SaaS Vendors Need A Mental Shift

Rant Alert: The post might be bordering on rant but it is very important for the success of SaaS

In April, I wrote a post about how SaaS users need a mental shift to do computing differently in this Cloud era. I have argued that they have to adjust themselves psychologically to play the Cloud game where they need to let go some control over their data in order to get access from anywhere in the world. In today’s post, I am going to wear an users’ hat and talk about how SaaS vendors need to change the way they do business in this era. This post is a result of my recent experience with two of my favorite SaaS applications.

There is no denying that the users need to change the way they think about computing. Starting with the very idea of using the apps from the Clouds and storing the data on the Cloud to issues like security, privacy, etc., users are witnessing a paradigm shift happening in the world of computing. With this mental shift comes a different set of expectations from the users side and it is important for the vendors to understand it. When we push the idea of Clouds to the users, along with the notion of ubiquitous availability, device independence, etc., we also push the idea of “pay as you go” pricing model to their minds. In fact, some of the pundits on the infrastructure side put this as one of the conditions to meet the definition of Cloud Computing. Whether the vendors like it or not, users have come to expect the pay as you go pricing model to be part of the entire SaaS ecosystem.

Recently, I was trying to sign up for one of my favorite wikis in the SaaS space. When I tried to upgrade to their paid plan, instead of taking me to a signup form where I can put in my information and make a payment (which was the norm even in the Web 1.0 era), it took me to a form where I was asked to submit my information so that a sales representative can contact me regarding the upgrade. To me, this appeared to be a pre-web business strategy and it was a big put off. As an user, I want my entire ordering process to be automated without any need to even talk to a sales person. I was pretty shocked to find that I have to undergo the car salesman kind of experience in this Cloud era. Here is a request to the SaaS vendors. I don’t want to see a sales person unless I really have something to ask them but I do want to talk to a support person instead of recorded messages or automated emails or useless context based knowledgebase in the helpdesk. Please fire all your sales guys and hire support techs.

As if the above experience is not enough, the sales person told me that I have to pre-pay for a complete year instead of paying on a month to month basis. When I queried the sales guy about why they are charging me for the full year, he responded by saying that the monthly fee of $20 is too low to have a month to month model. Even if I ignore the fact that they advertise their service to be $20 per month, I was still surprised by the response because I have used other services where they charge much less than $20 and they have no problem with the minuscule nature of the transaction. My company in India is using Zendesk and we pay them a smaller amount on a monthly basis. In fact, there are many other vendors who offer options to pay on a month to month basis (sometimes along with an option to pay on a half yearly or yearly basis for a discounted price). There is a chance that this vendor is targeting medium sized companies and enterprises but this particular service I was trying to subscribe was clearly directed towards freelancers and small businesses.

The biggest advantage with the pay as you go model is that it is easy to scale up or scale down or, even, completely unsubscribe to the service. This is the basic premise behind all Cloud Computing payment models. Recently, our company in India needed to use a wiki service for one month for a really short term project. We subscribed to Zoho Wiki Basic Plan (Disclaimer: Zoho is the sponsor of this blog but this is my experience as a paid user and it was an user-vendor relationship between us) because we wanted to use the Wiki under our own domain name. We completed the project in 15-20 days, took a backup and changed the plan back to the free plan. We just paid $12 for the month we used the wiki and not a single penny more. This is the kind of experience I come to expect from SaaS vendors and, in fact, there are many vendors who take this path. The vendors can try to lure users to pay in advance by offering discounts for yearly payments but not offering a month to month plan is not acceptable. If I am going to be a really short term user of an app, making me pay for a year is meaningless and it doesn’t offer the kind of savings I should be getting when I move from desktop app to SaaS app. Having said that, I don’t deny the fact that I pay on an yearly basis for apps like Flickr or Picnik but the amount I pay for a year is a meager $25 compared to $240 I will be paying in this case. For an individual user or a small business, this is a big difference.

I also had another experience few days back with another SaaS vendor that has disappointed me a lot. Recently, I got an email from one of my favorite mind mapping apps. I am a free user of this app and for some personal reasons, I didn’t get a chance to use this app in the last few months. Couple of days back, I got an email from them saying that I need to log into my account once every 120 days to keep the account active. We have seen such requirements from vendors like Yahoo mail and Hotmail in the Web 1.0 era. Those were the days when storage was expensive and vendors wanted to get rid of inactive accounts in order to minimize the waste. That was also an era of desktop software where users kept all their important apps and data on their own computer so that they were available whenever they wanted it. In this Cloud era, users expect the vendors to make the applications and data available to them whenever they want it, without any additional requirements like logging in at least once every 120 days, etc.. If vendors want to convince the desktop users, who have their apps and data available to them even if they log into their computer after 2 years, to move to the Clouds, they better ensure that users are not forced to do things differently from their desktop experience. Already, they are making a mental shift in terms of losing control over the apps and data. Any additional burden on them will push them back to the desktop world and they will not trust the SaaS vendors.

Before winding down this long post, I want to once again emphasize that vendors need to adapt to the changing expectations of the users in this Cloud based era. They need to modernize their business strategies and go the extra mile to empower the users. Unless they change themselves, it is difficult to convince users to make the mental shift.