Service As A Service
<Reprinted from www.projectknighton.com/ckblog>
For those of us ancient enough to remember the birth of e-commerce, you can probably recall that ten years ago we were all worried that this new medium was unsecure and that using it would put us and our personal information at risk. God forbid we would actually let them store our credit card information for us – the less they knew about us, the better.
Now, ten years later, I wish I could get back the hours spent retyping in the same contact information, billing address, etc and I readily accept that these companies know a lot about me, that they are inferring from my behavior that there might be other products and services that I want, and that they keep a close eye on my purchases and follow up with me to find out if I was satisfied. I’m amazed how quickly familiarity and convenience can overcome paranoia.
One of the many pleasant surprises I have encountered now that I have moved from packaged software to software as a service is the remarkable opportunity to improve how customers are served through their entire lifetime of using the service. Of course, if you are looking for a sinister motive, then “the man” is only using your confidential information to exploit you by forcing you to get the full value out of their product. Is that really so wrong? So, let me get this straight – every month I get my bill and decide whether or not I will pay it or cancel the service. With this awesome power they now have they are somehow forcing me to feel happy with the service and to believe that I am getting enough value to continue?
No, of course not. In fact, I would argue instead that the new model is much better both for the provider and the consumer. The consumer now gets to decide very frequently if the service has value and if they will continue, and the provider gets to use their knowledge of the consumer’s use of the service to figure out how to make sure they are getting their money’s worth.
I suspect there is a subtle economic truth in here – every product would be better if offered as a service. Commodity consumer products work like this, and this is why these companies invest so much in brand and reputation. They have to because there are so many opportunities for substitution. But back to digital products – if the product is software offered as a service, then it’s quite practical to monitor the product’s usage and to assess if the customer is actively engaged and happy with the product, or worse, to be able to predict that their use is waning and that they are likely to churn.
There is an ethical hazard here to consider – believe it or not, in some cases people or organizations will continue to pay for a service that they do not use. I logged into my cell phone account to add a new service to one of my phones and among other things discovered that I was paying $2 a month for roadside assistance for my son that does not even have his driver’s license. So, here is the question – if I am a service provider and I see that a customer is not using a feature of my service for which they are paying, should I tell them?
Some day there may be companies that actually differentiate themselves by behaving this way, but I suspect that most companies today would simply stop communicating with that customer for fear that they would raise their attention to this fact and only hasten their departure.
Now, imagine if you will, that we take this idea of monitoring usage of a service as a service in and of itself. Imagine that you are a provider of a service but have not yet figured out what are the critical use patterns that indicate a healthy customer nor have you built the tools that would mine the data for these patterns and provide reports and alerts as to the health of your customers. If so, then I would guess that you would find value in a meta-service that did this for you. In our case, we are doing this for ourselves, but as the SAAS model continues to proliferate, so will the demand for such Service-As-A-Service offerings. We know from practical experience that this is not easy to do and is hard to enable through competing for scarce product development resources. If only someone could do it for you…
At the risk of introducing an entirely different topic late in the game, I think that one thing that Google has done for (or to) the software industry is to get many of us to thing of software applications as “content”. That is, we are beginning to expect them to constantly change and evolve, to stay fresh, to regularly add new features, and to not have to pay for them. This new visibility into customer usage patterns also enables this – it allows you to watch how new features are adopted and what can be trimmed as unnecessary feature bloat.
There is great value in knowing how an individual customer is graded today, but even more in knowing that their scores are gradually falling and if not corrected will likely lead to a precipitous decline and churn. With this kind of information, customers can be nudged back to health instead of a drastic intervention in an attempt to recover. With this should come a better world for software in which customers only pay for the software they use and providers only invest in the features that sell.
