A Strong SaaS Argument: Labor costs will continue to rise as hardware costs go down

Jacques Chester over at Club Troppo has a nice piece titled “Shared Hosting is Doomed.” One of the arguments he makes revolves around the idea that over time labor costs for technical administrators will rise substantially while the costs of hardware will continue to drop precipitously. I’m in complete agreement.

One of the big benefits I see for Software-as-a-Service (SaaS) is that the technical labor costs are spread over a large group of users in a very efficient manner. His argument, as it pertains to the low-end, shared web hosting environment is a positive for SaaS: increased technical labor costs will drive more companies to SaaS solutions.

SaaS is going to have a greater impact than most people realize. I’m looking forward to it.

Include a Written Section during Interviews

One of the best techniques to employ during the interview process is that of a written portion. For us, we have a series of research questions that aren’t easily answered without effort. It helps us understand the candidates’ writing skills, resourcefulness, and attention to detail.

In addition, being a SaaS company makes it easy for us to provide a few simple assignments for the candidate to do using our web-based software. This helps us better understand how quickly they pick up new products, their resourcefulness, and their likelihood of success in the company.

I recommend using a variety of different techniques to assess candidates.

Recommended Leadership Books by Patrick Lencioni

Leadership and managing people is something that you really need to work at and consciously look for ways to improve. For any new managers, as well as seasoned managers, I recommend reading the following books by Patrick Lencioni in their entirety:

  • The Five Dysfunctions of a Team
  • The Three Signs of a Miserable Job
  • The Four Obsessions of an Extraordinary Executive
  • Silos, Politics, and Turf Wars
  • Death by Meeting
  • The Five Temptations of a CEO

Patrick Lencioni is, in my opinion, the leadership guru of the 21st century. Check out Amazon.com for these books.

Thoughts on the Employee Hiring Process

We’ve been spending quite a bit of time lately doing interviews and hiring new people, as we’re experiencing significant growth in both of our product lines. Here are some quick thoughts:

  • Come up with simple bullet points of the types of characteristics you look for in the person and include those in the actual job posting (e.g. good natured, professional, self-starting, etc. are what we look for)
  • Identify some easy ways to filter resumes (e.g. in-bound emails from @aol.com addresses and those without a full paragraph or two in the email message itself are immediately deleted, without even looking at the resume due to not being tech savvy enough as well as not interested enough)
  • Do phone interviews first, followed-up by in-person interviews, and include the Top Grading techniques if it is a manager position or requires several years of experience

Good luck!

Quarterly Performance Reviews

I’m a big proponent of doing 360 degree performance reviews every quarter. Many companies do them annually or twice a year. I feel that is too infrequent and that you spend most of your time talking about the most recent quarter, at best. Another benefit of doing it quarterly is that compensation discussions aren’t tied to every review. This makes it less stressful and more useful.

We follow the advice of Patrick Lencioni and only have four simple questions on our quarterly performance reviews:

  1. What did you accomplish?
  2. What are you going to do next?
  3. How can you improve?
  4. How are you following the values?

Every employee answers these question for themselves as well as their direct reports and manager. It is an invaluable tool and I highly recommend it.