Today, my friends at Totango announced their $3.8 million Series A funding and the public launch of their service. I've been involved with the company since the beginning (in fact, before the beginning) as an advisor and I wanted to give my take on why I think what they are doing is so significant to SaaS companies and to cloud companies in general.
As I've written many times before -- and at this point is pretty much generally accepted -- the move to a service delivery model for software (SaaS) and other aspects of IT (PaaS and IaaS) is changing every aspect of the business: engineering and operations, but even more interesting to me, the business side of the house, including marketing, sales and customer success. This is especially true for B2B companies.
About a year and a half ago, Guy Nirpaz, now Totango co-founder and CEO, and I spent an afternoon in a coffee shop on The Embarcadero in San Francisco thinking about where all this leads to. What new business needs arise from this model?
Then, as now, I had the advantage of working with multiple companies who were on the cutting-edge of this trend, companies such as Heroku, Twilio, Sauce Labs and New Relic. From that vantage point I could see a curious phenomenon. In theory, given that the entire interaction of customers with their products was online, they could truly understand what customers and prospects (in free trials) are doing. They should have been able to answer questions such as how are we doing on all of the key performance indicators of our business? Whice trial users are ramping up their activity and are ready to buy? which ones are having problems? What features of our product are the most and least popular? and many other questions.
That was one of the promises of the cloud delivery model, but in reality it didn't quite materialize.
Don't get me wrong. Almost every company in the space, startup or established company, has some sort of "dashboard" for tracking KPIs and some aspects of customer usage, but these tools are usually done in a rush and as an afterthought. They are crudely developed by an engineering team that provides this because the business folks are demanding it but there heart isn't really in it.
This results in half-baked solutions. For example, it is very common that every time a business person asks a simple question, a developer has to stop what they are doing and work through a series of SQL queries and other coding tasks to get them the answer. And that is assuming they have properly instrumented the application to track all of the relevant activities, events and metrics in the first place.
As you can imagine, with such a high barrier (and a lot of tension arises because of this), these types of analyses don't happen often. Not only are they not being done consistently and continuously, they are not being done methodically. There were no "best practices" as to what we should be looking at and what it means.
It is this problem that Totango addresses.
Totango has many great things in the work but it begins by focusing on sales. And not no-touch sales, but SaaS companies that have inside and field sales people who need to sell, renew and upsell accounts.
Companies such as Zendesk and Jajah have already been using the service in private beta and proving the value. It's worth checking out (it's free for now).