How Russian cloud services for business slow down their own market

At the time of creation, 4 years ago, our company understood its purpose: we simplify the use of SaaS for small businesses. And although the original business model was chosen incorrectly, all this time we were in a permanent search for our own niche. We have seen a surge in cloud services in Russia, we have seen a recession, and we are seeing a second rise. The specifics of our business in combining SaaS products. And we see how our leading SaaS companies put sticks in the wheels of their own market.

SaaS developers are trying hard to sell value products as massive

SaaS does not determine the approach to building a business, but characterizes the way software is delivered. The fact that both unambiguous ups (for example, Google Keep) and complex products (for example, Salesforce Sales Cloud) belong to SaaS creates some confusion. When SaaS was seen as a promising business in Russia, two conflicting ideas took root. On the one hand, SaaS has become synonymous with a product for mass sales, on the other hand, the products being created are focused solely on business.

An example to follow was the company 37signals (now - Basecamp). The staff consisted of 18 employees, and the company’s product, a project management service, was used by 2 million customers. Ideal SaaS: a large number of customers gives a large revenue, economies of scale can save on infrastructure and specialists. This impressive example inspired developers to focus on the product and avoid expensive offline activities as much as possible. The chosen approach was also confirmed by Evernote, Dropbox and Gmail, which grew precisely as mass products.

At the same time, the founders created B2B services based on two points:
  1. neither individuals nor business have yet become accustomed to SaaS, but the latter at least have money;
  2. Russian business certainly needs a tool to automate work processes.

The second thesis was reinforced by experience in IT outsourcing, where the process approaches of Western companies became a revelation (and at the same time answered the question why “they have” clean sidewalks and everyone smiles).

It turns out that the developers created services that organize the company's business processes, which means they pretend to change the existing foundations, but at the same time they tried to exclude offline activities. A complex software product for a business is a value proposition that, in addition to complex sales, also involves complex implementation, and selling it as a mass product is incorrect. This thought still remains in the background. Developers expect quick conclusions from customers, turning their sites into similarities to landing pages (for example, Megaplan), and their telephone operators still deny the need for implementation (for example, MySklad).

When customers are encouraged to make an impulsive decision that will significantly affect the life of the company, they have a natural stupor. To understand its reasons, you need to think wider and doubt the truth of the original theses. Eliminated the stupor by optimizing sales and marketing, concentrating on this effort. In the morning, sensing the need for offline work with clients, Megaplan has nurtured a telephone sales department. Various tricks were invented with a subscription: “Elba” replaced the monthly period with the annual one - to be appreciated and “sat down,” “Business Environment” signed clients through invisible points in the questionnaires for banking services. Simplified registration and payment functionality. Powerful mechanisms were used, such as automatically optimized contextual advertising, retargeting, and A / B testing. Today, "live sites" and "callbackers" are in fashion, which catch bored and weak-willed people. The databases of the oldest services like Bitrix24 and Megaplan contain millions of inactive clients, and these are those whose hopes were not realized.

It is interesting that a deep study of sales methods was transformed by some founders into missionary self-awareness: “Businessmen do not buy my CRM because they do not know how to sell and do business,” they conclude and begin to selflessly “train the birds to fly.” Businessmen were, are and will be, and the lack of interest in CRM is an indicator that there is something more important for their business.

Today, connecting to wi-fi, it’s hard not to get into someone’s sales funnel. The registration and payment scenarios in the services are extremely optimized. These steps take no more than 4 minutes. Then the client, having stumbled into the system, with a high degree of probability becomes a dead leader.

A complex software product for a business is a value proposition that, in addition to complex sales, also involves complex implementation, and selling it as a mass product is incorrect.

SaaS developers oppress integrators and leave them no place in the worldview of customers.

The confusion with self-determination of SaaS was reflected in the work with integrators. I call integrators system integrators well known to the corporate world. In the SaaS world, the concept of an integrator is vague, they are simpler (since they are often provincial hipster web designers), and it is customary to call them partners.

Despite the fact that SaaS companies position their products as something that does not require IT specialists, installation and configuration, it is not always possible to completely ignore the complexity of implementation. The experience of Salesforce is well known to our players, so affiliate programs were created in an attempt to throw individual fuss with a client onto the shoulders of someone else.

But there are some features in how service creators build their affiliate business:
  1. Service developers present their product to customers as a turnkey solution that does not require implementation, and this leads customers astray. There are no integrators in the worldview of customers. And although we see the “Partners” section on almost every site, and you can leave applications there, service development companies do not give customers a clear signal that these partners are needed.
  2. First of all, service developers are trying to sell a subscription on their own. In other words, they compete with those who agreed to do complex and expensive offline work instead. These SaaS companies are similar to young managers who rush about between the desire to delegate authority and the fear of losing power, and as a result, they put questions on themselves and hamper the overall process.
  3. Even if service developers recognize the role of partners, they exclude the existence of integrators as a class, implying that their partners are only their partners. This leads customers away from the idea that integrators could select optimal services for customers and act as service integrators among themselves.

Thus, SaaS companies understand the win-win strategy so that both win should belong to them. Partners play the role of faithful dogs, who, with any luck, sometimes the application falls from the master table. And this not entirely ethically correct strategy is the norm today.

Service creators compete with those who agreed to do complex and expensive offline work instead.

SaaS Developers Do Not Consider Integration A Basic User Functionality

I have been involved in service integration for the past 8 years. First for Sesame Communications, where we supported integration with 22 systems called the Practice Management System (PMS for short). There was a sad joke on the sidelines: “All problems from PMS” - these systems were usually updated without warning, so errors were often detected by the client itself (there is nowhere worse!). Then, in Startpack, we integrated almost twenty Russian SaaS products and made some discoveries for ourselves.

To begin with, the presence of the API in most cases is due to concern for the architecture, this allows you to take the business logic into a separate layer, and on top to downgrade any user interface - web, mobile application, automatic tests. Techies make the API primarily for themselves (and simply because it's fun). We are not talking about clients.

When two groups of techies meet, in 10 cases out of 10 hostility arises between them. The phenomenon was described back in 1961 by the sociologist Muzafer Sherif, who found out that for the emergence of hostility it is enough to divide people into separate rooms and give each group its proud name. The mistake of the leaders of SaaS companies is that such frictions are ignored, and sometimes even encouraged. The result is a business process devoid of responsible persons, and the study of bugs begins with the words "Again these rascals ...". The client, faced with a non-trivial integration error, most likely will not find the one who will accompany him.

Integration requires a company to have a special workflow that goes beyond the company itself. Without this, the integration between developing software products is fragile and unreliable - even if you observe the laws of honor, cover the software interface with automatic tests and check the integration on the battle server after each delivery, no one can guarantee that your partner does the same.

In addition, when the service has an API, the company rejoices that now complex tasks are solved by waving the specification in the air. Developers get frustrated when the API doesn’t coincide with someone else’s, and are extremely reluctant to adapt to “those villains” (who are “so stupid that they use SOAP, not REST”). Therefore, when a client asks for a non-standard solution such as integration with access control systems, the manager “solves the issue” by sending a specification, which gives the client (furniture manufacturer, for example) nothing but conflicting feelings. Advice to contact the integrator is perceived with disbelief, because the developers did everything so that there were no integrators in the client’s worldview.

Despite the desire of services for integration extensibility through marketplaces (Bitrix24) and special sections (amoCRM), in general, communication between services is not considered as full-fledged user scenarios that require optimization, decision makers and support. In this area, life could be seething, giving rise to a diversity of ecosystems and satisfying any tangible demand, but services neglect this layer of user needs.

Advice to contact the integrator is perceived by the user company with distrust, because the developers did everything so that there were no integrators in the client’s worldview.

SaaS developers ignore core customer fear

Every day I communicate with one of the users of our cloud application selection service. The vast majority of stories come down to two types:
  1. “We found out about a product such and such, paid money, but did not understand it and left it”;
  2. “I’m the leader, I’ve been putting off the decision on the SaaS product for a month now, because I’m afraid to lose.

Let's talk about the second type. If backup and migration aren’t a concern in IaaS and PaaS - system images and dumps are easily saved, copied and deployed elsewhere, in SaaS this issue is the main concern. In the Megaplan report “SaaS / B2B Market Potential in Russia” (2013), respondents who understood the value of online services mentioned the following reasons for not using SaaS: 27% - fear of losing data, 26% - fear of losing access. 53% of legitimate distrust, which is interpreted by developers as "lack of enlightenment", "prejudice" and "misconception"!

To be honest: when a customer signs up for SaaS for business, it’s not the same as paying for the Internet. He acquires an asset that requires investments in the form of subscription fees and time spent on study and implementation. Investments should pay for themselves, dividends should increase, the risk of loss of investments should be minimal. Translated into everyday cloudy language, the client is ready to subscribe if he is sure that the service will be of benefit, that the benefit will be maximized (the service will become the flagship) and that the development company will not close. And if deposits in the bank are somehow protected by the state, no one gives any guarantees.

Entrepreneurs are not fools. Choosing a service, they intuitively evaluate it as an asset. They are not impressed with gibberish about RAID and the data center level Tier III. At heart, they want an answer to the question: “I will plant my company at your service, and what will happen if your company closes?” In terms of an asset, a characteristic of liquidity is the ability to quickly and without loss find a replacement.

And here SaaS companies have nothing to answer. It is impossible to quickly and without loss copy a project from the PlanFix system, for example, to WireCRM, you cannot just transfer bookkeeping from My Business to Sky. Moreover, SaaS companies quietly consider this part of their strategy: they say that we are not like that, it is SaaS. Evernote and Google Freemium models “Sit down for free, pay when you can't get off” is the ideal that service developers strive for in various variations. The only answer to the client’s fears “Everything is reliable with us” simply means that the liquidity of the asset is zero.

Remember the law on the abolition of mobile slavery. Phone number intolerance suppressed competition, leaving customers hostage to the operator. Now we are witnessing cloud slavery: SaaS companies turn customers away, ignoring their most important fear.
Now we are all witnessing cloud slavery: SaaS companies turn customers away, ignoring their most important fear.

How to stop slowing down the market

SaaS developers oppose themselves to the vertical adopted in the corporate sector “vendor - system integrator - customer”. In one of the interviews, Alexander Prozorov (at that time - Megaplan’s partner relations director) even emphasizes that in SaaS there is no such conflict of interest between the system integrator and the customer, believing that SaaS is not just a one-time use some service, and based on long-term cooperation, the interaction between the supplier and the consumer. In practice, we see the exact opposite.

Let's look at the structure of the tourism business in Russia. The tour operator creates a mass product, and a travel agent finds a personal approach to the client. The tour operator solves the technical problems of creating the product, uses the mass effect, optimizes costs. The travel agent helps the client choose the right product, takes care of the design, accompanies, removes fears and doubts.

Tour operators respect travel agents, calling them “our everything”, they do not compete with them and do not inspire the client with the idea that the tour is good in itself and that the travel agent is not needed. Until 2010, it was impossible to buy a tour on the operator’s website, and even now direct purchase of a tour from the operator does not provide financial advantages. Tour operators do not crush agencies for themselves, they respect the ability to choose any optimal tour. This gives the market the necessary variety, fills empty niches, and removes distrust.

Think about it, all the SaaS problems described could be solved by integrators if SaaS companies treated them the way tour operators relate to travel agents. Integrators can select the best products, can introduce products on the spot, helping to translate business processes, removing snags and advising. They can integrate upon request and accompany them. Integrators can alleviate the main fear of customers by solving the issue of migration and backups in SaaS. Ultimately, in these areas, they can create perfectly tuned automatic mechanisms. All that is needed is to stop pretending that integrators for SaaS are not needed.

We have created an amazing world where it is considered normal to pay for refilling an office cartridge, for assembling furniture or for taking out garbage, but at the same time it is customary to spend a crazy amount of time to choose SaaS products, understand them and try to project them onto the company's activities.

Innovative customers have already tried existing services. Impressive customers caught by massive marketing have already paid money. It is time for the pragmatists. Our businessmen trust people. Businessmen need long-term relationships with responsible persons, with those who know how and love to work with a client offline, for whom the word “service” is not an empty phrase. And this new driver will be integrators. The faster the SaaS developers realize this, the faster the new cloud renaissance in Russia will come.

All SaaS problems described could be solved by integrators if SaaS companies treated them in the same way as tour operators relate to travel agents.

Published in the magazine In the Cloud. Russian Federation No. 3

Speaker: Alexey Fedorov, CEO of Startpack

The third issue of the magazine In the Cloud. Russian Federation is already available for free download to mobile devices in AppStore and Google Play stores .

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