There is a lot of talk in the software business these days about changing business models, particularly the trend toward SaaS (Software as a Service).
Will SaaS business models completely dominate the software business?
Many consultants, pundits and other industry figures are proclaiming that SaaS will very soon take over the world; saying if you’re not on the bus soon, you’re going to be out of business. I believe this is a bit overstated, but the strong trend toward the SaaS business model can’t be denied.
My opinion on SaaS adoption: When bandwidth is unlimited and close to free, all IT systems are totally secure, the Internet is as reliable as old AT&T; and every customer in the world decides they want to rent everything and own nothing–then I’ll agree that SaaS is heading toward 100% market share. As I said above there’s a strong trend in this direction, but we’re a long way from complete domination.
Is software product management dead?
I’ve written about SaaS a number of times before and since it has become so very important in the software business I’ll continue to do so frequently. What I want to address today is another opinion some “experts” are also espousing: that the trend toward SaaS means the end of the Product Management function in the software business.
I find this statement to be downright silly.
When following this debate, it’s important to take notice that many of the folks proselytizing these opinions have businesses whose success is based upon these predictions actually coming true. It’s always important to consider conflicts of interest among the debaters.
In one recent webinar I attended the presenters trotted out a SaaS software company that was growing briskly every year with no product managers in the company. What wasn’t said is that it was always possible to find software companies (of the traditional sort) who didn’t have a product management function. Software companies are often founded by programmers, and they haven’t always seen the need for Product Management. There are very successful companies where the developers talk directly to the customers, with no product managers at all. However, the facts are that a very small percentage of companies that do business this way are successful, and its usually based upon special circumstances: the rare developer who understands markets and customers as well as he does coding, markets where the developers themselves are perfect customer proxies, etc.
So while software companies without Product Managers have always been out there, it just hasn’t been a broad formula for success. Trotting out one SaaS company successfully doing business this way (incidentally, I saw some big holes in their model long-term) doesn’t impress me all that much.
I’m not defending the status quo–I’ll say it once again, there is a huge move to SaaS in the software biz. Many (and maybe most) software-based businesses will be doing business this way in the near future. However, like most over-hyped trends, this are some pretty big overstatements being thrown around.
SKILLED product management will always be important
The argument being made is that many of the functions Product Managers currently perform are obsolete under the SaaS model. With continuous development more practical using SaaS, there may be fewer (or no) new version introductions. So the old waterfall chart with MRDs being created for the new version may go away along with traditional new product introductions. I’m sure you get the picture. SaaS is a pretty fundamental change to the software business model, so you wouldn’t expect a product manager’s job to be stagnant under such change.
But those predicting the death of product management are focusing on the more mundane aspects of Product Management. The essence of this critical function is the ability to understand markets and match widespread, aggregate customer needs to the technical skills and IP of your company–creating a PRODUCT which can be sold to these many people. It doesn’t matter whether you deliver this PRODUCT over the Internet in a hosted manner using monthly subscriptions, or in the more traditional on-customer premises, licensed model. Product Management is about creating a profitable PRODUCT well-matched for a market segment. It matters not whether you are engaged in customer facing marketing/promotional activities, or upfront product planning–the product manager’s understanding of market needs and how your company can fulfill those needs is crucial in a product business. Otherwise, you’re just selling custom software–one-off’s for every customer. That’s a different business–not a bad one–and one you which doesn’t require product managers.
Can social media replace product management?
Another thing being bandied about by some pundits is the impact of communities and other social media for its potential impact on product development. The thinking goes that there will be much more direct interaction with the end customer, leading to tremendous amounts of data available to ISVs. SaaS is very well suited to communities (although not exclusive–they can be well utilized by traditional licensed software vendors and have been around in various forms nearly forever) but the ability to more easily obtain direct customer comments and maybe take votes on potential new features doesn’t eliminate the need for product management. To the contrary.
While communities and other forms of social media are very powerful tools, don’t mistake more data and customer access with actionable market intelligence. Data needs to be interpreted, and skilled marketers/product managers are best positioned to discern who’s telling you what and why–the underlying motivations behind any customer feedback. So all of this added customer access and resulting data will only put a premium on good product management, to utilize these powerful new tools and resulting additional data for quicker action and to allow better product planning decisions. Remember, SaaS competitor down the road will have access to the same tools and data that you do.
It is rare to find a developer who has truly exceptional product management skills. That’s not a knock on developers; as a whole they are an extremely sharp bunch. But specialization in life happens for a reason–very seldom is someone the best at everything. Developers are trained to write code and build applications, not understand markets or extract the “truth” from customers. Different types of people’s brain’s work differently, and a good developer and good product manager are an example of this.
I find that it’s when a talented, open-minded development manager teams with a market-savvy product manager that most great software applications are made. So no, I don’t believe that the Product Management function is going away anytime soon in the software business. There are many important changes going on in the business, the SaaS business model not the least of these. With any change in business model, functional roles will evolve and change. But I believe strongly that Product Management is a fundamental, important role that will remain critical in software businesses far into the future.
That’s what I think about SaaS and Product Management–what do you think? Post a comment to further the discussion!
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Wendy Swift-Rogers, CEO says
Ideally in the SaaS model, the Users themselves are arguably part of the Product Management team. With the ability to gauge where users are visiting, collect enhancement suggestions from the community and roll these enhancements out routinely, yes, versioning does become a thing of the past. But you could actually make the case that the role of product management is more streamlined and participatory than ever in the SaaS world.
Call me a fanatic, but I find SaaS disgusting and repugnant.
I used to spend thousands on software every year.
Now I spend almost zero.
I will not give-in to their control.
I will never submit to extortion.
I am willing to pay for a product.
I don’t want a bloody relationship.
I never connect my production computers to the Internet.
I will never share my identity nor my data with a software provider.
I run Windows 7, and I will never buy a computer which I cannot hack to run it.
Windows 10 is intrusive and ugly vomit.
Window 11 is a f’g colonoscopy.
Yup. I am a professional computer engineer.
Melissa Paulik says
Very interesting discussion. I believe I saw a similar presentation to the one you mentioned. Although I agreed with some of the premise, and disagreed with other points, it also got me thinking about the evolving role of the PM.
SaaS, Agile development methodologies, and social media have certainly changed the day to day activities of the product manager. Social media alone makes me pine for my days as a product manager as it gives one so many more ways to engage the market. However, I think there is one fundamental skill that remains as critical in today’s product manager as it was before SaaS et al – leadership. As you said, someone needs to be able to understand the market and extract the “truth” but they also need to have the leadership skills to translate that into a product plan and priorities. Included in leadership is the ability to confidently communicate in a way that gets everyone in the organization buying into the product priorities.
I don’t care what title you give that leadership role, it has to be there.
All the best!
I agree fully with your conclusion to a question that is floating around a little too much. Design by committee is tolerable (perhaps) if the product is commoditized and the established leaders are playing a slow game of feature creep one-upmanship. Perhaps then the feature that gets the most votes by the user masses is the right one to add to your product but as you point out true innovation can only come from high quality analysis, interpretation and vision.
Socially guided development will give you evolution. Skilled product management will give you innovation and that’s where the money is.
Great article, thanks for sharing
Josh Wortman says
Phil, I always learn so much from your posts!
I agree and appreciate with the need for product management in certain dynamics, but having a dedicated role for this is highly dependent on the nature and stage of the organization.
First, regarding startup, the software engineers who start SaaS companies (capably) are the atypical few with the ability to straddle development and product management leadership effectively. In a startup founded by these business-minded engineers, a dedicated product manager may be too redundant and unproductive.
Regarding SaaS companies that have exactly one product, a dedicated product manager may also be an unnecessary bottle neck. In these companies the marketing/customer service manager should be able to work with the development manager and jointly decide on a strategic product development plan.
However, in a SaaS company that is not lead by business minded SW engineers or if the company manages many products, I can see that a dedicated product manager may be important. In this situation the product manager can synthesize all the customer feedback with their expert product knowledge and and manage an optimal go-forward spec and development plan for each of the potentially multiple products lines.
When multiple products are being developed simultaneously, an engineer is not very free to think about the isolated capabilities of each product and the product manager can help to fill in those gaps.
Don’t know if this is relevant, but its my humble two sense. Regards!
Allison Wood says
Thanks for this great article, Phil. As one of those rare companies where the lead developer has similarly strong business and customer-facing skills, we have been able to meld PM with development priorities (thereby increasing product value) so far. However, we are still very early-stage – as we grow, it will be challenging to find folks with that same balance of skills. Likely we shouldn’t try, but rather should feel comfortable segmenting into more vertical skill sets.
I agree with other posters, PM isn’t dead – just commoditized. Those who understand service and can bring authentic leadership will continue to add value. Like so much else in the tech world, a hybrid of business, customer and development skills becomes more necessary every day for effective teams. Those PMs who understand the essence of dev work, matched with those devs who get the business imperatives behind their customers’ requests, will be the teams that rocket to the moon. We plan to be among them!
Allison and Josh,
I really appreciate you taking time to leave comments–and value your opinions. This discussion is moving away from the SaaS-specific area into an age-old topic in the software business–which can get a bit delicate.
The one point I’d make in response to both of your comments is that Product Management is a marketing function. Having developer’s do marketing isn’t different than having marketers trying to develop. It looks different because a developer can create something that looks like a marketing document might look, but a pure marketer can’t even pretend to create reasonable-looking code. However, the end results are most often the same. When it comes to creating great products, development and marketing are both important, complex functions with very different training, experience, skill sets and ways of looking at the world. In some sense the skills are almost mutually exclusive, different sides of the brain type-of-thing. Either function trying to do the others job is amateur vs. professional.
While of course it’s possible to find people that excel at both, in my experience it’s very, very rare. Every once in a while an amateur can compete with professionals. But there are many more folks out there that think they can do both well than actually can. Marketing seems to look easy to many developers–marketing done well is not at all easy.
This is a real trap for young, developer-driven software companies. In my career as a software executive and in my subsequent consulting practice this is one of the top 2 or 3 reasons for failed products and crib death of young software companies. Sometimes as a startup you have to (and can) get by with non-optimal resources, but it’s important to realize that’s what you’re doing. I could write a bunch more on this topic, but I don’t want to exhaust the comment field.
This is just my opinion–of course. I hope neither of you aren’t insulted by it. But it is based on dealing with this topic many times, over a long period of time and across many different companies.
Allison, totally agree with your last comments. If you haven’t seen it already, you might enjoy https://www.pjmconsult.com/index.php/2008/07/integrating-marketing-and-engineering.html where I wrote more on this issue.
Allison Wood says
Phil – absolutely agree. My whole comment was based on the fact that we are a very small team without the luxury and resources to specialize many functions. I cannot WAIT until we can bring in a real PM – and as a marketing person myself, I put AT LEAST as much value on the marketing side of the equation. 🙂
The point I meant to make was just that, in this day and age, everyone on an early team needs to at least be conversant in other disciplines so they can understand the impact and demands of those disciplines on their own. I think if you’re really silo’d in the early days, your trajectory of growth won’t be as glorious as it might otherwise be.
Thanks for adding more great thoughts to the conversation!
Tom Evans says
Hi Phil – all great points. I want to address the point of communities in more detail. Communities are “not” new to Saas, or any other company profile. I have been running communities in almost every PM role and I have done these via User Groups and Product Advisory Councils. The difference is that these were in an offline mode and now technologies are supporting online communities (and as Phil noted, online communities are not exclusive to Saas) which are more interactive and dynamic.
But is the community the only source for product direction? Absolutely not! The PM has to ensure that multiple constituencies are served. And as Phil states so well, even input from the community must be evaluated, interpreted, validated and prioritized, which requires someone doing the PM role – and developers typically do not want to do this or even have the skill-sets to do this (as Phil also stated very well).
Daniel Elizalde says
Hi Phil – thanks for the great article. I found it particularly interesting since I currently work as a Sr Product Manager in a SaaS company.
My opinion is that we can’t take our role for granted and we have to constantly evolve to add value. Before SaaS there were mainframes, desktops, embedded and now there’s Mobile. SaaS is just the next one on the list and I see it as our next opportunity to shine. Technology evolves and we have to evolve with it.
Particularly, SaaS is relatively new and it posses big challenges that might be new to many PMs. Items like security, SOA, big data and multi-tenancy are new areas we need to understand so we can add business value on top these amazing technical achievements. We have to gain engineering’s trust, not the other way around.
With SaaS, there is also the advantage of having the whole “programmable web” available to us. Long gone are the days of closed and self-contained systems. Now, when building a SaaS product, the decision of build vs buy is prevalent on every corner. Should we build our own component (CMS, Tax engine, shopping cart, you name it) or should we integrate with other SaaS providers to add more value, reduce cost and reduce time-to-market? This is just one example of the type of decisions SaaS PMs need to be comfortable making. By keeping current or even ahead of the curb, SaaS PMs will continue to demonstrate our value and we’ll secure the survival of our species.
Daniel, thanks for your excellent additions to the conversation.
Greg Council says
Great article. And really great responses. I’ll echo some other comments and the original post: SaaS threatening the PM discipline is the same as Agile threatening the PM discipline. If you’re really good at the important aspects of the PM discipline (note: I’m not saying the “product management job”), then these changes are completely welcome as they offer new ways to improve the way we deliver solutions and interact with our customers.
That said, unfortunately I’ve known a lot of product managers that are more “product stewards” and approach their job more perfunctorily: take the enhancement backlog, rank it, work with dev managers to scope, and create a release plan. That part can be automated.
My own words of advice: if you’re scared about or feel threatened by SaaS, find out why. You may not be doing what you really need to be doing.