The benefits of migrating workloads between different cloud providers or between private and public clouds can only truly be redeemed with an understanding of the cloud business model and cloud workload management. It seems that cloud adoption has reached the phase where advanced cloud users are creating their own hybrid solutions or migrating between clouds while striving to achieve interoperability values within their systems. This article aims to answer some of the questions that arise when managing cloud workloads.
On a vacation you often find that the best way to enjoy is to try and disconnect from the regular working day routine. Part of my blogging tasks include searching for knowledge resources and publishing news and articles to my followers. I maintain communication with my readers using social communication means such as Twitter and LinkedIn. Setting that in semi-automated state with twaitter (so I can spend my time with my lovely wife and not with my iPad …) brought me to imagine a living, breathing independent cloud creature that “feeds” itself with information.
Think out of the box and try to imagine the possibility that these lines were written by a smart algorithm utilizing the clouds and their enormous amount of information and logic. Imagine that humans don’t have keyboards but only screens to view what the “intelligent cloud creature” generates using smart BI algorithms running on a complex extremely wide integration. As we speak this integration is sprawling; basic logic routines and cross systems flows developed by humans as well as by machines.
The question “what I would like to eat for lunch ?” can be based on enormous amount of considerations such as who you are, who is connected to you, what you have already eaten today and how it fits with your diet, as well as what your best friend would like to eat because he can join you today while visiting nearby. All of these answers and more are already out there. The enormous growth in the number and the size of apps’ eco-systems, Big Data and the robust physical computing capabilities of the cloud leads to a form of intensive information calculation that can generate accurate intelligent results in an adaptive manner.
Traditional IT systems and logic were confined within their on-premise domain of variables. Collaboration wasn’t really an option and integration was (and still is) always a painful point with respect to huge investments and high risks. API deveopment task was one of the last things on the ISV priorities list. Today things can be different thanks to these clouds. The cloud accelerates the extension of eco-systems and can makes this fantasy a reality. I believe that we are heading straight into a second, even more exciting information technology revolution.
“Ask Siri to do things just by talking the way you talk. Siri understands what you say, knows what you mean, and even talks back. Siri is so easy to use and does so much, you’ll keep finding more and more ways to use it.”
The first time I checked this IPA (Intelligent Personal Assistant) agent was about less than two years ago. I was fascinated by the fact that besides the voice recognition and ease of use, Siri aims to generate its own intelligence using its great eco-system environment to generate suggestions and solve problems in a proactive and self-improvement manner. Eventually, I wasn’t surprised to hear that the most innovative company in the world integrated the solution inside its leading product operating system (I am just waiting for them to stop playing around and release it as part of the iOS, not only for the 4S version).
Another noteworthy example is Boomi. The company that was bought by Dell a year ago is a growing business for out-of-the-box “connectors” (the term they use for their integration widgets) platform.
“Remember Data Integration is the key to the cloudy future. By having Boomi in its pocket, Dell is well positioned to handle these needs” wrote the cloud evangelist Krishnan Subramanian, in his article Quick Thoughts: Dell Acquires Boomi
I had a great discussion with Rick Nucci, Founder and CTO of Boomi regarding the company’s positioning and its strategy to become the heart of the enterprise business flow. The company’s offering enables the IT Organization to generate a full solution assembled from several systems. The company develops a platform that enables rapid provisioning of “connectors” that enable systems.
“AtomSphere connects providers and customers of SaaS, cloud and on-premise applications via a pure SaaS integration platform that does not require software or appliances. .. Leading SaaS players and enterprise customers such as salesforce.com, NetSuite, RightNow, Marketo, Taleo, Zuora, Coupa, NASDAQ” Read more on Boomi’s site
Utilizing the cloud the company is able to host and maintain all of its customers’ connectors in its own cloud environment. The company takes responsibility for the connectors’ compatibly and provision them as a SaaS with a SLA. The traditional integration maintenance hassle becomes a small issue. SaaS start-ups are focusing on solving a specific problem and by so doing will not be able to solve a complete business flow. I believe that vendors such as Boomi can be positioned on top of the cloud food chain (I love that term – I encourage you to use it and comment what do you think about it), even before some of the above SaaS providers.
Traditional ISV must take action in regards to its eco-systems, both those it owns and those it participates in. Traditional ISVs have vast experience and owns data and logic that can be utilized by the new and agile SaaS developer. The ISV can leverage this experience in the cloud and take strategic steps to increase its public interface services to extend its eco-system and generate additional revenue stream.
> > > > > Back to Reality
Without the crowd input, the user collaboration and the contribution of the fast running web developer the cloud content, systems integration and eco-system can not evolve and grow. The next IT revolution combined from the connected world and big data is just outside knocking on our door and it lies on top of a rapid pace of cloud innovations and evolution.
> > > Don’t forget to comment – What are the layers of the “cloud food chain” ? < < <
This is the third and last post in regarding the cloud lock-in. In the first and the second parts I covered the vendor lock-in of IaaS and PaaS. The appealing registration and the low cost overwhelm the new SaaS consumers that often makes them forget that eventually the service will become something they just can’t live without. What will happen if one day your SaaS vendor goes out of business ? In this post I will try to cover the threats and the actions the enterprise should take in order to lower the level of the SaaS lock-in risk.
> > > How does the lock-in of a SaaS application differ from a traditional on-premise application?
SaaS use is actually the consumption of servers, operating systems, middle ware, network connections and more. Switching a SaaS vendor is much simpler as these are not located in your site – shifting to another vendor mainly includes migration of the data without the hassle of ripping and replacing the full app stack. This cheerful answer also provides a less costly and less complex switch than the painful effort and the risky investment of moving an on-site software.
Let’s consider a simple case where an enterprise uses a single application stored in a simple cluster, without any massive investment in middleware or integration. In such a case, switching from one SaaS solution to another is not so different from switching from one on-site application to another. The main issue regarding the SaaS vendor is to make sure that the data can be transferred to the hands of the enterprise at any time. Today the most common methods are to enable the export of reports in a CSV format and to download the full database. Even in this simple case the actual migration in the SaaS case will be easier because the company doesn’t need additional sets of hardware infrastructure for the migration to take place. Furthermore SaaS vendors develop import tools so that a new customer will can easily migrate the data, whether it is in a raw spreadsheet or even in the format of other SaaS vendors.
> > > The SaaS lock-in story gets complicated when integration and customization are needed.
The advantage of the ready-made, easy-to-use online application can sometimes be a disadvantage. The SaaS application might not be flexible enough to support the business needs and the enterprise might need to customize it or integrate it with other services. This integration leads to an increase of the lock-in level as the enterprise develops dependency on professionals such as the SaaS vendor team or a cloud integrator that will stitch the different solutions together to support the business complete work-flow. In this case the enterprise might find itself locked not only on each individual SaaS app, but also on the integrator’s skills and services.
The integration needs might be solved by SaaS vendors that are surrounded by a large ecosystem of plug-ins and out-of-the-box integrations with other online services. In his recent short post Geva Perry talks about the impotency of the eco-system by demonstrating the huge advantage of a cloud vendor that has a great “pre-integrated eco-system”:
“I was recently asked to recommend a CRM system to one of the startups I am on the advisory board of. As much as I dislike the complexity and poor performance of Salesforce.com, I had no choice but to tell them it’s the only way for them to go — for the simple reason that it’s the only CRM SaaS offering that is guaranteed to be pre-integrated not only with every app they need today, but also with ones they will need in the future, which may not even exist yet.”
IT management and control must be implemented and balance must be kept to avoid the uncontrolled sprawl of online services without a rational and orderly structure. The loss of control can lead not only to an extreme lock-in but also to problems with compliance and security. Considering this risk, the enterprise might find that the use of PaaS make sense and can fulfill some of its custom needs.
> > > My Conclusion: In the cloud the customer decides.
Lock-in is one of the basic hesitations of the enterprise when considering new technologies. Today, I can move my Power Point presentation to Google Docs or Slide Rocket. The developer can choose to store the DB on a local virtual machine or on an IaaS platform and later on migrate it into a DaaS platform. Experienced customers are burned out by the traditional IT vendors on the matter of lock-in and today they demand that the industry change and prove a low level of vendor lock-in.
Check out the following interview (brought to you by Bloomberg) with Mark Benioff, the CEO of Salesforce, the most veteran SaaS vendor in the world. Benioff talks about the Oracle false cloud and the traditional IT business in contrary to the new cloud world. In his words, I think that he brings the essence of what’s cloud is all about:
Cloud vendors invest a lot on making an intuitive UI/UX, to make sure that the learning curve of the new user will be short. They also develop and support migration tools and services to make it easier for the new customers to leave their competitors and quickly adopt their offering. Additional new online services are developed fast and the eco-system should not be compared to a traditional integration. It provides a real strategic business benefit for the customer as well as for the vendor and it is part and parcel of the cloud environment. Beyond all the considerations and thoughts I have in regards to cloud vendor lock-in, without any doubt the cloud supports a much more competitive and flexible IT world.
The three layers of cloud computing IaaS, PaaS and SaaS occupy the headlines with significant capabilities undergo continuous improvement to host services in the cloud. This growing market is slowly changing so that offered services will become generic. The current evolving struggle is the deployment and management of SaaS applications in the cloud, Gartner calls this cloud market portion SEAP (Software Enabled Application Platforms). We will dare to say that developers are from Mars and cloud providers from Venus, let us explain in detail why.
SaaS application developer builds the application architecture structure including the database system, the business logic and the user Interface. The software developer (or the SaaS vendor for that matter) invests on building these main three infrastructure cornerstones in order to bring life to the business idea and launch a new on-line service.
Traditional software delivery puts the responsibility of deployment and maintenance in the hands of the customer. In contrast, the SaaS model key includes building the infrastructure wrapper that allows meeting the requirements to deliver it as a service. The change from the licensing model is that the SaaS vendor (the developer) is also the integrator and the responsible to support standards by adopting technologies which makes the software as a service.
The most popular example is the support of multi-tenant. This feature enables the scalability to perform extensive SaaS sales and effective maintenance on the non-physical infrastructure. The virtual infrastructure brings higher level of complexity which requires additional maintenance means. This complexity intensifies as the number of customers grows, hence the demand for more cloud capabilities and resources.
Developers use existing frameworks that enable a short and efficient development such as .NET provided by Microsoft or Ruby on Rails brought by the open source world. Software architects already understand that the application multi-tenancy is a part of the system infrastructure to enable scalability, but is the that enough to make an application as a service? the answer is no, there are more considerations the developer need to bear in mind when planning the architecture of software as a service.
In order to plan the development of a robust and automatic scalability, the software architect must understand the cloud dynamic nature that is to say the basic option to start and shut down resources automatically. The software vendor should pick the IaaS vendor as part of the initial development step, learn the IaaS platform’s API capabilities and make sure that the development roadmap includes also a tight integration with the cloud facility. The IaaS platforms offered are still young and automation deployment is still limited due to infrastructure barriers. Most of the IaaS platforms doesn’t provide convenient tools to deploy the application, therefore the SaaS vendoר is forced to invest in purchasing existing tools or even implement independently. Today we still see vendors that are not aware of these requirements as they are not pure application but operations oriented.
Check out I Am OnDemand terminology page and learn more about the four levels of Multi-Tenancy.
Another aspect in the SaaS development discussion is the option to build the system on a PaaS. There is a good number of PaaS manufacturers that offer products enable development capabilities as a service and by that solve the developer’s need to maintain a scalable service as described above. We can divide the this group of products to following two categories:
- Objects as a service – force.com is an example for such vendor. The developer will buy the option to use the out of the box software objects to implement a new application.
- Runtime and database as a service – here we can mention platforms as Heruko, Google Apps and MS Azure.
Gartner predicts a growth in the amount of platforms that provide the wrapper for the web development of new and existing application. These platforms already have taken a significant part in the cloud evolution. The number of PaaS providers grows while the existing vendors continue to extend their on-demand tools portfolio, enabling a wide range of services for operation, management and distribution of SaaS applications.
Besides the actual system scalability issues presented here, there are much more “developing for the cloud” considerations such as integration, develop for resources’ optimal utilization and SaaS development with the fast changing clouds’ platforms. Check out Cloud development: 9 gotchas to know before you jump in, an article brought to you by InfoWrold.
The relationship between the actual application development and the operational side of the application becomes stronger. While the SaaS vendor’s board should think on all cloud adoption strategic aspects, the vendor’s software architect as well as the product manager should think “out of the application box” to be able to deliver their product as a service.
Special thanks for Amit Cohen who raised this discussion and took a part in composing this article. Cohen is an experienced SaaS & Cloud computing consultant for the enterprise who held executive positions at several international software vendors over the last 10 years.
Following the post regarding the Free Trial 3 stages process and as part of the discussion in LinkedIn I would like to share with you the following comment from Michael Dunham, VP of Services Engineering, Principal Consultant at the SCIO a web application software consultancy vendor. I found it interesting and giving some more points of view when planning the free trials funnel.
As far as the discussion about confirmation emails goes – I think it is a perfectly valid way to capture emails for follow-up (a good practice, especially with new B2B products) and to weed out the pretenders. Most serious buyers will use their business emails and be straightforward about their interaction. In some cases I think some market information (segment, region, company size, etc) is useful also. I know it raises the friction of a trial, but if it is worded right – it tells the user the vendor is interested in knowing something about their market and why people do or don’t convert to buying the service.
Frankly, in all the years I have been in software development, enterprise solutions and consulting I have never seen an enterprise sale that didn’t require a trial. A demo just doesn’t cut it for enterprise buyers. They are buying for value and they want to ensure they get it. And – on the side of the vendor – while I might have trial data to test features – I want testers to use the service and input data. Doing that increases “stickyness” because they can see their data working and they can test the business process in their context. that means you want a button to clear demo data and start fresh. If the service works for them, they are going to want to just buy and move on (not lose their input data)
In many B2B apps – the vendor will want multiple users from the same client to sign on for the trial. In a Intellectual Property solution (for example) you need the entire product legal team to try the app to understand the process implementation and know if it will fit or can be modified to fit their constraints. One of the things I see a lot is B2B apps that are for complex processes but assume one person can evalute the app and buy. You need to be able to invite other company members to the trial to get a concensus in most B2B situations.
Free trials have an operational cost and can provide a lot of information for the ISP if – the trial users are actually the target market and not “lookyloos” that have no intention of buying. It isn’t unusual to have a requirement for a credit card in SMB markets even though the card won’t be charged unless the prospect converts. This creates some friction but we need to understand that free trials are NOT a substitute for value marketing. If the prospect doesn’t already understand the value proposition when they start the trial, the conversion potential is going to be much lower. Too many people think of the trial as a marketing tool. It must be the last step – the setting of the hook after they have already taken the bait.
With a good trial system, part of what you can find out is – is the service intuitive? can user become productive with little or no training or effort? Can they validate solution value immediately? Is the service extensible? Can adjacent markets adopt the application with a few changes to the configuration? If you have embedded meeting into the application and the trial, you should be able to answer these questions.
When the prospect is ready to buy, it needs to be a clean and fast process that gives them the assurance that the ISP is ready to engage. If I have to jump through hoops, if I can’t easily decide if I want to clear out trial data or simple transition. If I can’t buy it the way I need to (credit card, bank transfer, various periods, etc) it becomes a barrier to someone who is already sold.
The trial process is a critical part of the sales process to understand in SaaS. I’m glad you’re addressing it.
Starting with a research on optimizing the SaaS customers’ acquisition funnel, I decided to focus on analyzing the conversion from a visitor to a registered free trial user. I examined about 50 SaaS systems starting from the most known ones, such as Salesforce.
Checkout I Am OnDemand YouTube Channel and rate those 26 free trial jumps.
Software professionals such as product, development and operation managers tend not to give the free trial mechanism the right attention, as the free trial is just a “single simple form”. From their perspective it is part of the product’s marketing website and ins’t part of the whole service. This approach brings some of the SaaS vendors to spend almost all of their planning and development investments on the application. No doubt that this is a mistake, the free trial process has a very important role in the SaaS business life. The free trial mechanism should not be left behind, it is an integral part of the product and must be smart, measured precisely and improved continuously.
Trying to categorize the different “free trial mechanisms” was a bit tricky due to the plenty considerations that should be taken in mind: what is the target market? What model does the system support – B2C? B2B? Enterprise? How complicated are the business values that the SaaS offering present (Social software requires less setup info than financial software)? Etc.
Finally I decided to categorize the products I tested, by the visitors’ effort needed to convert, hence the duration till the new visitor converts to a new user. Categorizing by this feature doesn’t means that faster is better, it is just faster. This segmentation might not fit to all the different SaaS offerings:
- Small – Registration straight from the www site homepage, with almost no setup actions.
- Medium – The free trial process requires switching through several pages in the “www site” (I use this term to talk about the marketing website of the product).
- Large – The free trial process includes jumping to the mail box in order to complete the registration stage and login to the application.
- Extra Large – The free trial process doesn’t end with login to the application and the visitor will need to wait for someone to return a call.
Most of the applications I tested fit into the 2nd and the 3rd categories. I am sure that some of those vendors can improve the process easiness by stepping up to the 1st category or at least move from the 3rd to the 2nd. There are several considerations in belonging to the 4th like the maturity of the product, some of the young vendors will want to have a personal touch with their visitors on the alpha phase to understand their potential market needs. Some vendors will not want to reveal the application on a free trial due to competition. I also heard some saying that for enterprise software solutions free trial is not part of the customer acquisition process, for my opinion this approach holds a lack of vision.
The free trial 3 steps model
Your visitors don’t want to spend time if the service’s value is not clear and they will not mind spending time if the value presented is clear to fit to their needs. Most of the free trials jumps I tested can be entered into “the free trial 3 steps model” including 3 pages, that the visitor goes through at the free trial sign-up procedure.
> > > > > 1. The WWW homepage
Make sure that the www homepage presents the application’s basic values in a glance and give an option to drill down to read more. Make sure to know your audience’s needs, not only the specifics you can help them with, and provide an appealing and relevant content. Use graphics creative design to catch your visitors’ eyes and social tools to strengthen the communication with them. There are no limits to the creativity that you can present here, think out of the “Salesforce free trial box” and don’t forget to measure your visitors’ habits.
There are some leading SaaS vendors that designed their free trial process to include the pricing page. The main button on the www site homepage is “Pricing and Plans” button, clicking it forwards the visitor to the pricing page that includes also an option for a free trial. When I am interested in buying something I first want to understand that it solves my needs and only then I will ask for its price. I believe that the free trial button is still essential and I suggest giving an access to the free trial and then the option to check the pricing plans.
Following my free trials research here are a few insights regarding the www homepage –
- Put links to your social tools and show blogs’ content.
- Use videos to present the application and to show you customers’ success stories.
- Content should be dynamic and change according to the visitors reactions.
- The free trial button must be unique and available on all website pages. Also make sure that it is visible when scrolling.
- Although it sounds obvious, please make sure there are no errors on the page, specifically when clicking on the free trial button.
> > > > > > 2. The Registration Form
Once your customer decided to take the free trial, you should make it is perfectly easy and smooth (I would say fast as well) to start the application trial. When planning the registration form, I suggest to start from understanding that an email and a password is enough to be able to convert a visitor to a user. You should examine carefully all other fields that seem to be necessary to start the trial (URL, number of employees) or any other information you like to get from your visitors (Phone#, how did you hear about us?).
- From the visitor perspective the details submission is an instantaneous step before jumping into the application hence he will be fully focused on a quick submission of the form. I found some that show minimal content such as a quote of a happy customer, this is nice but why bother the eyes, the registration form will be enough.
- Once submitting the form the visitor should immediately be forwarded into the application. Even for security products a good option to solve identity issues will be by activating specific features inside the application by an email confirmation.
- Again don’t forget to measure. For new SaaS vendors I will strongly suggest to go with Multivariate Tests to optimize the registration form.
> > > > > > 3. The Application Landing Page
Once the free trial form was submitted and the visitor becomes a user, the user will be forwarded to the application’s landing page that has a very important role in the free trial jump. The first moves in the application must reveal the user to the benefits and present clearly how those align with the business needs. It is important to control the users’ actions and make sure that they demonstrate the system values, so don’t forget to measure! and improve continuously. Here are some points that you should consider when planning the application’s landing page:
- Emphasize basic actions to lead the customer to the main system work flows. For B2B systems an option to check a specific role view and workflows can be nice (check SugarCRM free trial as an example).
- Put links to training materials and knowledge. Some systems implant support videos in the landing page to help the visitor get started.
- Depending on your customers’ support capabilities, you can put an option to contact a person for an immediate live support.
- Make sure that the trial account includes default values so the user will see the application at work.
- Suggest and do not force Setup of the account.
- Link to pricing and show how much time is left for the free trial.
I found the following presentation and would like to share it with you as it is a great resource for understanding how to design your sign-up process.
There is a lot more to consider when planning the customers’ acquisition funnel of a SaaS system: How to increase the awareness of the www site? How does the email to the new user look like? How to present the pricing plans? How to measure? How long should the free trial be, 15 or 30 days? Although I thought that this subject is mature enough, I found that it is not. The free trial jump is still evolving and I feel that there is plenty of room for new creative ideas, just don’t forget to measure !
To continue the free trial discussion you are welcome to join the my LinkedIn discussion.
Following part 1, here is part 2 including the second half of Waineright’s important lecture:
Waineright starts the revenue generation and pricing discussion, by explaining that a difficult issue for the SaaS vendor is to find a clear relation between the expenses and revenues generated by the subscription fees. He is not elaborating on that point but summarizes it by saying that the specific ISV, as well as the specific industry market, will need to find their way by learning on the go.
I think that there is place to continue investigating this point. I found that SaaS vendors are struggling on a daily basis with calculating and optimizing their low profit margin, obviously this has a clear impact on their business life. Discussing monetization strategies, he presents five ways to generate revenues: subscriptions, advertising, transaction fees (revenue share on the transactions made), digital good and aggregated data (selling information about the customers and industry benchmarks). These options are clearly driven from the economies of scale benefits and in my opinion we must learn them by heart.
“I don’t quite understand it”
The next discussion was about subscription strategies including freemium.”I don’t quite understand it” Waineright says. I can add that acquiring lot of “freemium subscribers” can be a good option for a startup company to prove abilities and value but for an ISV who wishes to generate revenues, the freemium is not an option. The clear conclusion here is that freemium is only a marketing tool that has a cost and that must prove its benefit though there are better tools to achieve a cost effective sales promotion. Waineright says that people expect to get the same service level as if they were to pay for the service (such as Gmail users) and that ..
“there is a huge delta between using something for free and deciding to pay for it as a customer”.
Waineright is adding that there is still the administration cost and that eventually there will be an investment on the infrastructure to support the collection of payments (if the SaaS vendor starts delivering as only a freemium service). For this matter he exemplifies his points using study cases such as Box.net , Malichimp and Intuit. The latter demonstrate a success story with 60% of revenues that are generated from its SaaS operations.
In the last part of his presentation, Waineright suggests to use a trust advisor that can help with strategic guidance in order to do the right things. Due to the character of this lecture and the lecturer’s nature,a as well as from my personal experience I find this suggestion to be very important specifically for software vendors that are finding themselves “forced” to move to the cloud. SaaS is here more than 10 years and although it is just now starting to spread, you are able to find experts in this industry and they will be able to assist. Waineright is summarizing with the following 5 tips:
- Find your prospects – measure carefully your service values and focus on the potential customers’ users that will get the most from the application.
- You are a service provider – SaaS vendor does not deliver toolkits anymore but a “working service”.
- Pricing model must be kept simple and aligned with the service value proposition.
- Simple packaging of the application is important in order to get new customers on-board quickly and continue on with leveraging the upsale capabilities.
- Don’t forget to collect the cash!
The end of the presentation includes Q&A . One of the questions was “why are SaaS companies not profitable?” Learn more by listening to the lecture audio. I want to thank SafeNet and IGT for arranging this event as it was very inspiring. I also want to thank Mr. Phil Waineright on sharing this valuable knowledge with us.