AKF Partners

Abbott, Keeven & Fisher PartnersPartners In Hyper Growth

“Internal Customer”: The “C” Word of SaaS Companies

If you are a technology organization within a Software as a Service (SaaS) company, there is no such thing as an “internal customer”.

If you are a technology organization within a Software as a Service (SaaS) company, there is no such thing as an “internal customer”.  We often see this anachronistic IT phrase thrown around in web X.0 companies by executives and engineers who simply have not adopted the new SaaS mindset.  Do you think you’ll hear the left offensive tackle of an NFL team refer to the quarterback as his “internal customer”?  The quarterback consumes services (energy to block opponents) of the left tackle – so why wouldn’t he be a customer?  The answer is simple – because the notion of a customer relationship is different than the notion of a relationship within teammates.

The first reason why your teammate isn’t your customer is because he or she is, well, your TEAMMATE.  Customers are someone for whom you produce a service or product and teammates are someone with whom you work to accomplish a goal.  The difference between working FOR someone and working WITH someone is HUGE.  This difference creates a contextually activated identity that forces you to think about customers in a different light than you would a teammate.  Very often, as we’ve written before, this can result in affective (role based or bad) conflict between teams.  Affective conflict is bad and it destroys shareholder value.  Working as a team is important and customers aren’t part of your team.

The next reason that your teammate isn’t your customer is that the customer is always right.  Your teammate isn’t always right.  You need to debate certain points as a team to come to better solutions.  This isn’t affective conflict, it is cognitive conflict and if handled properly it is good and helps to create shareholder value.

The most important reason there isn’t a customer relationship here is that your teammate isn’t paying!   “Servicing” your teammate (uggh…that’s an ugly term) doesn’t create shareholder value.  Working as  a team to delivery a service or product to your  “real” customer is what creates shareholder value.  One design, one approach, one ruthless drive as a team to get across the goal line is what is necessary to thrive and succeed.

So stop using the ugly “internal” C word in your SaaS company.  It doesn’t have a place there.  Let the old world, internal IT folks continue to provide services to their internal customers.  Start acting like a team, designing and building services rather than software.

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  • Curtis Deptuck

    in September 29th, 2010 @ 22:09

    I think the flaw here is the assumption that you would have shallow encounters with your peers just as you would with your customers.

    Maybe the saying refers more to treating customers with the same depth and respect as you treat your peers.

    The customer isn’t always right, that is texbook nonsense, that practical would show you in relation to a system or area that your solution is focused in they are frequently wrong, which is very likely why they came to you in the first place. The trick is to always listen, learn and understand your peers and customers and to guide them both in the places they need to go.

    Your right the difference between working for someone and working with them is very significant. But if that’s the level your at, as the old saying goes, when a job is just a job it’s time to leave.

    • Wabb

      in October 12th, 2010 @ 14:30

      Thanks for the reply Curtis. The real issue here, from our perspective, is a psychological one. You simply don’t hear high performance teams referring to each other as customers. They know, at some deep level, that the relationship as you put it is simply different. Teams perform a heck of a lot better than customer relationships. You can’t coordinate with customers to reach an end objective – you work to satisfy some portion of their needs through a product or service offering.

      In our view SaaS products require teams to build them. Infrastructure, Software and Operations need to work together – not “for” each other.