Vendor Transparency and Future of Enterprise SaaS Sales
I told this story to an entrepreneur friend yesterday. I was evaluating commodities trading platforms over a year ago and based on our requirements, found four companies that had the requisite capabilities. It took some time and effort to whittle down the vendors given the confusing websites, nebulous marketecture brochures, and lack of pricing.
It was an informative process into how vendors operate now versus a decade ago. In the old days of procuring enterprise software, once the requirements were established, the first plan of action was typically to talk to a salesperson. They would convince you to have an in person meeting for a demo. You would get an overview of the product, technology underpinnings, and details of pertinent features. Maybe you got a sense of the pricing but typically that topic would be pushed offline. Anyway, if that meeting went well, you proceeded with a trial in which lots of paperwork would get exchanged around intent and legal issues and such. Maybe the product needed special setup (especially in the non-cloud computing, non-SaaS days), so it took a few weeks to sort that out. Then you got to use the product, but usually a vastly stripped down version. You would repeat this process for several other vendors, maybe do an RFP to get more specific answers of pricing, features, business viability, disaster recovery procedures, support, etc. Once a vendor was shortlisted, the process might entail more demos, more pilots of the software, lots of haggling and price negotiations, and eventually years later you picked a product.
Raise your hand if you ever had to endure this painful, soul-sucking experience. This is software technology procurement process at its worst, but it was ingrained as part of the cost of doing business. IT executives expected it and vendors obliged. Unfortunately, it is also incredibly wasteful, time-consuming, costly, and damaging to both innovation and business agility.
I was not all that hopeful that much had changed from the days when I was selling software. Indeed, the first company I spoke with simply replied to my inquiry with an NDA (non-disclosure agreement) attached to an email. The pricing was indecipherable when I could get them to provide something. Every discussion about setting up a demo was met with a barrage of irrelevant questions. I was convinced that they did not actually want customers and thus I told them to take a hike.
The second vendor did not immediately push me to sign legal documents, but information was difficult to pry out. There were so many tiers and exceptions in the pricing scheme that I was nearly convinced that it was a M.C. Escher creation. It was too draining to continue the discussions, so I told them thanks but no thanks.
Then something marvelous happened. I came upon vendor nirvana where every question was answered intelligently and succinctly, the pricing was transparent and dead simple, and I could download the software to start using it that very day. There was no sales pitch, sales engineers to set up stuff, NDA’s, obligations, or hoops to jump through in order to try out the software. If I had more questions, they had a great online community with complete documentation and forums actively monitored by employees. They offered to come down to the office to do training, which ended up being actual training. They worked with my clearing firms to get things setup seamlessly. Updates of the software were automated and changes to functionality were clear.
If you are a startup building a SaaS product, you have two paths. On one side, you can replicate the Oracle’s and SAP’s of the world that force a sales process that is difficult and opaque. On the other hand, you can be super transparent. This means offering a seamless self-service trial and setup process, establishing clear and simple pricing with non-onerous terms, and building a community of passionate users that can support each other. This is a model that is value building and focused on making the product an ongoing discussion with users. Customers are invested in the long term relationship with the product and company because they are part of the process and involved in a meaningful way. Customers and users truly own the product.
The era of shady tactics and obfuscation and secrecy in enterprise software sales is on its way out. Forcing that customer investment by locking them in with crap software, costly maintenance agreements, and painful upgrade cycles is over. There are viable choices now and the new crop of enterprise SaaS providers is making the process as simple as possible because the power of the cloud and prevalence of mobile technologies created the platform to enable this era of openness. Let’s hope that we see this environment of transparency in SaaS business applications as the model of the future and not just a passing phase.
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