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From on-premise to online: How we changed our business model to succeed in the era of digital transformation

Hands down – digital transformation is the most trending topic in today’s business world.

For companies all around the world, embracing digital technologies in order to transform and optimize the way they do business, is no longer the question of “if”, but a question of “when” and “how”.

According to Tech Pro Research, a whopping 70% of companies either have a digital transformation strategy in place or are working on one; while IDC reports that enterprises spent around $2 TRILLION on digital transformation in 2019.

These are the times of the digital revolution, and there’s no way to avoid it.

You’re either in or you out.

Embracing the digital challenge

Let’s begin with two important observations.

First, there is no one “right” way to transform digitally. But in order to succeed you need to have a plan. Introducing new technological tools without a vision and a plan is a waste of time, effort, and (most importantly!) money.

Second, technology and software alone won’t transform the way you work and won’t make your company digital. This means that embracing any digital innovation ultimately will result in change. A change in the way we interact with customers, suppliers, and how our internal business processes are done.

And for most of us, change is uncomfortable, even a bit scary. We tend to be apprehensive about the new reality. Will it be better or worse?

Psychologist’s who studied people’s attitudes to innovations discovered that people have an inherent bias to the way things are and tend to overrate the “old” ways and the status quo. They think that the loss of the “old” outweighs possible benefits of the “new”.

No wonder that the resistance to change is so universal. This unwillingness to change applies not just to your employees, but also your suppliers, partners and customers. So how do you overcome it? Do you wait and see, or do you begin to change… right now?

Of course, change doesn’t happen overnight or without costs! However, we knew that being a part of the rapidly evolving tech industry, we didn’t have the luxury of waiting. We had to “bite the bullet”, because we saw that major disruptive innovations were coming our way.

So, this is our story of change.

The story of our digital transformation

Our company was “born” in 1990 when technology looked very different than it does today.

And, therefore, when the time for a digital transformation came – we had to not only digitally transform our internal processes, but also our entire business model.

This story is about how embracing digital innovation resulted in the change of our business model.

In the early 90s, our software was delivered on floppy disks (remember those?) and the world had barely embraced email and mobile phones. Even though our product developed along with the new technological advances over the years, our main delivery model stayed the same for years.

Our customers paid to have our CRM software installed on premises and entered into a yearly maintenance agreement that gave them access to new versions of the software. They paid for consultancy services and training and often for integrations between our software and other software products they used. This is how all software was sold and delivered at that time.

Chapter 1. Acknowledging the change

Fast forward 15 years and the evolution of technology and the rapid spread of the internet evolved enough for a brand new business model to appear: the Software-as-a-Service (SaaS) model.

Working with the pre-runners to this model, the professional hosting companies that rented out IT services to companies, the new model did not come as a complete surprise. However, it also became clear that the new SaaS model wasn’t just about how a software was deployed. The SaaS model completely transformed not only how software was delivered, but also priced, onboarded, supported, and sold.

We realized that moving into this new territory required brand new skills from our employees and partners, as well as new systems to support it.

What to do? Clearly it is impossible to do it all in one go: we had customers to take care of and support, we had partners and suppliers who depended on our product.

So, we had to implement the change in steps – i.e. build the foundation and go from there.

Chapter 2. Build by starting small

It’s easier to handle business innovation if a smaller team is assigned with the task to define and implement new ideas. So, instead of executing a total, company-wide makeover that would interfere and compete with other existing business goals, we decided to start small.

A team was set up to define the new product and services, as well as prepare a proof of concept. Luckily, we already had a strong starting point – our product was well-placed for the SaaS model. We also had a forward-thinking management team that were willing to invest and take risks.

After a year of preparations, the team was ready with the first version of our SaaS (online) product.

The initial SaaS version was small, confined to only a subset of our core features and was relevant for a specific customer type. In our case, we appealed to the smaller customer who wanted a standard, standalone CRM software. No integrations. No bells and whistles. Just a CRM for the sales team, plain and simple.

Taking the new model to the market involved many things. But our biggest launch efforts were towards our internal teams. We went on a roadshow around our subsidiaries to explain what this was and how this would impact them. We created fact sheets, presentations, videos, compensation plans and targets. And we trained them… and then trained some more.

Initially, we asked our existing sales and delivery people to include the new SaaS product into their product portfolio and offer it as an alternative. This allowed everyone to learn more about the new model and how it differed from what everyone was used to.

We also asked our consultancy people to give us some feedback, define new relevant services and welcomed input from business managers in devising new commission models. Our previous experience showed that involving key stakeholders not only ensured a better process, but also resulted in better involvement and ownership.

Chapter 3. Change gains momentum

As time went by, we recognized every big milestone, like the first 100 customers, 1,000 users and so on, and rewarded achievements to encourage our people to talk more about the new offering.

Within a year we had a solid proof of concept with more than 500 new customers; however, it was also clear that more was needed. The old model kept getting in the way of the new. Both customers and our own people tended to revert back to the more familiar grounds. It was comfortable and easy, and the sales commission was better too.

So, the management decided to up the game yet again and established an entire business unit dedicated to the online version! The new team started by defining the new processes for how to sell, service and support our new online customers. To make this work with our existing business, we had to devise rules on how to handle new leads and how (on-premise and online) sales teams should collaborate.

For a while this worked really well, and we were able to service the new online market without compromising on the existing business. However, as the new market matured and more and more customers started to prefer the new version, our management realized that we no longer could have two teams competing over the same customer.

Once again, our management team had to make some big decisions, and they decided it was time for the new SaaS model to replace the old one!

Chapter 4. In with the new, out with the old

Involving all country managers in this decision, we identified what success criteria were needed for this to work and what we needed to make or adjust. Then, dedicated teams spent a year preparing.

For example, our quote-to-cash process was taken apart, standardized, digitized and automated, so it was possible to scale up. We had to build new services to support the cloud platform and made changes to how our product was defined.

We changed the way we developed and released our product – moving away from a few big new releases once a year to short cycles of continuous releases of new features and prioritizing the online solution.

Our product offering was completely redefined, as was our price model. To support our decisions, we evaluated, estimated and calculated a lot. For example, our contracts had to be redrawn to reflect the new services, and we re-designed our customer services and prepared a completely new communication platform to generate leads, as well as to sell to and onboard new users.

Put simply, we had to build our new business, while still running the old.

Chapter 5. Going all in on the new model

Finally, when all the preparations were done, we took our brand new SaaS CRM solution to the market.

But this time, the SaaS version was no longer a side product. It became our main product!

To make the change even stronger: we got rid of the old price model, and our sales reps and partners could no longer sell the old version! Drastic, isn’t it? Needless to say, not everyone welcomed this change without voicing questions and criticism. And dealing with grunts was a part of the new reality.

At this stage it was all about communicating the change to our employees and partners by answering their questions and offering them tools. We knew that if our people don’t understand what, how and why we do it, then nothing will change.

So, how did we make the opponents to come around? It was due to 2 main efforts:

  • First, the top management came up with and repeatedly outlined a clear vision and strategy for the company’s future – through a series of presentations and workshops.
  • Second, it was our unique customer-centric company culture that helped overcome the critics’ objections. They eventually saw that the SaaS model was simply better for our customers and, therefore, better for our company.

Finally, to complete our digital transformation, we had to bring our partners along. Connecting to other business applications was a requirement we met with the old model. But what about the new cloud model? To make it work, we had to define a new partner model and invest in new tools to let partners create new integration products that were cloud ready.

This was the birth of our App Store which was launched with a very small number of apps, but quickly grew to cover many key business applications and has proven to be a robust and sustainable model for customization that works for our customers and partners.

What we’ve learned from transforming our business

Our own digital transformation journey took us several years. And, frankly, we are still in the process of change.

To help you on your way towards digital transformation, we’d like to share some of the lessons we’ve learned along the way:

1. The digital future is here to stay

No matter what you do, you need to accept that new digital technology is a necessity for your business. And since it’s unavoidable, instead of fearing the new digital reality, you’d rather embrace it.

As the “brave new digital world” affects customer experiences and expectations in one market, it spills over into another. In our case, we caught the shift early enough to make the necessary changes.

But if you are still waiting, then our advice is to take a closer look at what else is going on in your market. Any industry can be disrupted.

The recent closure of the world’s oldest travel agency Thomas Cook proved that if you don’t make adjustments, and make them fast enough, your customers may find alternatives that suit their new digitally-enhanced needs better.

2. Be willing to take risks and innovate

Today, decisions are mostly data-driven. Those are facts and figures that prompt companies what to do next.

However, you still need to be willing to invest in new areas and go down unchartered paths, which means – you need to take risks. Our own experience demonstrated that experimentation and testing go a long way.

For example, first we had a small team to test out the SaaS model in the market. And when we were confident enough, we committed to the Cloud change fully. But even with all the analytical data and testing, this decision was not without risk.

3. Take a step-by-step approach

It took us several years, but once we defined a vision of what we wanted to do and where we wanted to be, we broke up our journey into steps and milestones and mapped out the road.

When it comes to digital transformation, it is important to realize that nothing happens overnight. Changing the way we work, think, communicate and do things, takes time. And the fastest way is to take it step by step and ensure that each step (big or small) takes you in the right direction.

Also, allow enough time for everyone to absorb the big step before taking the next one.

4. Never underestimate the power of education

The only way to get everyone to change is to start with education. Make sure your employees know why things are changing and how. A little bit of education goes a long way.

And, finally our advice is to be patient. A digital transformation does not happen overnight, and you may find yourself wanting to run when the rest of your team are walking. Be a coach. Train, motivate and keep working towards the goal.

Conclusion

Since the time we decided to change and embrace the new business model, neither we, nor our customers or partners have ever looked back.

We became the Cloud service provider and the Cloud CRM solution has become the norm for our customers for many good reasons.

The new model also allowed us to grow our business and to do so without employing a lot more people. By making technology do more, our employees have also been able to do more.

There is no right way to digitally transform a company. Embracing modern technological innovations is, however, a necessity for business growth.

Yet, what, when and how you do it depends on where you are now and where you want to be in the future.

For more best practice tips, please visit us at www.superoffice.com/blog