How to Build a Quality Management System for SaaS Operations

The current entrepreneurial ethos seems to eschew process and rigor in exchange for flexibility and growth. Even rigorous project management methodologies like Agile are often misunderstood and manifest as a free-for-all with zero attention to documentation. Golden Section believes the key to high-performing B2B SaaS founders and teams is an understanding of the power of processes and how leveraging it can yield a faster growth rate and more aligned team.

The Impact: A working quality management system results in consistent customer deliverables and experiences. Ultimately, a well-functioning quality management system yields the maximum exit multiple because it gives comfort to the buyer that they are buying a set of systems that produce consistent output.

The Goal: Establish and improve processes leading to continual operational improvement.

Background

The PDCA methodology - Plan / Do / Check / Act - is very simple:

1. Plan - identify your problems
2. Do - test potential solutions
3. Check - study results
4. Act - implement the best solution

This is the same process advocated in the Lean Startup for continual improvement and experimentation. While the Lean Startup is recent, manufacturing and service companies have used PDCA to foster continuous improvement for more than fifty years. Edward Deming popularized the process but referred to it as the "Shewhart cycle." (https://en.wikipedia.org/wiki/PDCA).

Implementing a process-oriented approach is simple. The key here is to not overthink or over-architect it. More process-oriented approaches die from overkill than from lack of rigor. In the B2B SaaS world, it is key to get buy in and have the documented processes used.

Steps:

1. Design a process template. We have included a template with the process considerations we believe are the most important. This template is one that all your processes will follow, so add any additional factors that are important to your company.
2. Identify the high-priority processes that need to be created first. Generally, if there is an area with multiple, similar failures, there is a need for process improvement. Some of the areas we have found processes to be most valuable for B2B SaaS founders and teams include:
   • Support escalation process
   • Customer contracting process
   • Sales to support/implementation handoff process
   • Invoicing and revenue receiving process
   • Customer contract renewal process (even if contracts auto-renew)
   • Employee onboarding process
   • Vendor onboarding process
3. Identify the process owner. She will be in charge of ensuring the process is followed and responsible for engaging with people who violate the process. We have found most people can truly handle only a few processes. The process owner will also ultimately be responsible for creating the final version.
4. Design a process. Think small. Like New Year's resolutions, processes are easy to make and tough to follow, so we recommend establishing a longer-term rollout plan for a few key processes.
5. Identify a proof of process. Well-designed processes will have proof of completion. For instance, if a customer contracting process requires a contract to be internally reviewed by the CEO if over $50k per year, then there should be evidence that such a review happened (ie an email approval saved alongside the contract). This evidence proves the process worked, and it is essential as you scale.
6. Codification. Any process is worthless unless your team can access them fluidly. Think through how you operate. The key is access and access control. There are some processes you might want to ensure are kept confidential. However, we recommend creating a process repository to house those processes that your team will be implementing.
7. Audit your processes. Once you have your process running for about a month, it is a good idea to hold an internal audit to review its robustness. This should be kept simple. We recommend meeting with the process owner(s) and selecting a few process items at random to be demonstrated. After a day or two, the process owner should be able to supply evidence that the process was or was not followed for those selected points. The results of this audit should be logged and any process violations documented with a follow-up to determine the root cause and revisions.