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Over the last decade, product companies across industries have increasingly shifted to XaaS business models. While this journey significantly transforms all parts of the organization, product management and strategy are at the heart of the shift. By thoughtfully addressing key product management capabilities, talent, and skills, senior leaders can help to ensure that their organizations make the most of their critical cloud investments.
The five largest areas of impact where product teams can directly influence cloud transformation value include Planning & Strategy, Customer Engagement Programs, User Centric Design and Development, Operations, and Leadership & Governance:
Planning & Strategy – An XaaS product strategy must account for several considerations unique to the cloud ecosystem. It is critical for product managers to understand and develop new commercial models that account for new considerations such as tiered cloud costs, tech/product support costs, hosting, DevSecOps, and consumption-based, scalable product architectures.
The product lifecycle of XaaS is rapid and continuous, hence, rather than planning around major releases, the organization must shift toward developing rapid releases while maintaining a multi-year high-level directional focus. The evolution also requires teams to establish rapid product innovation cycles that can deliver regular customer and business value through these continuous release cycles.
SaaS customers look for added value through seamless integrations and marketplaces connecting related/adjacent SaaS products and ecosystems. To address this need, product strategies must develop a portfolio view of connected or related product families and design for scaled digital ecosystems, inclusive of partners and integrations.
Customer Engagement Programs – Product teams must transition from episodic customer engagement to a continuous and value-based relationship. This transition must regularly engage users to capture the voice of customers/partners, socialize roadmaps for feedback, and constantly test value propositions. Best-in-class cloud-based product teams also personalize their customer outreach and communications to the various ‘cloud-buyer personas’. These range from key IT and Procurement roles to SaaS application owners, solution architects, application development leaders, and business function leaders. The use of beta programs and customer previews also becomes more important in a cloud model to quickly learn and capture meaningful feedback to continuously increase user satisfaction levels.
User-Centric Design and Development – Building compelling customer experiences is core to all product teams. However, in the cloud-maximized model, it is critical to design against the preferred buyer’s journey and refine end-to-end processes to enable different types of users buying from their respective places in the value chain. To realize the promise of accelerated time-to-market, product teams must also adopt faster build-measure-learn cycles through disciplined agile delivery. Leveraging customer engagement programs, teams must regularly prioritize their focus around dynamic customer needs.
Operations – In a XaaS world, the customer journey spans from trial, freemium, buy, onboard, to customer success and support, expansion, retention, and growth. Product Ops is key to optimizing and driving this experience. Therefore, XaaS product managers must trust and lean heavily on Product Ops leaders for data, automation, feedback, and guidance on how to deliver an operationally resilient product. Therefore, XaaS PMs must understand key operational features like telemetry, app monitoring, automation, site reliability, hosting operations, DevSecOps, security, and event management – and prioritize these appropriately in product roadmaps. Finally, XaaS PMs must utilize evolved monitoring metrics and tools to inform key decisions across the product lifecycle, such as A/B testing, MVT testing tools, cloud performance, and usage monitoring tools.
Leadership & Governance – The XaaS world introduces several new cross-functional dependencies and handshakes for a Product organization. These include experience and design teams, hosting/site ops and DevSecOps teams, cloud service providers, and digital ecosystem partners. In addition, PMs must have broader and more continuous engagement with operations, customer success, product telemetry teams, among others. Therefore, it is critical that leaders improve cross-functional alignment to deliver on accelerated timelines. Enhancing the skills of a product team for cloud technologies and the associated tools for increased automation helps unlock the full value of the cloud investment.
It is also essential to understand that the success metrics and KPIs in a XaaS world are different. Therefore, XaaS PMs must learn key metrics such as Annual Recurring Revenue (ARR), Monthly Recurring Revenue (MRR), Net Revenue Retention (NRR), Customer Lifetime Value (CLV), Customer Acquisition Cost (CAC), ARR/MRR growth and understand how these impact processes, behaviors, planning cycles, and roadmaps.
Finally, a continuous product delivery lifecycle makes it essential for leaders to revise budgeting processes to enable agility, flexibility by distributing decision rights, and empowering teams to deliver outcomes against longer term roadmaps.
To maximize value realization of cloud investments, XaaS executives must evolve their product organizations. By thoughtfully addressing key elements of the product operating model such as ways of working, commercialization, and innovation, organizations will benefit from increased operational efficiencies, reduced risk of strategy/execution fragmentation, accelerated time to market, and a competitive ability to excel at change.
