A senior SaaS executive once told me, “Reports sell software.” In a top down sale, that’s absolutely true. The CEO wants better predictability of bookings so she’ll buy a CRM tool to gather the data. Classically, software has been built for that mantra.
First, a company buys a database. The sales people, marketers or customer care staff continue working as normal. But after the purchase, these teams are burdened with an additional step of updating the database when they’ve finished their work, so a report can be generated.
But this design has an agency problem. The employees investing the marginal effort see very little gain. This agency problem challenges the effectiveness of the software in three ways.
First, managers must motivate employees to update the database. Second, since employees report data retroactively, the database is always out of date, undermining the accuracy of the reports. Third, the benefit of the software to employees is only visible months or years after filling up the database, when an employee can review the history of a customer interaction for example.
In bottoms up sales, workflow sells software. And new SaaS companies who aim to displace incumbent systems of record will architect their products in a radically different way. They will be event-driven SaaS companies.