The Insider's Guide to Business and IT Agility
By Christopher W. Cabrera, Founder and CEO, Xactly Corporation , 10/17/2007
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We live in a jaded society, where the phrase "the customer comes first" has little resonance anymore. From such daily insults to our credibility as "due to unexpected call volumes…" to the ritual finger-pointing of IT vendors, we're conditioned to believe that "customer first" is merely lip service for most companies and that we have to put up with whatever we're fed.
When you're paying hundreds of thousands of dollars for an enterprise software implementation, that's a hard thing to swallow; yet once such an implementation gets underway (usually ponderously), the customer has precious little leverage. But, happily, the pendulum is starting to swing the other way, with the on-demand/software-as-a-service (SaaS) model fostering a much more customer-centric view among the new generation of software companies.
In the on-demand world, the customer is truly in the driver's seat. The software is "rented" on a per-month basis, and if a vendor does not deliver a consistently high level of value or fails to meet expectations, the customer can cut that vendor off in a blink of an eye -- almost as easily as switching mobile phone services. Hence, customers need to be central to everything a successful on-demand vendor does, from product development and implementation to partnering with other vendors and customer care.
This approach contrasts tremendously with traditional enterprise software, with its lengthy implementation cycles, long-term licenses and enormous sunk costs that breed customer inertia. With enterprise software, customers wait months or even beyond a year for their application to be scoped, tested and deployed. And the vendor sales team -- their constant companion during the sales cycle -- is now nowhere to be found, because they've moved on to the next "elephant hunt" in search of a new million-dollar order.
Everything about this paradigm fosters behaviors that place the customer not at the forefront of everyone's thoughts, but rather far down the pecking order. Not only does the power shift to the vendor once the contract is signed, but the vendor also weaves its tentacles throughout the customer's internal IT infrastructure in terms of hardware required; expensive human resources for implementation, maintenance and management; and on and on.
Yes, the on-demand paradigm is radically different. On-demand software is characterized by rapid implementation and time-to-value, with no sunk costs, little or no human resource investment, no ongoing maintenance, no ponying up for upgrades, and more predicable scalability. There's no need to invest in expensive security and high-availability infrastructures to support an on-demand application, because those costs are shared across all of the vendor's customers. And a customer has the power to pull the plug on the application just as rapidly as it was implemented, and without shaking the internal IT infrastructure to its very core.
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