Magazine Article | October 1, 2018

Put The Service Back In SaaS

Source: Software Executive magazine

Matt Pillar, Executive Editor

As developers increasingly turn toward offering Software-as-a-Service, Talmetrix continues to deliver service with its software.

Chris Powell
Chris Powell’s professional existence is fraught with inherent friction. The career HR executive-turned-talent management software company CEO faces a daily struggle to codify the employee engagement, talent analysis, and retention nuance that’s so deeply entrenched in his brain. Jason Ruebel, chief strategy officer at Powell’s talent analytics firm Talmetrix, says the company struggles mightily to “productize” Chris.

Talmetrix develops and sells a survey platform designed to capture feedback from its clients’ employees (feelings), then combine that feedback with employee talent and organizational data (facts) drawn from multiple sources, resulting in a comprehensive talent insights database engineered to guide HR decision making. On the back end, Talmetrix’ reporting helps its clients identify employment- related business trends, understand correlations, and predict retention, employee engagement, and customer satisfaction.

Because it’s predicated on the marriage of feelings and facts, talent management — and more broadly, HR management — isn’t a binary science. That’s reflected in the current state of the HR software market, which MarketsandMarkets projects will hit $9.9 billion by 2022 on CAGR of 8.8 percent. Back in the spring of 2017, software engineer and blogger Will Saborio mapped no fewer than 200 software companies in HR, a list that didn’t even include the many dozens of workforce management and timekeeping software apps on the periphery of the market. The multifaceted state of the HR software landscape is a reflection of the difficulty in coding a universal talent management solution.

Powell, who spent his career as an HR practitioner before endeavoring to reinvent Talmetrix, admits he entered the software space wearing rose-colored glasses. “When I came on board in 2014, I didn’t know what I didn’t know about software,” says Powell. “I naively believed that we could do anything we wanted to do with it.” He quickly learned that his 20 years of HR experience could not be codified and delivered as a service. That realization has fueled Powell’s drive to balance his software company on a tightrope, poised on one side by the efficiencies of SaaS automation and on the other by an analytics-intensive services business that’s driving close to 20 percent of the company’s annual revenue.

To the greater SaaS community, the services side of the business presents incredible risk. To the outsider looking in, the consequences of losing balance when services revenues creep north of 10 percent are dire. To the Talmetrix C-suite, however, those concerns are, for the most part, unfounded.

“We’re by no means trying to become a services company,” explains Ruebel, “but there’s a configurability requirement to our product and its role in our market, and it’s our responsibility to serve that requirement.” Talent analytics is a data-intensive business, one in which quality outcomes are predicated on quality inputs. That’s why the Talmetrix services team, comprised of three dedicated employees and Powell, steps into the client environment to assist with survey question creation and design on the front end and data analysis on the back end. “There’s a lot that can go wrong if data collection and analysis is unguided,” says Powell. Poor client outcomes result in churn, so playing an active service-oriented role in the guiding of its application, he says, is a key driver of subscription renewals. Talmetrix’ mid-market clients, in particular, don’t commonly have the in-house capacity to squeeze the real value out of talent measurement data. “Our philosophy is, ‘We can sell it, but if clients don’t use it, they won’t renew,’” explains Powell.

“We codify as much configurability as possible into the 80/20 split so that the client feels like the platform was purpose-built for their organization, but our perspective is that our technology will enable, while our services will execute.”

CHRIS POWELL, CEO, Talmetrix

GUARDING AGAINST INEFFICIENCY, SCOPE CREEP

Awareness of the difference between configurability and customization is ever-present at Talmetrix. New clients are granted a base level of consultative advisory services when they purchase a license. To ensure the efficiency of that service delivery, the company focuses intently on automated delivery of the onboarding process, albeit in a configurable manner for its clients. For instance, it developed a library from which clients can choose surveys that, in theory, meet the bulk (80 percent) of their needs. In other words, selection of the proper survey template gets the client close. Those templates are applied using a framework Talmetrix developed to categorize where each client sits on a continuum, based on their experiences, capacities, and capabilities in gathering and applying employee feedback and insights. That exercise is covered in Talmetrix’ license fees. Manipulating survey templates and creating data integrations to meet the very specific objectives of the client company’s talent management goals — the 20 percent homestretch that typically involves data mapping and the addition of survey questions specific to the client company’s culture, organizationalstructure, and goals — falls to the services team, which charges an hourly rate to take the project from close to spot-on. Enabling configurability and efficient customization is a prerequisite in HR and talent management. When dealing in personnel and culture, every company believes it’s one in a billion. One-size-fits-all software applications are simply unsellable.

“Our average end user has 10 HR platforms to orchestrate and synthesize the talent management effort. Our services team guides them through that to ensure the proper quality of data input, integrity, and mapping,” explains Powell. “We codify as much configurability as possible into the 80/20 split so the client feels like the platform was purpose-built for their organization, but our perspective is that our technology will enable, while our services will execute. If I hadn’t resigned myself to the fact that we’d have to maintain that 20 percent services effort, I would have surely driven myself crazy and burned through frustrated developers.”

MAINTAINING A SERVICE-ORIENTED CULTURE

Frustrating his developers — or any of his employees, as it turns out — is one of Powell’s greatest fears. Maintenance and nurturing of his company’s service-oriented culture is what causes him to lose the most sleep. “I don’t believe in legislating behavior,” says Powell. “I strive to enact a culture that emphasizes learning just as much as doing. I don’t want my development team solely focused on hitting an “easy” button when it comes to fixing bugs or implementing new features. I prefer to inspire them to think critically about how to best help customers.” That learning and critical thinking expectation, he says, impacts everyone in the organization. Ruebel concurs. “From a product design standpoint, we live and die by intuition. Each step or interaction with our product should be an intuitive part of the user’s journey that naturally drives insight and clarity. You don’t often hear developers thinking that way, but it’s our mantra,” he says. The company has strategically hired to that code of culture, and Ruebel points out that it’s staffed not by development generalists and data scientists but by career HR and consulting professionals. It’s a top-down approach to development driven by Powell, who’s decidedly not a software engineer, himself. “The services and advisory sides of our business are what enable us to ‘productize’ Chris and his deep domain expertise,” says Ruebel. In fact, Powell runs point on initial working sessions with new customers. Ruebel takes notes, then turns to the product team to translate Powell’s client interactions into developed code. “Obviously, it doesn’t always work seamlessly,” admits Ruebel. “The development team might say, ‘We can’t do that right now,’ to which we reply, ‘Okay, what are your limitations? Time? Tools? Can we do it six months from now?’”

Powell applies specific org chart strategy to instill critical thinking in his employees. “All of my senior team members, client facing or not, have account management responsibilities,” he says. “Our CTO is our senior account representative, which keeps him connected to client needs. That’s unique and different, and it gives our clients a face and a voice on our team. We invite clients to our office to get to know all of us, from who’s developing their products to who’s paying the bills around here. The further you get away from the customer, the less empathy you have for them.”

“The development team might say, ‘We can’t do that right now,’ to which we reply, ‘okay, what are your limitations? Time? Tools? Can we do it six months from now?’”

JASON RUEBEL, CSO, Talmetrix

MAINTAINING CULTURE AMID AGGRESSIVE CUSTOMER ACQUISITION

Powell embraces the challenge he faces figuring out how to sustain his company’s all-hands-on-deck problem solving culture as Talmetrix scales and grows. “Right now, it’s about instilling the DNA around customer focus, value, delivery, and experience. If we stay focused on this as we acquire more customers, we will be better than most if not greater than all,” he says.

Customer acquisition itself is a key challenge for Talmetrix because the tactics by which SaaS companies acquire customers is changing so rapidly. Powell declines to count how many marketing initiatives and consultants Talmetrix has experimented with and failed. “The HR SaaS market is like a bazaar,” he says. “There are so many messages hitting end users in such an open field that the buyer is often unclear about the various segmentations of solutions. They’re challenged to define their real needs, much less align with the appropriate software solutions. And everyone out there is overselling their capabilities and their capacities to deliver.” For companies like Talmetrix, it’s become very expensive to create a clear signal in all that noise. That’s why Powell brought Ruebel on board, to help the company navigate a morass of marketing strategies.

Ruebel leans toward direct-access opportunities that give the company 1:1 exposure with its desired audience. “There is no magic bullet, but I think the things that work best are targeted and intimate. Right now, we’re focused on opportunities like keynotes at conferences with 120 highly targeted attendees, rather than more broad groups of 4,000. Creating opportunities for 1:1 conversations is most important to us.”

That approach aligns with Powell’s observation that by the time a client engages with Talmetrix, they’ve already seen their need for insight and feedback to be better at attracting and retaining talent. “This is not a credit card and online subscription play. It’s a highly consultative, highly qualified sales process, so intimate engagement opportunities are a must,” says Powell.

References play a key role in taking those intimate opportunities from engagement to a sale. “We have a good record of renewals and customers entering years three and four using our software. We leverage those to illustrate the value of our insight,” says Ruebel. “When prospects see the data-derived insight we’ve shown other clients that they simply wouldn’t have seen on their own, they get it.

Powell holds fast to the notion that set-it-and-forget-it SaaS applications are too often leaving valuable stories untold. “Data begets data, but at some point the client has to make decisions. Our service-oriented approach helps them get out of that classic ‘research validates that we should do more research’ trap.” He says SaaS companies that lean too far toward processes, as opposed to outcomes, are setting themselves up for long-term failure. “The plug-and-play mentality will be the death of a lot of companies who forget there are humans behind the apps, pushing the buttons and turning the levers. Tech changes fast, but humans change faster than anything on the planet.” As Talmetrix evolves from startup to seasoned in the SaaS HR space, Powell and his company’s service-oriented org chart stand resolute in the protection of the human interaction that’s at the core of the market they serve.