Making a SaaS of yourself

A recent post at SaaS University ("Where CEOs Go For SaaS Higher Learning") argues that SaaS companies don't need product managers. Here's a quick summary of the argument.

• Product managers maintain the prioritized list of features.
• SaaS applications can ask the users to vote, within the application, on what features they want.
• Therefore, product managers aren't needed.

This argument is based on such a rich smorgasbord of fallacies that it's hard to decide where to start. I'll just elbow my way into the buffet line of bad assumptions at the point where the features are spread out on the table, waiting for people to select the juiciest among them. Here's how Rick Chapman, the author of this post, depicts the process of defining and prioritizing features:

The tick list is traditionally gathered from the product manager's imagination, development's imagination, the CEO's imagination, competitive analysis, press reviews, and, most importantly (and often only theoretically) from user requests.  It is the job of the PM to collate these new features, prioritize them, and fight (persuade) development that the PM is accurately reflecting the wishes of the customer in terms of the added functionality needed by the next version of the product.

Which begs the question, How do you figure out if you're "accurately reflecting the wishes of the customer" if everything runs on autopilot? Letting customers vote on features is important, but it's no substitute for understanding what customers really need, or who among them you should heed.

Making yourself clear
Say you propose Feature A. The one-line summary reads, "Streamline the process of imanetizing the eschaton." Now, assuming that your customers understand what the eschaton is, even if they're using it every day in your SaaS application, you're still hardly giving them enough information to know what streamlining really means. Are you proposing to cut down the number of clicks needed to get through the imanetizing process? Make it easier to learn how to use the imanetization management features in your SaaS application? Make the application run faster?

Crafting a good design
If you think that I'm being unfair by making the original feature proposal too vague, let's assume for the moment that the customers completely understand the importance of this feature. How then do you decide what the design constraints are? What might seem, to the developer writing the code, like the best eschaton-imanetizing feature ever conceived, might turn out to be baffling to the end user, or perhaps not all that helpful. Without any clear sense of the use case, the business problem, and the user, you're as likely to make bad design decisions as good ones.

Listening to the right people
But let's even put that risk aside for the moment, and focus instead on the voting process. The people doing the actual eschaton imanetization might have very strong feelings about the need for streamlining it. Unfortunately, these users may also have no impact on the business success of your SaaS application. For every 10 end users, there may be 1 manager that wants a new report instead of the streamlined imanetization. The manager may be the one who makes the buying decisions, and may be royally POed if you don't give them what they want, even if they're in the minority of voters.

Going after a bigger market
And what about market development? Our hypothetical SaaS vendor has already attracted a particular kind of company--say, medium-sized eschaton brokerage firms in the continental United States. But is that the ultimate market that you, the SaaS vendor, want to reach? By following the direct feedback of current customers, you may be missing the features that are important for the next market you want to enter, where neither streamlined imanetization or improved reporting may be the cost of entry.

Letting PM focus on the customers
As startlingly naive as this view of enhancement requests might be, the bigger error of this post is its conflation of bad product management with all product management. Here's how Chapman describes the role of PMs as voices of the customer:

PMs are traditionally supposed to spend a great deal of time with customers learning what they like and don't like about the product they're responsible for. The reality is that in most companies, most PMs learn a great deal about how to manage a tick list, communicate the tick list, prioritize the tick list, fight for the tick list, write the MRD, revise the MRD, examine the PRD, fight about the PRD, etc., etc. This doesn't leave much time to spend with customers.

The companies in which Chapman worked may not have granted PMs the time to research customer use cases, market characteristics, buying behaviors, and other critical topics. However, that's hardly true of all technology companies.

For example, in the soon-to-be-published Forrester Leadership Board on product management best practices, a VP of product management describes how he writes time spent with customers into every PMs quarterly goals. Other PMs I've interviewed since taking this job as an analyst have similar stories to tell. Either they have taken the initiative to protect the time needed for their research, or their management has made it a bigger priority, fearing the bad consequences of misguided product decisions. Chapman's argument smacks of, "Well, we've never given the PMs the chance to do the most important part of their jobs, so we'll just get rid of them altogether."

Understanding PM's to-do list
Maintaining the prioritized feature list is hardly the only thing PMs do. The list of tasks that PMs perform may vary across companies, but it's always a big list. Sales and marketing support, training, release management, customer reference recruitment, social media outreach, press and analyst briefings, release management--someone has to do these sorts of tasks.

I might have my disagreements with particular approaches to teaching product management. However, Pragmatic Marketing, AIPMM, et al. don't limit their description of product management to "the tick list."

Since Chapman begins his post with the statement, "If you're a SaaS company with product managers and are considering sending your PMs to one of these courses, I wouldn't bother," it makes me wonder how much he really knows about these organizations, or the curricula they present. Nevertheless, even if these outlets for PM training were to prove completely worthless, that's not the same as saying that product management is worthless, too.

[Postscript: The role of PM does change in SaaS organizations, but it hardly disappears. If you're a Forrester client, you can read the complete report on what PMs actually do in SaaS companies here.]

Comments

[Daniel Paner]

It's interesting how the original story reads as if from the perspective of someone who is not directly in or associated with Product Management role. The "I-don't-really-even-know-what-that-person-does-here" mentality when viewing roles within an organization. Boiling down Product Management to the facilitation of a customer-compelled wishlist is naive at best, ignorant at the other end of the spectrum.

A good SaaS organization should certainly have their prioritized list of enhancements with customers having some influence, though a better SaaS company should be driving by the overall needs of the market moreso than just a survey of user needs.

[Ken Barrette]

As a longtime Product Manager, I just want to say thanks for taking the time to craft such a well-thought out reply. In my experience, maintaining a "tick list" is a very small part of the job - and one of the less interesting parts at that. Unfortunately, there are far too many people out there who don't understand the value that good Product Management can provide to an organization (SaaS or otherwise) and the original post just reinforces that point of view. People still equate product management with project management. Maybe we need a different name for the profession.

[David Locke]

So what would happen if you captured feature requests on your site and implmented them? You would tune your application to your loudest most active users. You would focus your market to an ever smaller population. And, surprise, you would go out of business.

Then again, if you are a fast follower, this would work out fine for you, because you never really intended to serve the market of live long and prosper.

As a customer, I could just write a bot to send the same request over and over until you got it done. As a competitor, I could do the same thing. Imagine the zeal with which such a vedor would serve their competitor. Grim all round.

[Tom Grant]

Good point, David. You have to fight the very human tendency to listen selectively. The technology should help you take the difficult but necessary steps to understand your market more broadly and deeply, instead of reinforcing bad tendencies.

[Darayush Mistry]

Tom, good response. Read your complete report as well .. great stuff.

Agree that most of the stuff on SaaS University post was gross misrepresentation of what PMs do and how it applies to the PM role at SaaS product companies. However wanted to see what you thought about one of the things they mentioned about getting a deep mine of almost real-time information on what users do with SaaS products. I still don't see a large PM movement (or maybe its still mostly underground) around really drilling into that available data while making decisions or trade-offs for SaaS products. Its data that really wasn't available to PM's working on on-premise products and is a game changer in some ways.

[Rick Chapman]

+++ A recent post at SaaS University ("Where CEOs Go For SaaS Higher Learning") argues that SaaS companies don't need product managers. +++

Uh, sorry, it did not. The post you refer to is part one of what I have expanded to be a three part series. My conclusions will be published in part three. My post did make the following assertion:

+++ We think spending money on product management training and certification is pretty much a waste of money if you're a SaaS firm. +++

I stand by this assertion. However, it's conditional; if a company does not meet some criteria I'll list out in final article in this series, these courses have value. If they do, I believe they're a complete waste of money as currently constructed. I'm also confident that after reading my posts, the developers of these courses will begin to frantically resculpt them to reflect my observations; they then, in the future, may have value.

I ENDED the post with a question:

+++ So, what do you do with your PMs? Do you even NEED PMs at a SaaS firm? And, instead of expensive courses and irrelevant certifications, where should you be spending your money? And what about product marketing managers (PMMs)? How does SaaS impact their role and function? +++

You DO realize that the rest of your post is therefore...well...not really relevant? Your commenting on opinions I've not yet expressed.

You'll have to wait for the third post in this series to be able to accurately comment on my opinions. I was going to make this a two-part series, but decided to go to three after reading some of the comments on www.saasuniversity.com

[Rick Chapman]

+++ Agree that most of the stuff on SaaS University post was gross misrepresentation of what PMs do and how it applies to the PM role at SaaS product companies. +++

No, it is not. It an absolutely accurate, real world description of product management by someone who A) has been a product manager, group product manager, senior product manager, and VP of product management at several high-tech firms, most of them software B) authored several books on software, including The Product Marketing Handbook for Software, the 5th edition of which is due out this summer and In Search of Stupidity: Over 20 Years of High-Tech Marketing Disasters, and is C) the managing editor of Softletter.

I'm also writing a new book on SaaS; also due this summer.

Look for it!

[Jackie]

From someone who has been a Product Manager I find is suprising that the percieved most important job "traditionally" performed by a PM is a tick list...

As well I would argue that feature enhancements do not solely (or even mainly) come from existing customers. PMs spend a lot of time listening to the non-customers, the ones who have not yet bought or left the product because of lack of functionality. If you keep enhancing the product based on existing customer base it will be very hard to gain new customers.

[Jackie]

I do agree though that the traditional MRD will need to evolve as we work with new business models.

[Rick Chapman]

Part 2 of this series has been posted at:

http://www.saasuniversity.com/COMMUNITY/Forum/tabid/1230/forumid/1/postid/20/view/topic/Default.aspx

[Tom Grant]

Rick--

Why do you keep insisting that other people's experiences can't possibly be true? I don't doubt that you're describing what PM was like in the companies where you worked. However, it just ain't necessarily so, across the rest of the industry.

Rather than compare the size of our data samples (mine's pretty big, by the way), I'll instead say that it's easy to find a different kind of PM than you describe. I've met quite a lot of them since I've taken this job. It's not hard to find VPs of PM who report directly to the CEO, who get rewarded on their direct contribution to the bottom line, and who even reward their PMs on the basis on how much time they spend on "field research" about users, use cases, business problems, and the like. You often find these people in SaaS companies, too.

I agree with you, the role of PM in SaaS companies does evolve. In fact, that was one of the research projects I did last year. However, they just don't evolve in the way you describe, even when they have mechanisms for gathering direct feedback from customers.

Last, it's a little disingenuous for you to claim that you've been holding back your opinions for some future post. Here's your own quote:

"It is the job of the PM to collate these new features, prioritize them, and fight (persuade) development that the PM is accurately reflecting the wishes of the customer in terms of the added functionality needed by the next version of the product.

"However, in a properly architected SaaS system, this job should be carried out by the product itself."

And then you continue, in the comments section, making very strong assertions about the uselessness of PM education (a separate issue) and the withering away of PM. You even cite Plexus as the great (and single) example of the SaaS company that doesn't need PMs. It's apparently such a great example, it has expanded to fill the universe of technology companies, annihilating the people who are telling you that, as PMs, they don't fit the stereotype you've constructed.

[Rick Chapman]

I think you should put this post up on www.saasuniversity.com; the entire articles series is there and people can read what I said in direct context. I've never said that other people's experiences aren't "true"; I DID say that claims that product management in software is new aren't true; product management has been used in the industry for decades. This is not a disputable fact.

I also accurately described the realities of PMs in software companies, not idealized models. And as I said, a quick look at company 10-Ks tells you who is "strategic" at a software company and who isn't.

And the fact remains that you have begun commenting on opinions I've not yet expressed.

As for experience, I have much more than you in this area of the industry--AS a product manager, hired PM gun, person who constantly writes about the industry, and as one who is constantly generating research on the topic. I constantly talk to PMs as well as other executives in the industry.

But, of course, when you have real world experience, you tend to cut through the puffery and get to the facts on the ground.

rick

[Tom Grant]

Before proclaiming that you have more "real world experience," or that you produce more research, you really should check your facts. I was a VP of PM at various tech companies, big and small, before coming to Forrester. Since becoming an analyst, I've published 15 documents in the last 18 months, with 3 about to be published.

Of course, it's silly to have to respond to an ad hominem argument in the first place.

[Rick Chapman]

+++ Before proclaiming that you have more "real world experience," or that you produce more research, you really should check your facts. I was a VP of PM at various tech companies, big and small, before coming to Forrester. Since becoming an analyst, I've published 15 documents in the last 18 months, with 3 about to be published. +++

That's a lot of companies to be a VP of PM at! At how many were you just a plain old PM?

+++ Since becoming an analyst, I've published 15 documents in the last 18 months, with 3 about to be published. +++

I have you beat on page count! Five editions of one book, two of another! The 2009 SaaS Report is 430 pages, our just released SaaS Marketing Report is 450+. That doesn't count the direct sales report also about out: 200 pages. Softletter twice a month.

rick

[Tom Grant]

Unsurprisingly, the person who made the ad hominem argument isn't ashamed to have made an ad hominem argument. Instead, he continues it. Who knows, you may have more industry experience, or maybe I do. But are credentials are not relevant. If you need a refresher on ad hominem arguments and other logical fallacies, the articles on Wikipedia are not too bad:

http://en.wikipedia.org/wiki/Ad_hominem
http://en.wikipedia.org/wiki/Logical_fallacy

And please stop declaring victory until you've actually answered your critics. For example, see the section on Agile's role in PM in yesterday's "SaaS Backwards" post. You apparently read it, since you commented on it. So, did Jim Highsmith not actually write what I quoted? Did the PMs we surveyed and interviewed lie to us?

And with that, I'm bailing out of this discussion, since it's going nowhere. (Please, give me a pleasant surprise by not using my decision to move on as an excuse to declare victory again.)

[Rick Chapman]

The answer to this post can be found on:

http://www.saasuniversity.com/COMMUNITY/Forum/tabid/1230/view/topic/forumid/1/postid/20/Default.aspx

[Rick Chapman]

Just a teaser:

Tom Grant of Forrester is still unhappy with me. More from www.theheretech.com.

+++ Unsurprisingly, the person who made the ad hominem argument isn't ashamed to have made an ad hominem argument. +++

Hmmmm. This is starting to sound like "argument weak here, yell like hell."

+++ Who knows, you may have more industry experience, or maybe I do. +++

I'm pretty confident I do. But, it's not really that important.

Do have you beat substantially on page count, though.

http://www.saasuniversity.com/COMMUNITY/Forum/tabid/1230/forumid/1/postid/20/view/topic/Default.aspx

[The Cranky Product Manager]

Oh, JOY! There is nothing the Cranky Product Manager enjoys as much as watching a GOOD PISSING CONTENT! Yippee! And between a Ho-Bag Analyst and a Self-Proclaimed Expert/Author/Windbag, no less!

But instead of posting your respective "page counts" or whatev, let's just be honest about what this argument is REALLY about, and then help us put it to rest.

So, Rick, Tom, .... how many inches? Really. Tell us. Don't forget - we need to know length and width.

[The Cranky Product Manager]

Oh, yeah, just one more observation: Rick, the Cranky Product Manager can't figure out if you can write or not.

Yes, you have a prodigous page count behind you (All Hail He of the Big Page Count! Whoohooo!). But your argument confuses intermingles two unrelated issues (the value of training vs the value of PM) - NOT a sign of good writing. The CPM's junior high English teacher would give you a "C" for this one. Hopefully your books don't suffer similarly.

BTW, Rick, WHY oh WHY has no one every recommended your best selling books to the Cranky Product Manager?

[Neil Davidson]

Cranky PM,

I highly recommend Rick's best selling "In search of stupidity" book:

http://www.amazon.com/Search-Stupidity-Twenty-Marketing-Disasters/dp/1590597214/

It's awesome. I think you'd like it - Rick can get pretty cranky himself.

BTW, I disagree with Rick's comments about product managers here, but I'm staying out of the cross-fire, thanks.

Neil

[Greg Glockner]

When I worked as a PM, I would have welcomed anything that reduced my workload. If a SaaS has features to help PM gather and prioritize requests from existing customers - that's great. There's still a ton of work to do, starting with getting data on all the people who aren't customers. No SaaS system can give you that kind of information. And that's critical for the growth of a product.

[David Locke]

The features are called a server log and web analytics. But, that only lets you tune your application to the linear convergence of the red ocean. Yes, you do not need a PM, since you set out on that path of short lifespan in a price-based, fast follower-filled market.

I'd rather not, so I'll hire a PM crew, as in not just one. In the SaaS market, you better have a new technology under way.

[Geoffrey Anderson]

I will second Neil's recommendation of Rick's book. I am a HW guy, but I lived through the computer revolution as an end user (yes, I am an old fart) and his book kicks ass. I make all my new PM's read it...

Geoff

[Tom Grant]

Just remember, Oh Cranky One, that I'm still editing your podcast interview...

[Nick]

Rick Chapman: you have more page count? Remember the expression "If I had more time, I would have written you a shorter letter". So you can churn out pages to rival Stephen King... perhaps the quality of your research is equivalent to a Stephen King novel too.