SaaS Vendors Can Win Over Customers with Honesty

All computer systems go down. They just do. And the more you talk to people in IT, the more those 99.999 percent uptime numbers you hear about seem to be just that: numbers.

When it comes to the fledgling on-demand, SaaS and cloud computing marketspace, however, those system reliability and application uptime 9's have become inextricably linked to SaaS vendors' success-or failure.

For instance, back in January, Salesforce.com was castigated on the Web for a "full service failure" caused by a networking device gone awry: "Salesforce Demonstrates How (Un)reliable SaaS Really Is," noted one blogger. Chimed in another blogger: "Salesforce.com Crashes," with just a little too much schandenfraude-ian glee.

Approximately 30 minutes after the outage, and after Salesforce.com techs initiated manual recovery steps, the Salesforce.com apps were back up. A post on its trust.salesforce.com blog explained the unplanned service disruption.

That kind of real-time transparency not only benefits harried and worried customers, of course, but also has become table stakes for SaaS providers. ( NetSuite, for instance, promises 99.5 percent uptime as part of its standard agreement.)

But now it's time for SaaS providers to offer even greater transparency to their customers and a willingness to become true "partners," as the trite saying goes in enterprise software. What better way to do that than to take a potentially disastrous event-like a three-hour unplanned outage-and turn it into something positive? To move the vendor-customer relationship beyond the 9's stipulated in a contract and actually create that trust, which is sorely lacking today, even with on-premise vendors.

Because make no mistake: Traditional on-premise ERP, CRM, BI and supply chain vendors are looking for any chinks in the SaaS armor, and are not afraid to cut through the fleshy parts of the SaaS body when they think they can.

FUD sounds dull, but it can be deathly sharp.

As an example of a step in the right direction, look at what recently happened with SaaS ERP provider Workday, which counts more than 100 companies as customers, including Chiquita. On Sept. 24, 2009, Workday suffered a significant, unplanned outage, related to a network attached storage device.

Aneel Bhusri, Workday's cofounder and co-CEO, took to the Workday blog to deliver "the story" behind the outage. He explained the IT that caused the problem, shared how they were taking steps to not have it happen again, acknowledged that "any unplanned outage is unacceptable," and, most importantly, thanked customers for their "understanding" and "the overwhelming sense of support and teamwork."

In a recent interview with Bhusri and Workday cofounder Dave Duffield, ERP guru Vinnie Mirchandani asked them how "pissed off" their customers were about the outage.

Said Duffield: "Unbelievably, I got e-mails from a couple of our customers basically saying, 'Better you than me.' They are so glad they are not being woken up middle of the night. That's our job now." (For a profile of Duffield and Bhusri, see Can Two Legacy ERP Guys Get IT Executives to Buy into On-Demand Applications?)

Mirchandani, in his blog, lauded them for "transparently blogging the mea culpa." The response from Workday customers, saying "Don't sweat it-you are doing better than what we [would have done]," should concern on-premise vendors who might not overly concerned about SaaS and cloud vendors, Mirchandani concludes.

Time and time again we've seen that companies, politicians or celebrities who honestly and courageously admitted to whatever particular sin they committed stood a much better chance at building a better future for themselves and their "customers," as it were.

I wish that the "on-premise versus SaaS" debate didn't have such a divisive Red State - Blue State feel to it. There's more than enough room for everybody. But I fear that's where this is all headed.

If that is the case, and Salesforce.com, Workday, NetSuite and others want to hunt bigger prey in the fields of Oracle and SAP, then there's one untapped area where they should focus their efforts: dealing in absolute truth with their customers.

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This story, "SaaS Vendors Can Win Over Customers with Honesty" was originally published by CIO.

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