Mara Krieps, Pivotal Product Management
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This post was mentioned on Twitter by jefflash: New AskPM post! “How do I position a new version of an existing product and avoid cannibalization?” http://bit.ly/4o9umi #productmgmt…

Every customer experience starts with a person with a need they would pay money to solve. If you have different / exclusive answers, then you will experience minimal cannibalization. The Photoshop example of different or evolved product name would make a lot of sense too. If the needs overlap significantly you will cannibalize one or the other, and your task is to manage the life cycles to maximize revenue.

For a different take on the question of how many needs / customer experiences a company should have, check out this post: http://bit.ly/3aLVCM

Good luck – LCI

In simplifying your application, think in terms of removing all the geek feature bloating customization features. Give them the power without the hassle. To prevent canibalization, eliminate any collaboration or team features. For that, make them go to your server version.

Another approach would be to use the installed app as a client and force the server-based customers to install it. They could install it as a mainteance upgrade for which they already paid their subscription fees. This is a bit counter to the SaaS expectations.

In looking for more revenues in the late market, you could go with a mass customization strategy if you separated out the technology from the content, aka domain-specific work your users do. Then, move deeper into those domains. Leave the installed application at the technology layer.

The reality is that late market requires a change in your vector of technial differentiation, maybe your entire sales model, adoption of customer lifetime value, brand investment, A new radical technology.

SaaS is a whole product play all by itself. You might think in terms of broadening your offer at your server. Look wide at the value chain, value constelation, the n-tiering possibilities. Leave the installed at where the server is, and move the server into a much more horizontal distribution that crosses more if not all of the user experience.

Then, you could also move your server towards post-interface processes, demand-side services, choreography and orchestraton. Look at meta-management, economic buyer considerations in terms of the hypecycle. Sell the expertise that helps your customers manage their touchpoints with your server app in terms of workflows, project management, data management issues well beyond where you are today. This stuff is beyond the manager roles, and beyond the users. Where is your product in the hypecycle.

There are plenty of things you can do. The die was probably cast before you showed up. SaaS does flow into information appliances (devices), and embedded systems. Gowth is over. Your company needs a completely new technology, and that will only work if you start over in a separate organization and let it grow organically without shared services or attempts to leverage scale, or even worse, trying to sell your current customers on the new disruptive stuff–they are deeply pragmatic.

Adobe successfully late marketed Photoshop with a product that provides the power without the control, classic task sublimation. They gave the late market product a different name. No Photoshop user would think of using that post-geek app, so no canibalization. Macomedia and Adobe had good game.

One tactic I’ve seen many software companies use successfully is to target different customer segments for the two versions.

For example: Promote the Desktop version for small companies, while promoting the Server version for large/enterprise accounts.

Sometimes, this can be done even if there’s not much of a difference (technically) in the products themselves!

- Raj
Accompa – Requirements Management Tool for Product Management Teams