While XaaS value propositions are different from traditional value propositions, product management practices continue to follow the traditional approach in cloud native and newly transitioned XaaS businesses. The popular frameworks for assessing value and prioritizing the product roadmap make no distinction of our accommodation for the differing business models. Largely, product management teams use the same value assessment methods for the product, feature, or enhancement regardless of the business model context.
Consider the top-level differences between these modes and it immediately becomes clear that what may matter in one model, carries a differing type of priority altogether in another. Prioritizing impactful products, features, and enhancements on the XaaS product roadmap requires an assessment of business value and therefore demands an updated approach.
Product Management’s Impact on the LAER Customer Engagement Model
The first step to updating a product roadmap to suit an XaaS product is understanding the customer engagement model associated with XaaS. The LAER (Land, Adopt, Expand, Renew) engagement model is the de facto industry standard introduced by TSIA many years ago. (If you’re unfamiliar with this model, you can read more about it in the LAER Explained blog post.) A recent blog explaining the phases of LAER Maturity laid out key markers to distinguish what phase a company may be in: LAER Experiment businesses are in the early stages of figuring out the most essential elements that leverage operational scale. Meanwhile, LAER Efficient businesses have optimized their engagement and supporting operations to consistently deliver customer outcomes at scale, realizing high revenue growth and operating profit.
So, does product have a role in contributing to LAER maturity? Absolutely. Without an intentional product contribution, companies are unlikely to achieve the mature state of LAER Efficiency and enjoy the top line growth and operational scale that ensues.
In the paper Accelerate the Path to LAER Efficiency: Requirements and Action Plans, I outlined product management’s ability to accelerate LAER maturity with strategies to apply the technology to:
- Help customers achieve tangible value and specific business outcomes
- Optimize for revenue acquisition
- Cost-effectively drive new sales, customer adoption, and expansion
These three outcomes are what businesses are striving for during the LAER customer engagement cycle. The research has demonstrated over and over that Product Management has an outsized impact on driving LAER maturity and therefore must proactively plan for its success.
The Product Roadmap Challenge
Technology product management spends a considerable amount of time planning and managing their product roadmap. Determining what to prioritize on the roadmap with some assessment of value is a foundational practice and one of the biggest challenges they face given the overwhelming volume of features vying for resources and related roadmap capacity. Research shows that most of the roadmap capacity is taken up with categories related to:
- Getting new technology to market
- Maintaining existing features
- Supporting new sales opportunities
Additional research reveals that the internal teams that have the most impact on the product roadmap are the C-suite and sales, with many other teams vying for a slice of the available capacity in any given release. Objectively deciding what to build, where to focus limited resources, and what customer segments to target are challenges that face every organization on a daily basis.So, how are product management teams assessing the value of each and every decision in the context of becoming LAER Efficient? It starts with understanding how product management’s responsibility expands in XaaS. Traditionally product management’s focus was considering capabilities from concept to launch. That worked in the make-sell-ship days of CapEx fueled business models, however, in XaaS the scope of product management’s concern is to have an impact from concept through consumption.
The Value Assessment Framework Deficiency
Most value assessment frameworks only factor for parts of the three LAER outcome vectors. These value assessment frameworks include:
- Kano Model (customer delight vs product function)
- “Buy-a-feature” (prioritization exercises)
- Opportunity scoring (customer importance vs satisfaction)
- Value vs. Effort
These methods all help product teams to prioritize what ultimately lands on the product roadmap. The Value vs. Effort framework is one of the most popular, although many teams use more than one model to make effective decisions. The model works as follows: for each initiative under consideration, the product team will make two separate assessments:
- How much value they anticipate the initiative to deliver in the form of revenue and customer satisfaction
- How much effort implementing it will require to deliver it
This sounds good on the surface, however it reflects traditional B2B product management thinking, where the planning process generally factors for getting the feature to market. In XaaS, there's a lot more to be factored, such as:
- The contribution of the feature under consideration to the customer value realization
- Frictionless customer acquisition
- Increasing adoption
- Optimizing for reviewal
- Facilitating seamless expansion
- Continuous cost to deliver the service that is largely ignored in the upfront value assessment
So it stands to reason that the Value Assessment framework needs an upgrade to factor for the elements that contribute to scalable XaaS growth. Said another way, a LAER Aware product roadmap is needed to fuel LAER Efficiency.
LAER-Aware Value Assessment
What’s needed is a roadmap value assessment framework that factors for all three of the outcome vectors along LAER. LAER Aware Value Assessment requires precise articulation of the impact to each element of Land, Adopt, Expand, and/or Renew and the related operational gains.Before product can get to the point of doing a relative stack ranking, the VALUE to be assessed includes:
BASELINE
1. What is being requested? 2. Is there an alternative approach to addressing the customer problem?
VALUE
3. Who will benefit if the product/feature/enhancement request is implemented? 4. What’s the vision about how the product/feature/enhancement should work? 5. How will the success of the product/feature/enhancement be measured?
LAER VALUE
6. What’s the quantifiable impact on each phase of LAER? - Land new customers - Adoption improvement - Expansion facilitation - Renewal ease 7. What operational efficiency will be gained: i.e that productivity gains will be realized that reduce internal effort due to the product feature enhancement.
EFFORT
8. What go-to-market support is required to launch the feature(s) to new and existing customers? 9. What post launch support is required to maintain this product, feature, enhancement? 10. How much investment is needed in the development effort to bring this new product, feature, enhancement to life? How can requesters increase the likelihood that their feature request gets the attention it deserves? Recommendation: Take the information you already know about 1-7 above and provide it directly with the request. After all, if you are in sales, customer success, professional services, managed service or other service function, chances are you’ll know this information at the time of the request. Providing this information will ensure that product management will:
- Avoid time and effort overhead to reengage in ‘discovery’
- Avoid automatic reprioritization of the request due to lack of understanding of the request
- Faster understanding of the business impact
- Get to a prioritization decision quicker
Key Takeaways
- LAER are the gears of growth
- LAER impact must be factored in all product roadmap decisions
- XaaS Product management needs an updated value assessment framework to drive LAER Maturity
- If you are outside of the product management team, you can increase the likelihood of your product, enhancement, or feature request getting prioritized on the product roadmap by providing the key info along with the request