SAAS is everywhere, every other product vendor irrespective of the domain wants to launch their existing and new products in SAAS mode. All the surveys and the likes of Gartner and Forrester of the world suggest that SAAS market is not going to be less than ~120 bn USD this year and will only go north. With such a focus on SAAS, there is one aspect which has been underplayed and often subdued and that is the professional services associated with SAAS Products.

Are Professional services required at all in the world of SAAS? If it’s going to be all configure plug  and play? Ideally it sounds right but as always, world is far from ideal and SAAS is no exception to it. Even if SAAS products do reach a level of maturity over time, where in a model of just configure, plug and play works, it would still need services. Let me take a analogy of fast food chain, where everything is more or less well defined, modularised and ready to grab and go the moment you order. Please remember that though there is everything ready and defined, someone needs to put it together based on what you order (assuming even the order part is done using a kiosk instead of someone servicing you to take the order, else you need someone taking the order too). Not only that, if you are walking into a fast-food chain for a dine-in, there are also people to ensure the facility is taken care, hospitality is maintained etc. You still need a whole host of services, be it taking orders, helping with offers, getting the order ready , maintaining facility and hospitality etc. Yes, its far less compared to a full-fledged restaurant but still you require services in a different form. Just that you have more services behind the scenes than on the dining floor.  Remember the reputation of the fast-food chain is dependent on the services and hospitality offered at their chains and just not the quality of food, making it a point that services do matter and matter in an important way. Back from the analogy, remember SAAS products are not as simple as food, they have lot of complexities and need customisation to cater to customer requirements which are always unique to an extent in some or other form.

It seems straight forward that services are required but then why is that SAAS companies typically snub services in SAAS mode? It’s just because they are players in a market which tend to be commodified and in a commodity market its just volumes and margins.  Volumes and margins means vendors cannot afford services as much , as services are low margin and high maintenance business.  As services tend to grow, they will dent the  margins and SAAS companies thrive on High Margins to be successful. Services are imminent but at the same time SAAS companies don’t want them to weigh in for obvious reasons.

Though SAAS companies typically shy away from 'Services' in their balance sheets, professional services typically morph into 'speciality services' like deployment services, support Services, consulting Services, expert Services, governance services. Instead of taking full ownership of implementation for every customer (which is no longer required), it is instead taken care at the factory level. Companies tend to provide speciality or well-defined services only on need basis there by reducing the services play. Also, services itself can be shifted to 'Partners' just as it used to be with typical product companies. 

Most of the times, the services portion of the SAAS companies vary based on different factors like markets being addressed, maturity of the product, customer retention rate, complexity of the domain and product, Services strategy. Also, services in SAAS companies tend to be higher in the initial stage of the launch and as the product matures, they taper off and morph into different buckets as described above.

Bottomline is, services continue to thrive in SAAS companies too, it's just that they are more organised and in fact more predictable. Product might be the best in the market, most accessible, affordable and if not served properly, it won’t sustain. To note, SAAS itself expands to 'Software as a Service' and 'Service' holds equal stake in success.  If services are streamlined in advance, they can be predictable sources of revenue, increase customer success leading to customer retention and most importantly provide the best leads for upsell, cross sell and even new sales. Well thought Services are vital to success of SAAS products.