Posts Tagged ‘SaaS’

Last November at the Business Technology Summit in Bangalore, India I shared a few thoughts on how leaders of IT organizations can refresh technology, continue to deliver sound IT and meet customer needs, and, by taking advantage of on-demand infrastructure services, remain in the good graces of the company CFO.  I’ll attempt to do a bit of a recap here, adding recent data points and additional thoughts along the way.  Well then, shall we?

The US Department of Commerce reports (most recent Information & Communication Technology Survey, which was in 2007) that capital expenditures (CAPEX) make up, on average, 63% of companies’ IT spending.

CIO’s today are currently faced with decreased capital and operating IT budgets, as well as staffing reductions or hiring freezes.  All the while, the expectation to scale applications and systems – and maintain performance and SLAs – remains.

In October 2009, Barclays Capital reported in its CIO survey that IT spending expectations would increase 0-5% in 2010 versus 2009, with priority placed on datacenter expansions, virtualization and Cloud initiatives. In the near term, CIOs had forecasted that their IT spend would be focused on storage, networking, and servers.  Comparing the Barclays results with a more recent CIO survey – this one conducted by Gartner this past January, where some 1,500 CIOs surveyed yielded a similarly bleak forecast: IT spending will largely remain flat, and if it does increase, it’ll do so by just over one percent.  (Which clearly isn’t great, but it also isn’t the elbow-drop of more than eight percent in IT budgets as seen in 2009 .)  Oh, the CIOs in this latest survey also posited that their IT organizations have about the same level of resources now as they had back when Kelly Clarkson’s “Since U Been Gone” ruled the airwaves; yep, welcome back to 2005. The lesson? Wring everything you can from what you’ve got.  Having fun yet?

Right, so how does one squeeze blood from this proverbial IT turnip? The first step is to dig into your IT spending a bit – gain as much understanding and insight as to what you have in your arsenal today – and the related costs – as possible. This sounds like a simple task, but you’d be surprised how many IT directors and CIOs don’t really know just exactly what they are using and how much they’re paying. (Sidebar: If you haven’t yet read my partner Brian Superczynski’s article from last week, I’d encourage it; he offers good thinking and a few tools around this business insight)

The CIOs surveyed by Gartner report that their top three business priorities for 2010 are:

• Business process improvement
• Reducing enterprise costs
• In the use of informatics/analytics

In addition, their top three technology priorities for this year:

• Virtualization
• Cloud computing
• Web 2.0 (read: Social Networks)

Taking a cue from this, the next step to a CAPEX-free world is to first address how the data points above stack up against your own business and technology priorities, then explore ways in which you can reduce capital costs by taking advantage of outsourced infrastructure and related services like virtualization.  Hang on now…don’t be afraid of that Cloud…embrace it. I’m not suggesting you entrust your most valuable corporate crown jewels to a multi-tenant (shared) Cloud service (Amazon Web Services/Elastic Compute Cloud and Rackspace Cloud largely fall into this category).  These services do have their place and you may find they will play an important role for your organization at some point. However, I’m referring to enterprise-class, private datacenter services, where you retain complete control over access and to your infrastructure above the operating system; it’s just that someone else manages everything else –  hardware/upgrades/monitoring, inter-networking, bandwidth, power, etc are all taken care of.  Think of this as an extension of your own datacenter that simply lives elsewhere…you still have the master key and you pay for everything “as-a-service”, largely free of capital costs.

These as-a-service solutions take on many forms, each designed to address specific IT needs: Compute Clouds for development or testing, storage arrays, backup datacenters/Disaster Recovery (DR) services, email, or simply a rack of dedicated servers with your name on it.  A few providers to consider in this area: private Cloud services like Terremark’s Enterprise Cloud, SoftLayer’s CloudLayer, or datacenter replication/DR from nScaled, CA’s ArcServe, or dedicated, managed servers from Latisys, The Planet, Rackspace, and others.  The point is to spend the time. Sit in on a few webinars. Perform your due diligence, seek help if you need it, and I think you’ll find that utilizing tools like infrastructure-as-a-service for some applications or areas of your infrastructure makes sound business sense.  Also, if you have a technology refresh initiative as core to achieving your goals in 2010, these services typically deploy on the latest hardware…double bonus!

By the way, much of the data from the Gartner survey can be found on the author’s blog post here.

The Japanese pioneered a concept you are probably familiar with called Kaizen: calculated steps, taken daily, designed to achieve a larger goal. Applying this methodology is key to a sound migration path away from capital IT expenditures and toward infrastructure-as-as-service.  (I know, I could have just said “baby steps” but this Kaizen thing just sounds better, no?) Here’s how you apply it:

1. Start small
2. Find a service that meets your liking then deploy – perhaps just one or two applications or projects
3. Monitor performance and costs for a month or three, using the service as a Litmus test to evaluate and design the migration for the rest (or most) of your infrastructure.

If they pass muster, simply add more fuel to this as-a-service fire and before long, you’ll find yourself on the receiving end of praise from the CFO, your own team, and your customer as well. Or maybe you’ll find yourself singing happily along to “Since U Been Gone.” If the latter, you just might want to keep that one to yourself.

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Tagged as: active garage, CAPEX, cloud computing, datacenter, Datacenter Trust, marc watley, SaaS, technology, virtualization, web2.0

If you’re the VP of Sales for a software or other service company I want you to listen to this cautionary tale.  It’s absolutely true and ought to make you ask some important questions about how confident you are in your inside sales or demo teams. More importantly, I can make some educated guesses about how they’re measuring this sales person’s performance and that really ought to make you go hmmmmm. At any rate I was able to avoid a painful experience and what I can only guess would have been the worst demo I’d ever seen.

A cold call/email for no reason: I got a voicemail from someone at a company who “wanted to speak to me” about their software-as-a-service product.  I suspect I know which list they got my name from but “that’s okay”, I figured… they’re trying to make a living. I then got an email at about the same time with the same kind of offer. Of course, there was nothing about their product other than the name and a hyperlink. My immediate thought was “If I don’t know what it does for me, why would I want to talk to them?” Something told me this person is cranking out the cold calls because they have a certain number of contacts they have to make. That’s fine, I’ve been there and done that, but I also know it’s not terribly productive except that it keeps their boss happy.

A kind offer to waste my time: I have great sympathy for sales people just doing their job so I emailed back and said (essentially) “tell me what it does and what it has to do with me and we’ll see”. I then got a response telling me what it is (an “email marketing tool”. Thanks for clearing that up!) in a single sentence, but I really should schedule time for a 30-minute demo so I could “really see what it can do”. Note: They didn’t ask or even assume what it could do for ME, just what IT could do. I don’t know about you, I don’t have half an hour (and is anyone foolish enough to think it will really only be 30 minutes out of my life???) to waste just watching someone tell me about a product I don’t need or want. Again, I figured their “sales management process” demands a certain number of demos a week. I know fully well the assumption is that if they do “X” number of demos, some of them will convert. Exactly what is their conversion rate? Do they measure it?  Imagine how high it would be if they only did demos to people who actually might buy the product to start with!

It would have been a complete waste of THEIR time too: Had this sales person asked a couple of questions they would have known I’m not a good prospect for them. Instead they invested a phone call, two emails and blocked out half an hour of their time (not to mention putting me in their carefully managed CRM pipeline) without ever asking a couple of basic questions which would have taken me off the list immediately. And let’s do some math: 5 minutes of questioning up front versus 30 minutes per demo to someone completely unqualified who will never buy.  It makes no sense, but if I’m being measured by how many demos a week I perform, you can bet I’m going to schedule them. And let’s face it; it’s less painful than filling that time with 15 more cold calls from an obviously flawed list of leads.

Here’s what I avoided:

By not taking up their kind offer of a “30-minute FREE demo” (are there people who charge for that honor?) I avoided several things:

• A carefully scripted (we can only hope… either that or a rambling, unprofessional) 1-way monologue about their product and its features
• A demonstration of all the cool bells and whistles without asking any qualifying questions about my company or goals
• A not-too-subtle avoidance of the price and other key questions until the very end (although that’s probably one of the first questions I have and I’ll sit through the whole thing wondering about it)
• If this person’s demo is carefully scripted, it MIGHT contain a call to action like moving to a trial account. (About half the demos I watch and review for people have no clear call to action so I’m giving them the benefit of the doubt here). My guess is I won’t have been asked who actually makes that decision or whether we’ve got budget for it (assuming they ever get around to telling me the price) until the very end of our time together.

I don’t blame the sales person here, at least not entirely. The big problem is some assumptions on the part of sales management:

• Measuring activity will get results–  you can make 100 cold calls but if you’re calling people who aren’t good prospects you’re wasting a lot of time and effort and demoralizing the sales person
• The demo itself will move the sale forward– Are we supposed to believe that a good pitch will move an unmotivated person to tears of joy and make a sale?
• The function and features will make the sale- If I see the wonder of your product, how can I resist? I can think of 20 reasons not to buy something- starting with I don’t need it
• All customers want the same thing and we can provide it- an interesting notion but you know it’s not true. Find out what I need and give me THAT, then we’ll talk
• Product knowledge is really the critical part of a demo- asking the right questions, acting like you care about my business and showing me what I want to see (especially in the early stages of the sales cycle) is far more important to a customer than your User Interface or the fine details of your algorithm

Basically, I was able to avoid having a half hour or more sucked out of my life by a “well intentioned” person just doing their job and appeasing their boss. Not exactly a constructive way to do business but one we see all the time.

How are you using demos in YOUR sales process?

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Tagged as: cold calling, demo, features, functions, greatwebmeeting, meaning, meaningful, product, product knowledge, SaaS, sales, sales call, software as a service, time, waste of time

When presented with the options more and more companies are opting for Software as a Service (SaaS) services rather than traditional desktop workstation software.  Traditional desktop software has benefits and drawbacks;  SaaS has similar, though different advantages and draw backs.

In tradition workstation software, the vendor is forced to re-acquire the customer at each revision in order to achieve predictable revenue recognition goals. The customer, on the other hand, has an incentive to wait as long as possible before upgrading to minimize the costs associated with the upgrade (downtime, data corruption, learning curve, and new feature acclimatization are but a few).  PC and Server maintenance as well as storage and backup is the responsibility of the customer. The customer can choose the point of upgrade, regardless of the vendor’s release schedule.

Enter SaaS.  SaaS takes the cost of managing PC and Servers out of the Company and creates a scalable model for the Business.  The SaaS provider now has the responsibility and costs associated with being able to ramp up or scale down the application environment.  It allows the business to better project long term costs by tying Total Cost of Ownership (TCO) directly to each application by headcount.
Most businesses do not do a good job of analyzing true TCO for the applications the Business Units ‘require’ for their day to day operations.  So IT is considered to have a larger overhead cost than it truly does.  With the SaaS, model, businesses will be able to run metrics on whether applications like SFDC (salesforce.com) or CRM (customermanager.intuit.com) are actually effective and have an ROI to the company. They can also test changes in their models and deployments and rollback changes that don’t test well.

SaaS must be tightly managed from a Role Based Access Management perspective as it is very easy for a companies intellectual property to walk out the door via a SaaS solution.  Strictly controlled access is an overhead cost that must be budgeted to maintain a competitive edge.

There are mindsets that come along with both desktop and SaaS development that need to be addressed as well.  It is very easy to fail with SaaS, (See the Mitchell Ashley’s article – http://www.networkworld.com/community/node/3174).

In summary there is no simple answer to the classic dilemma: Desktop vs SaaS. The only answer that comes to my mind is the consultant speak on most topics – “It depends.”

Tagged as: Business Management, Desktop Software, SaaS