Service will be the next SaaS differentiator

Where most of the focus on SaaS has been on the software side of things previously, as the industry matures, service will be the deciding factor for many.

SaaS (software as a service) is spelled with two capital S's. The first refers to software and is the one we commonly think of. It references the need in companies to find economical cloud-based solutions for running their software. However, it is the second "S" which stands for service that promises to become a more significant differentiator for SaaS providers as the industry matures.

I can reflect on my own experiences as a former SaaS manager. Configuring the data center, developing the product, and securing clients was one thing—but retraining an IT staff that was used to serving internal users and not outside customers was another. In short, we had a lot to learn about service.

The memories flooded back during a recent conversation I had with Bill Gardner, Infrastructure Architect for Oildex, a SaaS financial services provider for the oil and gas industry.

"My entire career has been spent in the SaaS world, and customers always had very high expectations," said Gardner. "But it didn't change the fact that we initially had some growing here to do in the area of what was expected of customer service from our IT staff. In IT, you hire many individuals who are coming from an internal IT organization and dealing with co-workers. What they learn when they enter a SaaS environment is that there are other service considerations when you are dealing with outside customers and their data—especially if the data is financial in nature."

Gardner—and Oildex—believe that service is an integral part of the value proposition that SaaS providers should be delivering to their clients. The company actually inserted its own "teeth" into its SLA for service, without clients having to ask for it first.

"We wanted our service SLA to reflect our belief in service," said Gardner. "In other words, if we didn't meet our service commitment to our customers, we committed that we would pay them in the form of rebate credits that would be applied to future billings."

This is how the system works:

Oildex currently promises a minimum of 99.95 percent uptime to its clients. However, if it ever fails to meet this level, it rebates "penalty credits" to clients that are reflected on their next bills.

"We've always believed that service was an important part of what we deliver," said Gardner. "We also recognize that for clients to go with us, they need to develop a trust in what we do."

Oildex takes several other steps to ensure high-grade customer service:

  • It regularly performs audits that clients require as documentation for their own internal and regulatory audits; and
  • It sends out its sales force to personally visit with clients twice per year to discuss service levels and product enhancements that clients would like to see.

"The client visits have really made a difference," said Gardner. "For a time, we were encountering some system performance issues that were due to old code that was running inefficiently, and that we subsequently fixed. The problem was a direct result of rapid growth in clients and transactions—because we didn't actually encounter the issues until transaction volumes reached a certain level."

Oildex renovated its code and has since seen dramatic improvements in systems performance that passed directly to its clients.

"What we do is all about great service, and we understand that," said Gardner—who also said that the company had recently hired a support manager from the retail industry who brought the service culture message to the organization. "In retail, the customer is always number one. We continue to bring that mentality into Oildex," said Gardner.

It's a heartening message, given 2013 survey results on SaaS performance as seen through the eyes of SaaS customers. A 2013 Enterprise Strategy Group Survey revealed that 57 percent of survey respondents drawn from 248 global companies found that SaaS service was slow and unresponsive or completely inaccessible due to outages. Only 37 percent of those surveyed said that they had a dedicated support engineer to assist with implementation, and only 40 percent of respondents said that they received regular communication from their SaaS provider.

As SaaS matures and as companies become more demanding of their SaaS providers, Oildex's Gardner believes that SaaS providers will be held accountable (with rebate penalties) if they fail to meet their SLA commitments.

In some ways, we are already seeing this as companies themselves position to become more customer-centric in their strategies, operations, and IT. Naturally, they will expect their key business partners (like SaaS providers) to follow suit. 


Mary E. Shacklett is president of Transworld Data, a technology research and market development firm. Prior to founding the company, Mary was Senior Vice President of Marketing and Technology at TCCU, Inc., a financial services firm; Vice President o...

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