Product Managers Beware – Misaligned Incentives May Be Holding Up New Features in Your New SaaS Implementation
As I wrote in some of my earlier postings, the SaaS world differs greatly from the standard packaged and installed software. The basic ideas are the same, but there are many organization, technology and budget differences that can trip up any product manager. Let’s take a look at this scenario…
You sold your management on offering a SaaS product in part because of the ability to deploy new features and bug fixes quickly – there is no waiting for the next build to be sent out to customers and no waiting for them to deploy it. As soon as it’s tested, it can be dropped into production and it’s live.
However, now you are finding that it takes your enhancements and bug fixes a long time to get implemented. Why is there such a large gap between code complete and deployment into production? This was not supposed to happen.
Before the executives grill you on why this is happening, you may want to sit down with your IT department and have a conversation about incentives – Could it be that you, the product manager, are placing your IT organization in an untenable situation?
Astute product managers know that when the organization fails to deliver, it has in many instances a lot to do with misaligned incentives. This is very much the case between IT and Product Management in a SaaS implementation.
You see, IT wants stability (although they never get it) because they are incentivized to minimize service interruption and system slowdowns. They are the ones everyone comes after if there is a system failure and customers experience an outage.
Product Managers on the other hand are motivated to get the latest market demands built into their software. Since market demands change quickly and regularly, they are indirectly incentivized to push change into their products and even with the best change management, the more change you have the more instability you have.
IT wants to control change while Product Management drives more change. Looking at it this way, it is rather obvious where the problem exists, but how do we fix it? Incentive Alignment – that’s how!
Now, you cannot provide complete alignment. It’s IT’s job to maximize stability and performance and it is Product Management’s job to maximize product enhancement. They both serve to keep each other in check and that is not a bad thing overall. However, you can petition executive management to modify their incentives to achieve a level of alignment.
When the objectives for IT are set, management must ensure that IT embraces change. A goal could be to reduce the turnaround on new features. For example, any new feature that leaves QA needs to be part of a release in X days on average – basically an SLA on product feature release. This may cause IT to start scheduling more frequent releases or work together with other teams to more closely align releases to completion of product testing. This may also cause them to re-evaluate their release process to see if there is a way that they can safely shrink the release cycle. Finally they may generate a business case to increase their budget and get the headcount and infrastructure in place to maintain stability while supporting faster releases. Once the incentive is there, the wheels will start turning to solve the problem.
The product manager’s objectives must also be modified to ensure that incentives exist to help the IT group maintain stability in their world. This can be achieved by a basic objective stating that all features developed must also include the ability to support that feature and the ability to track its performance. This is going to do two things – it is going to reduce IT’s fear of new features because they feel that they have the tools to support them and it will also ensure that Product Management builds features that are not too complex to support because they have to provide the means to support them.
These are just examples – each situation is different and may require different incentive alignments. As you are the CEO of your product line, you have to decide what you need. An open discussion with your IT department, your executive management and HR will give you an understanding of exactly where your objectives are misaligned and you can work from there.
A word of caution though – your executive management must be behind you to ensure that this endeavor is successful. Without their backing, the incentives have no teeth and therefore will produce no changes.