For more information, please see this post by Chris Barbin, CEO of Appirio.

But today on Martin Luther King Jr. Day, I'm experiencing the opposite going on. This is a holiday that a couple years ago would have passed me by without much thought other than noticing that many of my clients had the day off. But today, I've seen a dozen friends post quotes from Dr. King. They've caused me to think and reflect on his inspiring example, how far we've come, and how far we still have to go.

Because of Facebook, I've had a deeper connection to this holiday than I have in years. While social media can certainly be a force to accelerate cultural change, so too, it can be a way to help us reflect and reconnect with our history.

1. SaaS companies are first and foremost product companies.


2. SaaS products are fundamentally different from traditional on-premise products.


3. SaaS subscriptions are fundamentally different from traditional product licenses.
   • Revenue recognition: Upfront license fees are immediately profitable; a subscription is not profitable until it has generated more monthly revenue than the cost of sales required to attain it.
   • Sales approach: Product licenses are longer, larger deals; SaaS subscriptions depend on a land and expand model.
   • Time to Customer Value: Product licenses have at least a year to prove their worth; subscriptions must demonstrate their value every month.
4. SaaS companies cannot succeed without services.
   • Services drive adoption.
   • Adoption is a prerequisite to retention.
   • Retention is a requirement for SaaS revenue and a prerequisite to renewal and expansion.
   • Expansion is a critical path for reducing cost of goods sold.
5. Churn erodes SaaS revenue and delays profitability.


6. Churn is inevitable, but not immutable.
• Successful customers do not leave.
• Products must be optimized for customer success.
• If churn continues, it is a direct result of failed adoption services.
7. The key lever to reducing churn is delivering greater and deeper user adoption and customer success.
   • Greater user adoption means more users use the product.
   • Deeper user adoption means users use more of the product.
   • Driving greater and deeper usage hinges on adoption services.
8. Old-school high-touch adoption services are both too much and not enough.
   • They are too much unless you want to dilute company focus and revenues by building a body shop.
   • They are not enough unless you want your customers to be forever dependent on your people for their success with your product.
9. SaaS adoption services can and must be scalable or they will prevent or delay profitability.
   • Services do not all need to be provided by the SaaS provider, nor should they be.
   • Services can and should extend to a partner ecosystem built from best-of-breed service providers that offer a three-way win: to the customer, to the SaaS provider, and to the services provider.
   • Services can and should extend to an opt-in customer community that lets people learn about each other’s experiences, challenges, and success factors.
10. To be truly scalable, adoption services should be automated, and include a technology-based infrastructure built around knowledge worker needs.
    • The diversity of SaaS customer size and types means that many do not have their own infrastructure available to support adoption.
    • Adoption services infrastructure should provide always-on access to useful information that is personalized, contextualized, and kept relevant by both formal and crowd curation.
11. All types of adoption services should be accessible to customers from one place: wherever they want it.


12. Smart SaaS companies have a unified view of customer success.
    • They provide integrated services rather than redundant efforts by disparate teams.
    • They define customer success, monitor it, identify potential pitfalls, and have intervention plans at the ready.
13. Only SaaS companies that make their adoption services as nimble as their products will survive.

Siloed Technology

The technology systems that support these folks in their jobs fall into the same silos.

• The Training People have a Learning Management System
• The Technical Support People have a Help Desk System
• The Consulting People have a Knowledge Base

(In my experience the Implementation People are often neglected here. Maybe someone puts together an (already outdated) implementation checklist document. Maybe they have an impossible to navigate wiki.)

The main problem here is that the current model focuses on the systems. Not on the user. When the role of the user crosses many of the old silos, confusion and frustration are the result.

None of these systems is connected to the others.
All of them have separate, usually redundant, sometimes contradictory content.
The likelihood of a user finding what they needs across the various systems becomes pretty grim.

The Need for Personalization and Context

What these users really need is something to bring it all together. In this scenario, the focus is on the user, not the old siloed systems. Something that can bridge across these various silos to pull everything that they need into a single context, personalized for their needs.

We need to pull together the right knowledge resources, social interaction, and other functionality.
We need to let them access it in the right context for the task at hand: maybe a community portal, maybe inside a CRM/ERP or other application, maybe in their email inbox, maybe on their mobile device.
And we need to present it in a way that emphasizes what's important to their particular needs and provides other options as secondary.

First Steps

Here at VMG we've been starting to work with our clients on first steps toward this vision. We're really excited about the possibilities and will have a lot more to say about this in the next few months. Say tuned!

Siloed Organizations

We're all familiar with the current set of silos:

• People who do Consulting
• People who do Implementation
• People who do Training
• People who do Technical Support

They define themselves around a particular kind of interaction that happens at a particular point along the customer life cycle.

Focusing on "Success"

But more and more we're seeing these silos breaking down. We're seeing integrated teams that do bits of all of this. The focus is changing from "I do Training" or "I do Technical Support" to "I do whatever it takes to make my customer successful." This change in alignment is showing up in job titles like "Customer Success Manager" and "VP of Customer Success" and we're definitely seeing Software as a Service companies leading the charge.

As of this morning, a Google search on "customer success manager"(with the quotes) gave me 677,000 results. I scanned the first 10 pages and it's mostly job listings for a Who's Who of SaaS companies: Lithium, Eloqua, SocialText, Yammer, and our clients Spigit, Appirio and Salesforce.com.

A couple other quick searches shows Jobster lists 1,921 "customer success" jobs and Business Week lists 1,000+.

Why the realignment?

SaaS companies are making the shift to Customer Success for financial, practical, and philosophical reasons.

On the financial side, customer success is critical to driving financial success. SaaS companies have month-to-month subscriptions with their customers and switching costs that are much lower than for traditional enterprise software. Successful customers renew and grow their business. Unsuccessful customers walk away. Any SaaS company who is not making their customers immediately successful is quickly dead.

On the practical side, many of these companies are just not able to staff for a bunch of separate specialized teams. According to IDC, 33% of the $13.2 billion generated by SaaS companies in 2009 came from companies under 100 people. They're often hiring as fast as they can to meet customer demand. People drawn to these fast growing startups tend to have a flexible "do whatever it takes" mindset. So putting these people on a single team with a mission of "make customers successful" just feels natural to these companies.

On the philosophical side, these companies believe that this is a better way. In many cases they were founded by people coming out of large software companies who have seen the difficulties that a fragmented approach to their customer interactions can take. Simplicity is a mantra for SaaS companies. So, of course it should apply to how they deal with their customers: just make sure they're successful.

Success beyond Saas

While we're finding this Success-focued model well established in most of the SaaS companies we work with, we're starting to see it in larger traditional technology companies as well. We haven't seen any wholesale realignments, but we're seeing the signs of change. Companies are starting to question the traditional silos and are starting to facilitate communication across the borders. People are starting to notice that 3 different groups create almost the same content. The Customer Success Manager job title is beginning to pop up in new places.

I think over the next several years we're going to see this realignment spread further and further. And I can't wait to help!

The truth is, the LMS is still relevant. If only it would stop trying to be more than it is, and get back to its core value proposition of being an administrative tool for offering and tracking courses. A lot of businesses still need to do that, offer and track courses, but many are realizing that they don’t need hundreds of features to get it done; they just need the right features at the right price. Meanwhile, a lot of LMS companies have gone so far down the feature-bloat path to differentiation that there’s no turning back. Never mind that LMS’s are increasingly commoditized, that the big players are nearly always a case of over-medicating, and that they are hardly ever price competitive. So instead of getting back to basics (remove functionality? lower prices? are you mad?) they try to “evolve” even more. Throw in some ratings and comments and a micro-blogging capability and viola! Enterprise social learning!

I am being way too harsh. Presumably, the leadership teams at the LMS companies see that enterprise learning itself is evolving and are realizing that their technology must as well. Presumably, they are mapping their best path to fulfilling this emergent market need, without throwing the baby out with the bath water. Presumably, they are re-architecting their technology to become the critical tool for a people-centric, networked organization; the place where people live to get their jobs done, rather than the place where people are forced to go to tick a box and prove that they have been “trained.” How much of a stretch could that be, after all? But there I go again. Being way too harsh. Or am I?

Is the LMS dead? Not yet. But it sure seems to be imploding.

Kevin Dobbs runs Montclair Advisors, which is a Software-as-a-Service advisory firm focused on strategy, revenues and product solutions. His blogs (and tweets) are always filled with keen insight into this rapidly growing space which also includes learning technologies of all kinds, from social learning to learning platforms and everything in between.

Kevin's latest post holds some great tips on how you can achieve Facebook, Zynga, and Yammer-like adoption for your cloud solution. As I read this post over again, it dawned on me that it is not that much different for your learning program. With a tip of the hat to Kevin, I offer you seven tips to make your learning viral.

Offer a free version

What better way to gain adoption by making it 'free'. Now this is learning, this version is probably customer focused rather than internal. What kind of training do you give your customers to help them get started? It's not always about getting butts in seats (classroom, webinar, or otherwise). The first thing you should consider is early adoption and usage of the product. People who buy the product and jump into a 2-5 day class are unlikely to know enough about the product to maximize all of that knowledge and those skills that you are likely to impart in that classroom. And there are probably others in the organization that could use small bites of info that don't need a class. Finally, that 'getting started' package can be a prerequisite to the classroom experience, allowing you to make deeper knowledge and skill transfer with a qualified instructor at the helm.

Clear pricing for your product

How many product companies don't list their training prices on the website? It's a registration form or a link to a sales person! Why would you not make it easy? In some cases, especially with cloud companies who sell their own products in a subscription pricing mode, you can align your learning business model and offer subscription (monthly, annual, etc) prices as well. If the customer is buying the product via subscription, it makes it easy for both the customer and the sales rep to add a line item for pricing on ILT, vILT, elearning libraries, office hours, etc. At renewal, drop the training price substantially (say, 60-80% discount) to encourage renewal and allow new users to access the same great training, continuing to maximize the usage of the product.

Trials

How about for your prospects? Maybe the free training (above) is only available through an adoption/implementation portal (e.g. the intranet). Lynda.com offers a great example of how you can use a trial version to sample your training materials and allow prospects to see the whole 'library' of what's there as opposed to keeping it secret behind closed doors (unless you really don't have any training to support adoption, which in that case, you've got bigger problems).

The other key point here - these trials allow prospects to see your learning materials and methodology, understand how easy it is to use, and get a picture of how good your training is so that they can quickly maximize the ROI on their product purchase. When I ran direct training through eHelp (RoboHelp, Captivate) as well as indirect as Macromedia, we found that almost 20% of attendees in the classrooms were prospects - yes, training as a pre-sales tool!

Intuitive interface

Two obvious points here. A really easy to use interface on the product makes it easier to create training that provides higher order value. Instead of low level functional training, you can focus on best practices, workflows, and insights you've gained along the way to help customers get smarter, faster.

If you are creating elearning, an intuitive interface makes it really easy for users to navigate by themselves instead of always having to provide branching and instructions for what to do next. It allows them to choose their own direction and putting that power in the hands of the users will always drive adoption more than force-feeding.

Keep training to a minimum

Kevin is spot on the money here. Given an intuitive interface, training should be kept to a minimum and within context as much as possible. Too many learning organizations try to boil the ocean (usually listening to SMEs and the engineers who try to convince them that every feature needs to have training), burning out resources and burning through budgets. Getting the right amount of training, in the right context, and supporting that with communities and user generated content is the right approach. Think about reusable content, disposable content, and content that you shouldn't create (or have created) in the first place. Use metrics and reviews to identify high value training content, topics, and most of all listen to your customers for what they need and want the most.

Small consumable chunks

Well, duh. After years and years of stories about 'chunking', I still see organizations creating 60min, or even multi-hour elearning modules, webinars, etc. It doesn't matter how engaging the training is if it doesn't fit into their work day. For ILT, chunking means don't make the instructor blather on for the first three or four hours of class before allowing them to get their hands on the product. It means providing plenty of hands-on labs, troubleshooting, deep thinking and collaboration and discussion to get the most not only from their instructor, but from the wisdom of the crowd that makes up the rest of the class. Everyone has something valuable to contribute and share.

Rapid Time to Value

Okay, one last 'duh' moment right? But do you really integrate this into your discussion and strategic planning for your learning program? If you are creating training for any audience - sales, technical, customers, partners...they all want the same thing. To be successful with your product (selling it, using it, implementing it) and bringing value back to their own business. So as you architect your learning solution, make sure you understand who your customers are, how they are measuring success, and how you can get them to seeing results on that metric as quickly as possible. This probably will drive a more longitudinal approach to your learning (thus, chunking) and allow for continued touch points of the customer through the lifecycle of that customer. This is especially key in cloud solutions as the switching costs are low, and adoption, retention, and renewal are key metrics in the business overall.

Kevin summarizes with the following, and I couldn't agree more.

Just to recap, getting a product to go viral requires a lot of thought around how your customers are going to use your product, keeping everything simple and focusing on making sure customers are successful when they use your product.

The Least Noticeable Difference

Years ago I heard Noel Tichy describe the concept of least noticeable difference. In a nutshell, it means that those inside an industry are often the least likely to observe and respond to significant discontinuous change. One of his examples was the icebox manufacturer whose response to the development and introduction of the refrigerator was to build better, fancier iceboxes. Today, many companies have implicitly organized their employee and customer training around the classroom model, without realizing that the classroom is empty. If they don’t respond to the cultural and technological changes that shape today’s worker, we might well end up with the learning equivalent of that icebox company.

The New Knowledge Worker

“There must be a new generation of knowledge tools to facilitate the growing social nature of work and to allow a more ad hoc and unstructured approach for knowledge work.”

That quote from Michael Fauscette’s recent post stuck with me. Most of the business systems in use today follow designs and processes established decades ago. While they still address the same underlying needs of businesses today, they completely fail to address the nature of knowledge work for the current generation. This is true for everything from ERPs to CRMs, and as I’ll talk about more in depth, enterprise learning.

It’s precisely such discrepancies between the tools at hand and the needs of a new generation that create opportunities for innovators to bring widespread, discontinuous change to an industry - and this is precisely what SaaS and cloud computing companies have done. They have jumped into the breach, providing flexible solutions that can scale rapidly and integrate new technologies as quickly as they’re developed - from mobile applications and platforms, to social networking features, to collaboration tools, and beyond. When a solution this powerful comes along, it’s not just an answer to a problem, it’s a revolution.

The same forces that have brought this revolution to enterprise IT are spurring similar disruptive change in enterprise learning. Similar to cloud computing, this disruption in learning is driven less by technology and more by contextual factors. In the case of the cloud, the disruption is created by the commercial and service models as much as by the core applications. In learning, the central driving force is about content – its creation, form, access and utilization.

Why does this matter to you? Whether you lead an enterprise learning organization or a rapidly growing SaaS company, your employees or customers expect learning and knowledge tools that are in step with the way they work and think. Just as we've learned that for students in the computer age to be successful, they have to be taught with computers, workers in this new generation want access to tools that embrace the mobile, social, crowd-sourced environment they live in.


The More Things Change… Welcome to the Third Wave in Enterprise Learning

The last revolution in learning began perhaps 20 years ago – that journey has brought us a whole industry around e-learning and spawned what is now a relatively mature set of learning management and content management applications and service providers. Interestingly, despite the enormous power and undeniable impact of this change, the central paradigm for learning has stayed the same. Whether it’s sales training, technology certification, SaaS customer training, or anything else, it’s still centrally driven by the classroom model. In a way, the e-learning revolution is to learning what automation was to transaction processing – it sped things up but it didn’t change the model. Measurement, pricing, learner access, and vendor supplied content was still organized around a traditional educational classroom model.

Now a new wave of transformation is at hand, created in part by new technologies, but primarily originating from the adaptation of social media to learning. Ironically, the literature in learning for many years has pointed to just-in-time, real-time learning as a far more powerful delivery model for learning that sticks. Most of us recognize implicitly the power of great mentors and trial-and-error learning. Our challenge has been to find ways to scale that model, and to build in capability to reduce the inherent variability in process and quality – the SaaS and cloud computing models now give us the tools to do that.


What’s Driving the Change in Learning?

There are a number of convergent factors which are building this momentum. They stem from three primary drivers:

1. The sources of content: Historically, learning content was created by instructional designers, building from source documents and subject matter experts. Increasingly, this model is giving way to user generated content (think YouTube), immediate access to experts (think threaded chat), and sophisticated search capability (think Google). In addition to the ubiquitous capability to connect with colleagues and extended resources through capabilities such as AIM, MSN, Yammer and others. While such sources carry with them their own risks and some companies have been reluctant to endorse such unfiltered sources for fear of liability, it is clear that, supported or not, such content sources will flourish and expand.


2. The nature of content: There are two somewhat disparate factors in this category. One of the biggest is the migration of gaming and simulation capabilities from entertainment to learning. It’s still early days, but the declining price/value ratios, the capacity for rapid development and the undeniable power for learning from these experiences will spur dramatic expansion of these methodologies. The other major factor is the ability to create and deliver context sensitive learning. This is another migration journey, this time moving capability from e-commerce into learning. Presenting learners with content specifically suited for them, based on a deep understanding of their current performance, style preferences, current tasks, most recent updates to policy or process, and just in time support is all within our grasp. This is especially important in a cloud computing environment, where frequent updates and releases are part of the fabric.


3. The nature of work and workers: The impact of the Next Gen worker is well documented. We are now perhaps 5 years into a workforce that has grown up with and expects to utilize the capabilities cited above. Perhaps just as important, however, is the nature of work itself. Mike Fauscette’s argument (read his whole post) is that we are moving to a whole set of complexity driven by knowledge work, which defies the standardization that legacy applications have been built to create and support. In a recent meeting on health care service delivery, one of the participants said: “the practice of medicine now is beyond the capability of human cognition.” In ever increasing numbers, today’s jobs and workers live in an environment where it is impossible to perform relying on routine, memory or policy manuals.

Implications of This Change for Learning

This coming change is so large, it can be hard to recognize for what it is. Like the icebox manufacturers of the last century, many in the learning industry are caught up in responding to small pressures without grasping the wide-ranging implications of this new wave. The classroom is empty; learning today has to be recreated where the learners went – in the cloud. And the cloud demands changes in every area: from the roles of learners, to the structure of training, to the technologies that will be needed.

The greatest impact will be the nature of the roles and responsibilities for service providers. While good instructional design will always be needed, new roles will need to evolve which may look more like librarians – one of my former clients took a cue from Foursquare and anointed “mayors” of his online communities. These were not necessarily people designated to training or learning, but deep experts in their field who served as collectors, resource managers and community organizers. Perhaps an even better analog stems from roles in art, museums and libraries: the role of “curator”. The key emerging skill set in learning may well be the ability to organize, maintain and present content versus structured creation of content.

Just as impacted will be commercial and organizing frameworks. Over time, we have evolved a well-developed set of commercial structures for creating, delivering, and acquiring content. But when the unit of measure is no longer a course and the creator of content may no longer be an instructional designer, we will need to develop a whole new set of commercial models. Likewise, our current system of measurements is deeply tied to our current learning paradigm. Both measures of volume and outcomes will need to be examined. How do we apply Kirkpatrick’s model in an environment where learning and doing are tightly bound together? And what are the impacts to the learning BPO marketplace? In other markets, BPO is giving way to KPO – Knowledge Process Outsourcing. Could that be the next iteration for these large service providers?

Finally, what are the implications for the legacy learning technology industry? Already, we are rapidly disintermediating the boundaries between traditional learning management systems (LMS) and newer portal technologies. If the trend continues, these more nimble, flexible learning and knowledge portals will likely replace our current notions of learning management systems. The SaaS model, itself a disruptive model, for acquiring and utilizing these technologies could be but a step on the way to cloud sourcing. And we will see yet another iteration of innovative companies undertaking the reapplication of existing technologies in gaming and e-commerce to the learning marketplace.

Once again disruptive change is coming, driven by new demands of the cloud-based worker and fuelled by changes to learning content and technology. This change will create a new wave of innovation and service capability every bit as big as the last one, and it will affect every aspect of the learning value chain. Some companies will embrace the cloud and everything it offers, while others will be left behind, looking in the classroom, wondering why it’s empty.

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