Managed Service vs. Self Service Software

There is a ton of software out there that is SaaS (Software as a Service).  This doesn’t mean at all that it is easy to use.  What it means is that there is no CDs or servers to install.  You go to a website and login.

Example of Managed Service SaaS: Eloqua.
Eloqua was in the marketing automation space for a long time before I worked at Marketo.  They built a SaaS solution that was so difficult to use that you needed a specialized consultant to run it for you. That consultant spent countless hours learning the software and even learning to program if needed.  They then turned around and charged a fee to run the software for you.

Any software that is poorly designed can be turned into a complicated mess that only trained experts could use.  Most software that requires “certification” falls into this camp.

Example of Self Service SaaS: Google Apps.
In the old days, you installed Exchange, SharePoint and MS Office if you wanted email and document management and client applications.  Installing those apps required MCSE training.  Google redesigned the enterprise from the ground up and came up with Google Apps.  It doesn’t do everything that Microsoft does, but it does enough.  It works.  You can login to it and get started right away. No certification required.  Self-service is defined as “Easy enough that you can do it yourself.”  Minimal training and support are often required, but not ongoing management.

Analogy: Managed vs. Self Service
Managed Service is like having a fleet of boats of different shapes and sizes.  They are used to ferry people across a wide river.  The more boats you have, the more people you can ferry.  Half a fleet is still pretty good.

Self-service is like building a bridge.  Half a bridge is useless.  A bridge is a single coherent system.  It needs to have one architecture and you build to scale to a certain number of customers.  When you finish and cars start driving on it, it’s hard to change the details.  People get angry when you change something they are used to and use themselves.

According to this analogy, building a managed service solution does not accrue to a self-service solution.  More boats don’t equal a bridge.  If you want to build a bridge, then build a bridge.  Think about the architecture and do it right.  If you want to build a managed service, then don’t worry about the “ease of use”.  Focus on power and flexibility.

Having clarity of what you are building is important.  There are tons of profit in both camps.  One word of caution:  Be careful building Managed Service solutions…if someone comes along with a self-service version of the same thing, they will eat you alive.

Whatya think?