has over 8 years of experience in design, development and execution of transfor- mational sales initiatives helping clients achieve business results and objectives. She is based in Seattle, WA. Todd Wagner is a client service group managing director for Accenture’s Management Consulting practice in the Communications, Media, and Technology industry segment. He has more than 20 years of experience in helping telecommunication and high technology companies define and implement strategies to improve marketing, sales, and customer service performance. He is based in Minneapolis, MN.

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