More and more, employees come to work and find themselves starting up their web browser and logging into an application where they will spend the bulk of their day.  Just as users launch Microsoft Outlook and other ubiquitous Microsoft Office applications throughout their day, they are finding themselves spending lots of their time in ASP (application service provider) hosted applications.  These applications aren’t owned, managed, or supported by the traditional internal IT teams, these applications are hosted somewhere far away, yet are the lifeblood of your business and many others.  Everyone has come across one variant of outsourcing: offshore, business process, back office or payroll, but the emerging trend is now for the outsourcing of mission critical applications that power an entire business and its revenue streams.  Welcome to the age of ASP applications!  You probably encounter these applications in your own world, perhaps your expense tracking system, or your salesforce automation tool, and many others.  Names like Concur, Salesforce.com, Customersat.com, Satmetrix, and many others are becoming common names in the workplace.  For the membership of the SSPA, this begs the question: for companies that provide ASP solutions to their customers, is providing services and support any different than for those supporting enterprise applications?  In short, you don’t know ASP services and support until you’ve
delivered it!

DoubleClick has been an ASP for its customers for approximately 10 years.  DoubleClick provides technologies to web marketers, agencies, and publishers that helps them take part in the growing use of advertising on the Internet. These customers pay DoubleClick on a CPM basis for the products they use (CPM = cost per thousand, i.e. they pay a set rate for every 1,000 impressions served/delivered), powering DoubleClick’s revenue stream.

The Financial Angle

In the world of selling software, there is often a services group that helps generate and sustain substantial revenues for the company.  This is due to annual software maintenance and support contracts, as well as professional services fees, work around upgrades, and a number of other similar streams.  For an ASP, services and support are frequently bundled into a “blended” pricing model.  Of course, there are exceptions, for areas like “ultra premium” support and some consulting services and fees, but the ASP generates most of its revenues from its usage or per seat model, not from additional services and engagements from its customers.  There are many effects of this in managing and running an ASP services organization.  The executive managing an ASP services organization is responsible for a budget, but due to the revenue streams, often does not have their own P&L.  There is revenue to be tracked and expenses to be monitored in the ASP world, but the financial model is more driven on usage – the more users of an ASP product, the more revenue for the company, this distinction highlights the need for an ASP services group to focus on ensuring clients know how to use a product and take full advantage of all of the features.  Switching in the ASP world can be much easier, there is often no capital expenditure and the only thing preventing ASP customers from changing vendors is the migration of data (I don’t intend to
over-simplify this).

When customers make a purchase for an ASP service, there is the expectation that the vendor will provide service and support as part of the license fee.  While I can’t trace this pricing structure back to its roots, it clearly has become part of the value proposition of using an ASP – the costs are much more in-line with usage, giving the appearance of a utility, where you only buy what you need and use.

The circumstance every software company dreads is when a client is in arrears and action must be taken.  In the case of an ASP, cutting off support and maintenance has proven to have less effectiveness.  As such, ASPs can be forced to turn off all access to their products, as that is the lever that truly has the leverage needed to get action.

Services in ASPs and software are both important parts of a company’s bottom line, but there are significant differences in how they make these contributions, from the marketing of services to the recognition of revenue.  The ASP world has been built on providing a simple price structure, this is now used a selling differentiator to the CIO and CFO.

The Importance of Client Services

Know your audience.  Know their needs and knowledge.  This is sound advice in any situation, but in the case of delivering ASP services, it’s acutely important.  Companies that create ASPs are providing applications to many end users, applications that are often used throughout their work day.  For example, if a company has deployed Salesforce.com for its sales organization, you can rest assured that their sales team will spend all their time, not calling on clients, in the salesforce.com UI.  This could include entering pipeline info, updating client contacts, checking marketing efforts towards their client roster, running reports, and so on.  This user is clearly and end-user.  The support and service this user is expecting is purely focused on product usability.  DoubleClick products are very similar, and as many are, in a B2B environment.  The revenue an ASP derives is often tied directly to enabling clients to be successful and use the product to its fullest.  These puts immense pressure on a services organization in an ASP world to continually find new ways to assist clients to get up and running on an ASP product and continually take full advantage of all it has to offers.  Some ASPs are based on seat licenses, where it’s easier to predict revenues and growth, but other ASPs, like DoubleClick, have their revenue based on pure usage, so the more a client uses the product, the more revenue DoubleClick sees on its bottom line.

Operationally, ASPs also pose a number of challenges to a services organization.  Possibly the most obvious is that, in most cases, all customers share a common infrastructure.  Customers, generally, don’t run on different versions of a given product.  This appears simpler, at the surface, than supporting a complex matrixed software product, with support for varying OSes, DBs, and software itself.  However, the flip side of this is that when an ASP product suffers due a failure or bug, the entire customer base is affected.  Running a support team during these times can be extremely stressful, as all your customers are suffering and literally, the phone is ringing off the hook.  This often presents itself following a rollout of new code or other environmental change.  In the software world, clients will upgrade themselves at their own pace, so it’s rarer to have the entire client base affected at the same time.  Software customers will test out new code in a development environment, mitigating risk, and upgrade only when they have gained confidence that the upgraded software will not pose challenges.  In the ASP world, code is rolled out, and upon all subsequent logins, the rules
have changed.

Simultaneous rollouts for all customers can also strain training efforts for an ASP, as training needs to be delivered to the entire customer base in preparation for a release.  At DoubleClick, this takes shape in many forms, as we launch a comprehensive effort across the company to communicate and train all staff and customers on upcoming changes.  Despite all best efforts, immediately following a release, inbound contacts have historically always spiked; some as a result of bugs in new code, also many customers are still acquainting themselves with some new functionality or features.

This shared infrastructure also forces the ASP hosting company to keep stability and uptime as top priorities.  In addition to some service SLAs (service level agreement), many ASPs will provide uptime SLAs to its customers.  If a customer is going to use an ASP for a mission critical application, they need assurances that these applications will be there for them.  Most ASPs will have a standard “maintenance window,” to bring the system down and do any necessary changes and updates, but this is also a critical expectation that must be set; despite 99.5% uptime commitments, the host does need opportunities to make changes to the system, many of which require the system to be down.  With risk being so paramount, the issue of hot fixes and patches is also handled differently that on the software side.  If a single client has an issue with part of the application, a patch would be tested and QA’ed, as with any software environment, however; the risk of pushing out a patch that everyone would be using will often force an ASP host to weigh doing it in the first place, as a patch for a single issue might not justify the risk of an immediate rollout.  As such, ASP rollouts tend to rarely be small code patches, and more often roll-ups of several changes, allowing for thorough QA and regression testing.

As any good software company, the ASP should have a great support web site, full of self-help documents, as well as a case logging mechanism.  ASPs do enjoy the benefit of not having to manage patches for download, nor does its support center need to maintain a robust development environment in which to replicate client issues.  For most ASPs, working in a web browser is the conduit to the product, so an ASP support center needs to simply have current browser and possibly a few permutations of OS.  For DoubleClick and other ASPs, they publish a list of supported browsers and OSes, but in this day and age, that can be quite small: IE or Firefox, Windows or Mac.

ASPs are being forced to be competitive more and more in a critical area: customization.  Software, being installed locally, can offer a wealth of integration and customization opportunities, but doing so in an ASP environment is only recently becoming a requirement.  ASPs are leveraging APIs and web services to offer deep integration and customization on the client side.  This area is offering very exciting opportunities for ASPs to build out professional services teams and revenue lines.  However, this is still new in many cases, and is also manifesting itself in the form of ASPs simply publishing and documenting their APIs and web services, allowing customers to build the rest on their own (without paying for a professional services engagement).
           
It takes a company-wide effort to manage customers when wide-scale issues arise.  Clients business are negatively impacted and need lots of communication about what is being done to remedy the issue and clear expectations about when a solution will be in place.  These are the times that can strain a support center the most.  But this is just one time when a support center will interact with customers.  Customers regularly engage with an ASP for service and support, but since the primary interface of an ASP is a web browser, many ASP customers offer robust on-line help and tools, such as chat and even Skype-like tools, to make the workflow more in-line with how an ASP end-user would operate.  At DoubleClick, the vast majority of our clients log their support cases via email and web as quite simply, that’s how they are accustomed to reaching out.

Supporting ASP or software applications pose great challenges to running a high performance services organization.  This can range from managing such a group and being responsible for the financials to the day-to-day operations of staff and interactions with customers.  They both strive to delight customers, operate within financial targets and margins, and develop their staff; the nature by which the differing services are delivered unveils some very material differences.  They are both, however, challenging and rewarding and play a critical role in the success of a technology company.

About the Author…

Ben Saitz has worked at DoubleClick for over 5 years in a various service management roles, both internal and client facing.  He currently is the VP, Client Services for North America, which includes Tech Support, training, technical account management, and campaign management functions.  DoubleClick has been providing services and support for its set of ASP products for almost 10 years.  Ben was a customer of DoubleClick for 4 years before he joined.  Ben has spoken at prior SSPA conferences and DoubleClick has been a member of the SSPA for over 3 years.  Ben resides in Denver, Colorado with his wife and 2 sons.