Azure Platform Business Overview
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This document provides an overview of the Windows Azure platform and discusses how software-as-a-service (SaaS) represents the largest growth opportunity in cloud computing. It notes that SaaS will see 42% compound annual growth rate through 2015. The document discusses factors driving adoption of cloud computing and how Windows Azure can provide business value to independent software vendors (ISVs) by offering low up-front costs, worldwide reach, and an ecosystem of partners. It also outlines how ISVs should adapt their business strategies to succeed with SaaS, such as changing their pricing, sales, support, and financial metrics. The document concludes by discussing next steps ISVs can take to learn more and get started with Windows Azure.
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Azure Platform Business Overview
- 1. Business Overview Windows Azure Platform
- 2. Agenda • What is the Cloud, really? • Factors Driving Adoption • Windows Azure Business Value • Succeeding with SaaS • Partner Perspectives • Next Steps • Open Discussion 2
- 3. What is the Cloud? IaaS Infrastructure-as-a-Service PaaS Platform-as-a-Service SaaS Software-as-a-Service Host Build Consume 3
- 4. The SaaS Opportunity Global Public Cloud Market Size Forecast $100.00 • SaaS represents the $75.00 largest and most sustainable growth $50.00 opportunity • By 2015, SaaS will see $25.00 SaaS a 42% CAGR PaaS $0.00 IaaS 2010 2011 2012 2013 2014 2015 Source: Sizing The Cloud, Forrester, April 2011 4
- 5. Customer Commitment to SaaS SaaS is not currently part of our applications According to Forrester’s Late adopter to strategy April 2011 report, SaaS 15% 2% Sizing the Cloud: Fully committed to SaaS • 42% of organizations in Cautiously moving 21% the US to SaaS 39% Committed to SaaS • 44% of organizations 23% worldwide are using cloud computing Level of Commitment to Cloud Application as a Percent of Overall Applications Use Source: IDC SaaS Adoption Survey, May 2009. n= 347 US-based IT Director and above respondents 5
- 6. Software Will Never be the Same 90% of new products of new companies 5X Growth rate of the IT industry 43% of revenue from SaaS subscriptions IDC: Cloud Computing: Partner Guidance, July 2010 6
- 7. Factors Driving Adoption Today 7
- 8. ISV Top Of Mind Issues 8
- 9. Capacity Management: Non-Cloud Allocated Load Forecast “Under-supply“ IT-capacities IT CAPACITY of capacities Fixed cost of IT-capacities “Waste“ of capacities Barrier for innovations Actual load TIME 9
- 10. Capacity Management: Cloud Allocated capacity Load Forecast Allocated IT No “under-supply“ capacities IT CAPACITY Possible reduction of Reduction of “over-supply“ IT-capacities in case of reduced load Reduction of initial investments Actual Load Time 10
- 11. Windows Azure Is A Great Fit 11
- 12. Low Up-Front Costs for Your Customers Software License Plus… Software Service Plus… • Server HW • $2/user/month • OS/DBMS • No installation • Installation/Configuration • No maintenance • On-going administration • Scale according to need • Maintenance 12
- 13. Windows Azure Business Value
- 14. Business Value For ISVs 14
- 15. A Comprehensive and Open Platform 15
- 16. Worldwide Reach Moscow, RU Seattle, WA Seoul, KR Ashburn, VA Doha, QA Bay Area & Los Angeles, CA San Antonio, TX São Paulo, BR Sydney, AU 16
- 17. Building Blocks Partner Ecosystem Build/Configure Operationalize Monetize 17
- 18. Windows Azure Marketplace Public marketplace for applications and datasets Partners have complete control over terms of use and price Partners can decide to transact or only list on the marketplace Customers can purchase app/data on monthly recurring subscription basis Marketplace provides ability to have access to Trials Microsoft and Partners will share revenue for all sales at 80/20 model For information about how to publish to Windows Azure Marketplace please visit: https://datamarket.azure.com/publishing/
- 20. How will you leverage Windows Azure? Create New Cloud Services Store Data in the Cloud Create New Solutions by Combining Cloud Services Move Applications Extend Applications to the Cloud to the Cloud 20
- 21. How will you adapt your business strategy? Your Company Existing Offering New Offering Existing Customers New Customers Existing Customers New Customers Existing Customers, New Market Segment, Existing Customers, New Market Segment, Existing Functionality, Existing Functionality, New Cloud Offering New Cloud Offering Delivered in the Cloud Delivered in the Cloud 21
- 22. Thinking Differently For Success • Churn Rate • Pricing SaaS Applications • Delivery rhythm • Cash flow • Customer Acquisition • Channel Dynamics • Lifetime Value of a Customer • Try before Buy • Service Level Agreements • Committed Monthly Revenue • Sales Cycle • Support • Referral Programs • Billing 22
- 23. Financial Metrics Change 23
- 24. Pricing Options Change 24
- 25. Buying Behavior Changes 25
- 26. Sales and Support Changes Non-cloud scenario - - - - - - - - Customer Interaction Cloud scenario Technical Migration, Customization Specialist , Integration Activation and Onboarding Sales On-going Support Pre-Sales Post-Sales Management
- 27. Sales and Support Changes Customer Interaction Cloud scenario Technical Specialist Activation and Onboarding Sales Pre-Sales Post-Sales Management First First 30-60 90 days days
- 29. Kentico: Grow Your Business . Thomas Robbins Thomas Robbins Chief Evangelist, Kentico Chief Evangelist Kentico 31
- 30. aZaaS: Scale Cost Effectively Choon Ngee Tan Regional Director, aZaaS 32
- 31. SOFTENG: Innovate Quickly 33
- 32. Holtl: Grow Your Business 34
- 33. SharpCloud: Innovate Quickly 35
- 34. Sitecore: Grow Your Business 36
- 35. Case Study Job-Listing Web Site Scales Up Solution, Reduces Costs by More Than U.S.$500,000 Company Profile: A full service job-listing Web site based in Mexico, OCCMundial.com gathers more than 15 “With Windows Azure we’re saving million unique visitors and posts more than 600,000 positions at more than 7,000 companies up to $400,000 in hardware each year. costs, plus at least a couple hundred thousand dollars for the staff that it would take to run that • Efficiency To scale up its OCCMatch algorithm to match more resumes and job infrastructure.” • Easy Scalability listings, OCCMundial.com needed to increase • Reduced Hardware and Management Costs computing capacity without the costs of More Than $500,000 expanding its IT infrastructure. • Agility After evaluating Google and Amazon • Enhanced Customer Value solutions, OCCMundial.com used the Windows Azure™ operating system to host OCCMatch on Eduardo Pierdant, Chief the Internet in Microsoft data centers. Technical Officer, OCCMundial.com Better service to more customers at lower cost, and the agility to focus on enhancing OCCMatch.
- 36. Summary SaaS has sustainable growth: 42% year over year The SaaS • • Cloud spending Opportunity • The time is NOW Develop, Deploy & Manage and Sell your SaaS applications Windows Azure • • Microsoft partner solutions enhance your success Business Value • Windows Azure Marketplace expands REACH and REVENUE Build a business strategy to guide your deployment decisions Succeeding • • New thinking is required in Finance, Marketing, Sales, Support with SaaS • Learn from others http://www.microsoft.com/casestudies/ 42
- 37. Presenter: enter the Windows What’s Next azure Incubation team member name in the orange box below Plan Try • Discuss cloud strategy within your company Use one of these FREE partner offers: • Contact local Microsoft Windows Azure • Introductory Offer - free trial expert <name and email here> • Cloud Essentials – via Microsoft Cloud Program • Microsoft BizSpark – for Startup ISVs Learn • Read the Windows Azure ISV Business Economics Package at http://partner.microsoft.com • Watch the Succeeding with SaaS Webinar Series on www.msdev.com • Send your technical team to the next workshop in this series 43
- 38. Open Discussion
- 40. Appendix
- 42. How ISVs can work with Microsoft
Hinweis der Redaktion
- Presenter:The timed duration for this presentation is 1.5 hours total, with approx. 10 minutes Q&A at the end.
- Speaking Points:As we begin, it is important to understand how to talk about our Cloud Services offerings.There is a lot of confusion in the industry when it comes to the cloud. Today, I would like to lay a foundation, covering what is happening in the industry and how Microsoft approaches the cloud space. This is the most commonly used taxonomy for differentiating between types of cloud services.The industry has defined three categories of services:IaaS – a set of infrastructure level capabilities for ISVs such as an operating system, network connectivity, etc. that are delivered as pay for use services and can be used to host applications. PaaS – higher level sets of functionality for ISVs that are delivered as consumable services for developers who are building applications. PaaS is about abstracting developers from the underlying infrastructure to enable applications to quickly be composed. SaaS – ISVapplications that are delivered to end customersusing a model where organizations can simply consume and use the application. This is the layer where ISVs monetize applications and develop revenue streams.It is important to note that these 3 types of services can exist independently of one another or combined with one another. Although solutions built on PaaS offerings are often delivered as SaaS, SaaS offerings don’t always have to be developed upon PaaS offerings – but there are benefits to that which we will explore alter in this presentation. PaaS offerings also needn’t expose IaaS and there’s more to PaaS than just running platforms on IaaS.
- Transition In:Lets begin to talk specifics, actual dollars and cents that represent this opportunity.Speaking Points:IaaS will hit its peak early and then commoditize quickly. With a market size of $2.9 billion in 2011, the IaaS market represents the second-largest public cloud space today. However, in the paper, Sizing the Cloud from April 2011, Forrester’s analysis shows that IaaS will reach a peak of $5.9 billion in global revenues in 2014 then will then enter a period of significant commoditization and price deterioration.SaaS represents the largest and most sustainable growth opportunity. The SaaS market represents the largest public cloud market by far, with $21.2 billion in total revenues in 2011.Thanks to rapidly increasing demand from companies of all sizes, the SaaS space will grow significantly over the next five years. The rapid growth in the number of SaaS end users will trigger good growth for PaaS and IaaS solutions, as the majority of SaaS vendors will rely on the platforms and infrastructures of their tier two PaaS and IaaS partners.The overall SaaS market started in 2008, but it will take a long time for all the differentSaaS applications to reach saturation.Because of the many different SaaS markets, it will be 10 years, until 2018, until SaaS reveals its full potential.
- Transition In:“So… it’s clear that software as we know it will never be the same.”Speaking Points:Cloud spending is growing 5X the rate of the IT industry in 2011, up 30% from 2010 <click>There is a quantum leap of net new “products” that are delivered via the Cloud <click>90% of allnew products are being delivered as SaaS applications <click>< 10% of net-new companies will go to market w/packaged product in 2010 <click>Perpetual license revenue is declining – and this is not a passing trend (-$7 billion in 2009) <click>IDC estimates that 43% of revenuein 2013 will come from SaaS subscriptionsSW maintenance will lag, but will gradually decline at the same rate
- Transition In:“So it is not a question of “if” the Cloud is going to be significant.”Speaking Points:Based on the convergence of a number of factors, NOW is the right time, indeed, to start providing cloud based services.” <click>Leading the list is ubiquitous high-speed access to the internet for corporate, small and medium sized businesses and consumers alike. <click>The current economic environment has also had a significant impact, forcing companies to seek out more efficient and cost-effective solutions. With IT budgets squeezed, companies are looking to outsource as much operational functionality as possible, while saving capital investments for strategic functionality only. <click>The other side of the fence, CXOs need to deliver unique and competitive value. Focusing on core competencies delivers a better end product. <click>Security concerns have traditionally been a major hurdle in buyers acceptance of cloud services, but today well-established security standards have made it easier for providers to meet or exceed the levels of service and security corporate consumers are receiving from their internal IT. <click>Added to this, customers are now able to choose from a greater breadth and depth of cloud services offerings than ever before. This availability of choice makes it easier for customers to evaluate and select from alternatives across a wide range of application categories. <click>With the emergence of true platforms for developing and delivering cloud based offerings, critical barriers for vendors looking to deploy a solution are removed. Prior to the Cloud, ISVs were hampered by having to architect their own hosting solutions, leading to costly capital outlays and much slower time to market.When all of these factors are viewed together it is easy to see why the move to cloud services has become mainstream, and acceptance is continuing to accelerate.
- Transition In:“So let’s take a look at the cloud from the perspective of companies like yours that develop software.”Speaking Points:The cloud offers elegant solutions to some of the key challenges faced by ISVs: <click>Remaining competitive: Cloud computing allows ISV to rapidly create and deploy new solutions. With no upfront hardware investments – innovations can occur at the speed of thought. <click>Staying Focused: With the cloud, the ISV need not spend time and resources managing and provisioning servers, hardware and load- balancing. They can concentrate on providing the most innovative and comprehensive solutions to their customer base. <click>Reducing Costs: Upfront hardware costs that mean CAPEX expenditures are tough in this economic environment both for the ISV and their end customer. Cloud computing allows for a utilization based OPEX model. <click>Managing Datacenter: Planning for peak demand would make data centers too expensive for average loads. Planning for average demand means that applications don’t scale well and fail when there is high demand With cloud computing the ISV can ensure that demand and capacity are always in sync without idling expensive hardware. <click>Maintaining Security, Privacy and Continuity: The goals of secure applications and increased access are always in conflict within the on-premises world. It is not so with the cloud paradigm. <click>Embracing Globalization: Globalization is both, a hurdle when it comes to distributed teams and an opportunity when it comes to reaching new markets. Cloud computing helps with both – in connecting dispersed teams and reaching new markets. <click>
- Transition In:So let’s peel back a few layers and also take a look at how the cloud offers ISVs a level of responsiveness that serves up a better end user experience and delivers a better utilization of resources.Speaking Points:In every scenario, there will be a general idea about computing demand over time. <click>However, actual demand, inevitably, varies greatly. <click>IT does its best to respond and allocates resources to keep up. And for each reallocation, there is a committed, fixed cost for that capacity. <click>With non-Cloud scenarios, as actual load inevitably varies greatly compared with forecast, IT capacity almost always over or under subscribed, resulting in either a waste of capacity or compromised performance.
- Transition In:In Cloud scenarios, the automatic responsiveness to demand results in no capacity waste and dramatically improves resource efficiency. <click>Speaking Points:The benefits are a reduction of initial capacity and resource investments, reduction of over supply, elimination of under supply, and flexible options to reduce capacity when reduced loads are encountered.This offers an elastic response to demand and if desired, offers ISVs a “Pay as You Go” option that was previously unavailable, eliminating the fixed costs of IT infrastructure.
- Transition In:While all applications can realize benefits from moving to the cloud, applications with certain workload patterns are particularly well suited to the cloud. Speaking Points:On and off: These are workloads for parallel processing applications, when large amounts of capacity are needed for a very short time frame. For example, an online state exam taken by thousands of students in one day.Growing fast: This is astart-up application scenario which begins with a few customers but grows quickly, adding many new customersThere are twoSpiky scenarios as well. Unpredictable bursting: is encountered especially withconsumer applications like online games and social network applicationsPredictable bursting scenarios include seasonal applications like shopping websites during the holiday season or tax and accounting applications during tax season, etc…
- Transition In:In addition to the Cloud working for you as an ISV, there are also compelling benefits that SaaS applications can offer your customers. Speaking Points:In comparison to on-premises applications, SaaS applications dramatically reduce your customer’s own IT costs, eliminating the large upfront licensing fees PLUS the costs associated with purchasing and maintaining hardware and software on-premises.PresenterNote: the $2 listed on the slide is for illustrative purposes only – no claims to actual pricing For Windows Azure or any other service.For customers, locally installed software is expensive to deploy, update, and upgrade and the deployment process can be time-intensive and difficult, even with software deployment automation. From customer data, we know that infrastructure costs comprise of over half of spending. Existing app maintenance costs such as updates and patching labor, end-user support, and license fees paid to vendors account for roughly a third of spending.When you work with in the SaaS model, all ongoing maintenance and solution upgrades are managed by the provider, which significantly frees up time and unnecessary cost. For customers, SaaS applications allow them to scale according to their needs and grow their business with more flexibility--since they are untethered from traditional IT costs associated with on-premises deployments previously needed to support that growth.
- Transition In:Since we have just reviewed what the cloud is and its benefits to you and your customers, let’s take a look specifically at the Windows Azure Platform and how it offers real business value.
- Transition In:The Windows Azure Platform is comprehensive, offering benefits to help you develop, deploy and manage, and sell your SaaS applications and ensure your success in the cloud.Speaking Points:When developing applicationsWindows Azure can help you innovate quickly via an open, comprehensive platform. Develop new applications or migrate existing ones or even create hybrid applications.When deploying & managing applicationsWindows Azure helps you deploy and manage applications with greater efficiency with fully managed hardware and softwareYou can scale reliably and cost effectively with fully managed hardware and software, reducing costs for you and your customersYou no longer have to manage multiple versions of on premise software, nor plan and manage infrastructure capacity, performance, and availability. You’re free to return to the beginning of the cycle and develop and sell more applications.When selling applicationsIt can help you grow revenue byMonetizing existing IP, or reaching new customers and new geographiesExtending your on-premise applications via a hybrid modelGenerating leads through an application marketplaceAnd by providing a rich partner support eco-system that includes sales, marketing and technical resourcesLet’s take a look at each of these 3 areas in greater detail…
- Transition In:The Windows Azure Platform is comprehensive and open.Speaking Points:As part of Microsoft’s continued commitment to interoperability, the Windows Azure platform has been built from the ground up with that as a priority and supports the language and tools your developers are already familiar with.Your developers can use multiples languages (.NET, PHP, Ruby, Python or Java) and development tools (Visual Studio or Eclipse) to build applications which run on Windows Azure and/or consume any of the Windows Azure platform offerings from any other cloud or on premise platform. With its standards-based and interoperable approach, the Windows Azure platform also supports multiple Internet protocols including HTTP, XML, SOAP and REST —key pillars of data portability. At a fundamental level, the Windows Azure Platform is based on two main components: Windows Azure and SQL Azure. Windows Azure is a cloud services operating system that serves as the development, service hosting, and service management environment for the Windows Azure Platform. Windows Azure Platform provides developers with on-demand compute and storage to host, scale, and manage Web applications on the Internet through Microsoft® data centers. SQL Azure is a fully relational, cloud-based database platform built on SQL Server® technologies and uses same familiar relational model and tools as SQL Server.With SQL Azure Database, your developers can easily provision and deploy relational database solutions to the cloud and take advantage of data centers around the world that provide enterprise-class availability, scalability, fault tolerance and security with the benefit of no physical administration required.
- Transition In:In addition to robust technology, datacenters in North America, Asia and Europe and a Content Delivery Network with 24 global locations, deliver better performance and user experience for SaaS apps deployed on the Windows Azure Platform.Speaking Points:The Windows Azure Platform is now commercially available in 41 countries .The Windows Azure CDN offers built-in disaster recoverywith its worldwide infrastructure and provides developers a global solution for delivering high-bandwidth content.The Windows Azure CDN and can help handle large distributed scale to better handle instantaneous high load, as at the start of an event such as a product launch. Additional details for presenter:Listing by countryAustria, Belgium, Canada, Denmark, Finland, France, Germany, Ireland, India, Italy, Japan, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland, UK, United States, Australia, Brazil, Chile, Colombia, Costa Rica, Cyprus, Czech Republic, Greece, Hong Kong, Hungary, Israel, Luxemburg, Malaysia, Mexico, Peru, Philippines, Poland, Puerto Rico, Romania, and Trinidad and Tobago. Global Foundation Services runs and manages all Microsoft Datacenters worldwideOne of the largest operators of datacenters in the worldMulti-billion dollar datacenter investment700,000+ square foot Chicago and the 300,000+ square foot Dublin, Ireland data centersMicrosoft cloud services provide the reliability and security you expect for your business: 99.9% uptime SLA, 24/7 support. Microsoft datacenters are ISO 27001:2005 accredited, with SAS 70 Type I and Type II attestations.PUE = Power Usage Effectiveness = Total Facility power/IT Systems Power = Indication of efficiency of DCUnder 1.8 is very good, modern cloud DCs approaching 1.2http://www.globalfoundationservices.com/http://blogs.msdn.com/the_power_of_software/archive/2008/06/20/microsoft-s-pue-experience-years-of-experience-reams-of-data.aspxhttp://blogs.msdn.com/the_power_of_software/archive/2008/06/27/part-2-why-is-energy-efficiency-important.aspx
- Transition In:Along with technology, you can leverage Microsoft technology partner solutions to enhance your success in bringing a SaaS offering to market.Speaking Points:By utilizing key functionality provided by Windows Azure Building Blocks partners, ISVs can focus on taking their software to the cloud as quickly as possible andwithout distraction.The Windows Azure Platform offers a broad ecosystem of SaaS solutions for ISVs that offer billing, security, provisioning, monetization, testing and management services for your SaaS applications.These can help you build or improve your SaaS applications, go to market faster, and improve the financial viability of your business model.Build/ConfigureArt in Soft offers a solution to move Windows Form (C# and Visual Basic 6) applications to Windows AzureQuest Software offers multiple solutionssimplifying Windows Azure Application Performance Monitoring, Subscription Management, and Storage The Visual WebGui solutionports client/server business applications to Windows AzureOperationalizeCumulux provides themanagement, compliance, and deployment solutions providing operational visibility and granular application control.Zendesk is a web-based Help Desk and includes a support ticket system and self-service customer service platform.MonetizeInishTech & Metanga are unique solutions harness the power to “Monetize the Cloud” with the enrolment, licensing, account management, billing, and customer payment servicesTicTacTi offers ecommerce and advertising services for the gaming sector aross devices and operating systems for placement of in-game ads without source code.More info (internal MS only): http://sharepoint/sites/windowsazureplatform/SitePages/BuildingBlocks.aspx
- Transition In:When it comes time to offer your solution, you can also turn to the online Windows Azure Marketplace where you can list and/or sell your SaaS apps and premium datasets to customers across the globe.Speaking Points:With the Windows Azure Marketplace, you can get your solution to market quickly, expanding your reach and your revenue.Here, customers seeking cloud-based solutions and specialized data sets can find and connect with you.It is free to list your Windows Azure applications, which is not always the case with other cloud providers.You can also set up your application to be sold directly to end customers using the Marketplace infrastructure – so you can take advantage of the built-in online transaction capabilities, unified billing, provisioning, and the ability to provide trial offers already built in – so you can quickly and easily monetize your app.<click>To get started, visit https://datamarket.azure.com/publishing/ for more information.Additional Presenter detailsGlobal ReachCommerce capability in 30+ countries (36 as of October 2011)w/ local currency and tax handling support Online marketing including SEM and display advertising for MarketplaceLeverage worldwide Microsoft eco-system of system integrator and resellers to sell applicationsReachbusiness users through integration in various MS products like OfficePremium ExperiencesCommerce enabled apps get preference with premium placements and priority searchesPartners own rich visualization & terms of use for their offeringsEasy discovery of applications by customers through search integrationSecure & Flexible PlatformSecure commerce platform run by Microsoft Corp.No cost (Free) publishing for ISVsUnified billing & provisioning platform Secure standards based API’s to integrate end user provisioning experienceFlexible monthly subscription pricing model e.g user based, transaction based, site base etc…Authorization and authentication model that allows secure accessSupport for free offers for easy customer acquisition
- Transition In:Key considerations for moving to the cloud are many levels deep, involving not only the technology platform and overall business ecosystem, but also include fundamental business strategy and tactical decisions.
- Transition In:One of the great things about the Windows Azure Platform is how flexible it is. You have many options that can be combined to evolve your business portfolio. Speaking Points:You can make decisions where to host all or part of your applications based on desired cost model, ability to manage and maintain systems, software licensing requirements, and desired hardware investment models. You can leverage the cloud for storage and backup for your existing apps to service your existing customers.You can extend existing on-premises applications to the cloud, growing your customer base by making your offering more accessible to different customer segments or geographies.You can move your current applications and existing customers to the cloud to remain cost competitive by passing along the savings to your customers.You can branch out and create new cloud services altogether to augment your portfolio and existing revenue streams.You can create new solutions by combining new and/or existing cloud services.But to do any of this successfully is to ensure that each one of these chosen options is part of an executed business portfolio strategy.Let’s take a look at the business strategy decisions that will provide structure, rationale and an overarching framework built for continued success.
- Transition In:As you plan for the Cloud, consider your breadth of options.Speaking Points:Consider whether you would like to simply transition an existing offering to the cloud. <click>If so, do you want to focus on converting existing customers to the cloud or develop it as a way to reach new customers that previously could not afford an on-premise solution? Maybe both? <click>Consider whether you would like to develop an entirely new offering as a SaaS application and offer that to existing customers…or branch out and use the new offering to reach entirely new market segments that have not been previously targeted.No one way is necessarily the right way. However, when developing a cloud offering that is either based on an existing application or created as an entirely new solution, be very careful not to cannibalize your existing on-premise business.By making these strategic decisions early on, you can focus your company on the planning needed to execute successfully on both the technical and business sides of your business.
- Transition In:Part of that early focus involves thinking much differently about your financial cadence and focusing on new metrics and different performance indicators than before….Speaking Points:According to Mural Consulting, a leading cloud services advisory firm, many cloud initiatives fail to reach their full potential because companies do not look at the impacts across the entire organization to maximize their chances for success in the cloud. With the cloud, many key aspects are different. To begin thinking differently for success,consider the perspective of your CFO:Additional upfront investments in R & D, sales, marketing and support are required and have a longer lead time for ROILarge upfront fees replaced by smaller ongoing payments collected and recognized over timeThere are ongoing costs associated with application deliveryAnd the cloud will require monitoring and an understanding of a whole new set of metrics and performance indicators. Sales and Marketing are also different for the cloud, where there are new pricing and licensing models, different sales cycles & compensation and different marketing tactics that are needed to be successful.With delivery over the internet and instant upgrades, promised SLAs and 24/7 support, customers need to be serviced with an entirely different model than before.So let’s take a look at each of these in greater detail.
- Transition In: Financial metrics are obviously fundamental to any business, and with cloud there are new metrics that are absolutely fundamental for any cloud/SaaS company to understand.Speaking Points:Every company is going to have slightly different metrics, but when it comes to cloud & SaaS, there are 6 metrics that are absolutely critical to understand.CMRR is the Committed or Contracted Monthly Recurring Revenue. This is the combined value of signed contracts on a monthly basis. The goal is to have a healthy flow of new and existing committed contracts as well as the monthly dollar amount of each contract being as high as possible. For example, if a customer upgrades from a basic level into a premium level package, the CMRR will increase regardless of whether any new contracts have been added.Churn Rate is a critical element of CMRR indicating the percentage of customers or subscribers, who do not renew their contracts in a given period of time.If your cloud offering is not quickly and continuously providing real business value your customers, those customers will likely cancel their account at their first opportunity which may be the next payment date or renewal date. According to Bessemer, the top most successful companies selling software as a service have a renewal rate of more than 90%. Customer Acquisition Costs (CAC) are frequently the single largest expense on the income statement. It’s important to measure and track how quickly you are able to recoup those costs on a per customer basis. According to Bessemer Partner Ventures, the “non-official” standard in the market is that the sales and marketing costs should be recouped within a year, with the following year covering the cost of administration, product development etc. C-pipe is your forward looking indicator for CMRR and CAC and another very important metric to determine the expected future health of the business.Cash flow is critical for staying solvent when payments are made in small ongoing incremental amounts over the lifetime of the contract. Many companies often use discounts for pre-payment to improve their cash flow position.Customer Lifetime Value (C-LTV) focuses on long term financial health and it is particularly important with cloud services where the overall success of the company is based not only on acquiring new customers but also on sustaining and growing the customer relationship over time. The goal is to have a continued stream of profitable payments that will increase in value over time as the customer upgrades their account and takes on additional products and services.
- Transition In: On the marketing side, the cloud creates many options for new and creative pricing for SaaS applications.Speaking Points:There are multiple methods for monetizing cloud offerings….and they are not all mutually exclusive. Many cloud providers successfully combine several methods to arrive at a hybrid pricing model. Be creative, find combinations that work, experiment… <click>Free models:These provide a basic level of service for free and then offering premium upgrades.This method significantly reduces any barriers customers may have in trying out your software. Once they have started to derive business value from it, they will quickly outgrow the limited number of features available to them and want to upgrade. Your challenge here of course is to package your features and functions in such a way as to increase the number of customers who are upgrading.Ad Based Revenue is a valid pricing method, though a tough one to successfully implement. Having said this, Google and Facebook have both generated significant revenues from advertising while providing their services free of charge for users. Other companies can also make this model work for them.Related Services charged – in this model the application is free but you may have to pay for some related service or virtual goods. Most commonly this is leveraged in free games where you can do micro transactions and in consumerwebsites <click>Per UnitPer Meter - this has applicability only in certain situations. It is good, for example for file sharing or backup applications. When it is applicable, it is often used in combination with other methods such as per user pricing. The growth goal in this scenario is to increase storage per customer.Per transaction pricing is also a common pricing method, but not applicable to every application where it may be hard to carve out discrete transaction units. The growth goal here, of course, is to increase the number of transactions per customer.Per User pricing is one of the most common pricing mechanisms. This may include number of seats or named users. Once again packaging your offering in such a way as to make premium upgrades available will help to ensure that you are providing a low end, easy point of entry for your customers and then quickly encouraging them to upgrade in order to have access to an expanded set of functions and features and/or additional users, thereby increasing your average revenue per customer. <click>Payment typesA monthly subscription is one of the most common payment mechanisms though lack of robust billing systems means that this is often billed annually in commercial sales. Consumer sales however require the billing systems to be in place even before the service is offered.Revenue Share many services which are sold via a reseller require the ISV to take a cut of the revenues and share the rest. The share is most often higher for whoever owns the brand and customer relationship.Perpetual License Fee this is seen most often in companies that offer on-premise software and have not yet fully transitioned to the cloud business model.
- Transition In:As previously mentioned though not required, SaaS applications led themselves very well to trial versions…and this creates an impactful change in customers’ buying behavior and requires a new way of selling to those changes.Speaking Points:In the traditional model, customers use your software because they paid for it.In the cloud world, customers pay you for your software because they are using it and have and continue to find value in it.This dynamic difference drives very different sales and support cycles
- Transition In:Traditional software sales are Sales Led and Sales DrivenSpeaking Points:With on-premises software, the Sales team…finds the prospectsqualifies the customerleads discussion and negotiation on pricethen closes the deal. <click>Migration or customization ramps up post-sales then quickly tapers off. <click>Support, if offered and/or purchased is introduced post-sale.In contrast,SaaS Application sales are Customer Led and Support Driven <click>the customer locates service via web searchself-qualifies via website or Live Chat Agentthen reviews demo and/or signs up for trial via website. <click>Support is offered pre and post sales via Technical Specialist or Live Chat Agent, etc <click>A customer care agent or onboarding team shows buyer how to further realize valueWith cloud services, <click>your opportunity to truly impress your prospects and customers, and keep them coming back for more, is in the first 30 to 60 days of initial contact. Beware: The highest churn rate most often occurs in the first 90 days. Your sales people may still play a role but it is more of a back seat role where they often act as the facilitator between the customer and support.In the post sales phase, support type resources continue to play a leading role in proactively engaging with the customer and building on the relationship established in the pre-sales phase. They will continue to drive effective usage of the product, introduce additional services and products and ensure that customer satisfaction remains high. Because of this, a different approach to the sales team is often required.Breaking your sales force into 2 groups can help achieve a balance to meet customers needs… Hunters: are the folks who focus on finding and closing leads…and can do it Farmers: are those who provide care and feeding to customers and increase the rev/customerIn addition to a different sales team structure, sales compensation will likely have to change as well.
- Transition In:Traditional software sales are Sales Led and Sales DrivenSpeaking Points:With on-premises software, the Sales team…finds the prospectsqualifies the customerleads discussion and negotiation on pricethen closes the deal. <click>Migration or customization ramps up post-sales then quickly tapers off. <click>Support, if offered and/or purchased is introduced post-sale.In contrast,SaaS Application sales are Customer Led and Support Driven <click>the customer locates service via web searchself-qualifies via website or Live Chat Agentthen reviews demo and/or signs up for trial via website. <click>Support is offered pre and post sales via Technical Specialist or Live Chat Agent, etc <click>A customer care agent or onboarding team shows buyer how to further realize valueWith cloud services, <click>your opportunity to truly impress your prospects and customers, and keep them coming back for more, is in the first 30 to 60 days of initial contact. Beware: The highest churn rate most often occurs in the first 90 days. Your sales people may still play a role but it is more of a back seat role where they often act as the facilitator between the customer and support.In the post sales phase, support type resources continue to play a leading role in proactively engaging with the customer and building on the relationship established in the pre-sales phase. They will continue to drive effective usage of the product, introduce additional services and products and ensure that customer satisfaction remains high. Because of this, a different approach to the sales team is often required.Breaking your sales force into 2 groups can help achieve a balance to meet customers needs… Hunters: are the folks who focus on finding and closing leads…and can do it Farmers: are those who provide care and feeding to customers and increase the rev/customerIn addition to a different sales team structure, sales compensation will likely have to change as well.
- Transition In:So let’s now hear a bit about how these issues are tackled in the real world, from partners who have been right where many of you are today: at the very beginning or at the outset of this process.
- Key Point: By building new for the cloud, or migrating part or all of existing applications, ISVs of all sizes are already experiencing significant success with the Windows Azure platform. Kentico is an example of an ISVs that has achieved measurable business value. Using Windows Azure, they were able to significantly reduce costs for their customers and expand their business.Here is a summary of their experience:Web content experts at Kentico help small companies to enterprise businesses improve their web presence and increase their marketing outreach by using Kentico CMS for ASP.NET, a set of extensible and easy-to-use website creation modules. In response to customer interest and industry changes, Kentico added cloud capabilities to its on-premises solution by porting Kentico CMS to the Windows Azure platform from Microsoft. By using the cloud-enabled version of the solution, customers can create engaging and highly scalable websites without the need for up-front hardware investments. Kentico also uses Windows Azure to bring new features of its solution to market more quickly, which provides customers with a better product, strengthens sales opportunities for Kentico partners, and allows Kentico to refine its business model.A link to the full case study – http://www.microsoft.com/casestudies/Windows-Azure/Kentico/A-Move-to-the-Cloud-Benefits-Content-Management-Firm-Its-Partners-and-Customers/4000009611
- Key Point: By building new for the cloud, or migrating part or all of existing applications, ISVs of all sizes are already experiencing significant success with the Windows Azure platform. AZaaZ is an example of an ISVs that has achieved measurable business value. Using Windows Azure, they were able to significantly reduce costs for their customers and expand their business.Here is a summary of their experience:Based in Singapore, aZaaS creates software-as-a-service solutions that help customers run their businesses. Customers were frequently asking for customizations to aZaaS software, so the company decided to build a database-centric business application that could be easily adapted by customers to suit their needs. It created the aZaaS Cloud Application Engine, which customers tailor to manage human resources, customer relationships, inventory, accounting, purchasing, expenses, and more. The solution takes advantage of Microsoft SQL Azure capabilities for relational database management, multitenancy, and high availability. The company hosts the solution on the Windows Azure platform and deploys application instances at Microsoft data centers. aZaaS and its customers benefit from a speedy time-to-market, reduced costs, a highly scalable solution, and a sustainable business model.A link to the full case study – http://www.microsoft.com/casestudies/Windows-Azure/aZaaS/Cloud-Provider-Offers-Customizable-Application-Reduces-Customer-Costs-by-80-Percent/4000010017
- Key Point: By building new for the cloud, or migrating part or all of existing applications, ISVs of all sizes are already experiencing significant success with the Windows Azure platform. Softeng is an example of an ISVs that has achieved measurable business value. Using Windows Azure, they were able to significantly reduce their time to market. Here is a summary of their experience SOFTENG is a Microsoft Gold Certified Partner known for innovative technology. The company created Softeng Portal Builder, a solution that manages web development tasks, incorporates business processes, and analyzes user behavior. To deploy the solution, the company needed to host it in a data center environment that could support Microsoft .NET Framework technologies and handle complex scalability needs. It chose the Windows Azure platform for maximum performance, high availability, and agility in deployment. Seven employees spent 12 weeks to make Softeng Portal Builder compatible with Windows Azure, and the company took advantage of Microsoft SQL Azure. SOFTENG benefits from reduced costs, quick time-to-market, improved customer confidence, and opportunities to innovate, while its customers get a better return on investment.A link to the full case study - http://www.microsoft.com/casestudies/Case_Study_Detail.aspx?CaseStudyID=4000008180
- Key Point: Holtl Retail Solutions is an another example of an ISV that benefited by building applications on Azure. They were able to grow their business and addressable market, reaching smaller retailers with their cloud offering hosted on Azure.Here’s a summary of their experience.POSFlow from höltl Retail Solutions, a Microsoft Gold Certified Partner, is the point-of-sale (POS) system of choice for more than 50,000 users in several European countries and is especially popular with midsize retailers.To enlarge the product’s customer base and make POSFlow a cost-effective option for smaller businesses, höltl migrated the software to the Windows Azure platform.Before, a höltl technician needed four hours to set up POSFlow onsite and to train the customer in how to use it; now, even the smallest retail customers can set it up themselves in just four minutes. A link to the full case study - http://www.microsoft.com/casestudies/Case_Study_Detail.aspx?CaseStudyID=4000007121
- Key Point: By building new for the cloud, or migrating part or all of existing applications, ISVs of all sizes are already experiencing significant success with the Windows Azure Platform. sharpcloud is an example of an ISVs that has achieved measurable business value. Using Windows Azure, they were able to reduce time to market and save $500,000 in costs.Here is a summary of their experience:sharpcloud was founded on a revolutionary idea: to enhance strategy development efforts by using the interactive and collaborative tools familiar to people who use social networking sites. But turning that idea into a real service for corporate users required a global series of data centers—far beyond sharpcloud’s reach. By taking advantage of Microsoft partner programs and familiar Microsoft technology, sharpcloud developed and now hosts its solution on the Windows Azure platform . The company estimates that it is 200 to 300 percent more productive than it would have been on a competitive platform, saving up to U.S.$500,000 annually. Running on Windows Azure , sharpcloud has gained the confidence of major corporations such as Fujitsu, which finds that the sharpcloud service reduces its strategy planning time by 75 percent.Link to case study: http://www.microsoft.com/casestudies/Case_Study_Detail.aspx?CaseStudyID=4000006685
- Key Point: By building new for the cloud, or migrating part or all of existing applications, ISVs of all sizes are already experiencing significant success with the Windows Azure Platform. Sitecore is an example of an ISVs that has achieved measurable business value. Using Windows Azure, they were able to create a compelling web solution that will increase their business growth by 200%.Here is a summary of their experience:With internationally recognized companies among its client list, Sitecore software development is always looking towards the next big thing. As soon as cloud technology became available, customers started requesting it. The company responded by developing applications hosted on the Windows Azure services-based operating system. Sitecore can now offer the first deployment solution that companies can use to publish to the cloud in one click.Link to case study - http://www.microsoft.com/casestudies/Case_Study_Detail.aspx?CaseStudyID=4000008283
- Link to case study and video:http://www.microsoft.com/casestudies/Windows-Azure/OCCMundial.com/Job-Listing-Web-Site-Scales-Up-Solution-Reduces-Costs-by-More-Than-U.S.-500-000/4000005802
- Company OverviewCanadian not for profitEstablished to help Canada achieve sustainable podium performances at the Olympic and Paralympic gamesOwn The Platform app is marketed to athletes, sports organizations, financial monitoringBusiness ChallengeLimited internal IT infrastructure Global 24/7 access requiredPeak workloadsInconsistent desktop images
- Company OverviewVRX Studios IncVRX Studios is a full-service photography company and Microsoft Certified Partner. It provides content production, licensing, hosting, and distribution services to the global travel and hospitality industries. The company serves more than 10,000 hotels, including Hilton Worldwide, Wyndham Worldwide, Best Western, Fairmont Hotels & Resorts, and Hyatt Corporation.Business ChallengePROBLEM: VRX Studios was using a 10 year old homegrown content management system. As their digital assets increased exponentially, the system became too complex to support the company’s image archive. They needed a new solution that did not exist:Massively scalableHighly flexibleGlobally accessibleAffordableFuture PlansContinued feature developmentConnectivity with customers’ content management systemsWindows Azure Marketplace DataMarket
- Company OverviewPrivately held Canadian companyDevelops a variety of point-of-care, education, quality assurance and other web-based software applications for healthcareMain product: Q-path (point-of-care ultrasound processing and data management)Manage ultrasound education, credentialing, quality assurance, billingTelexy’s Q-path strategyFocus on developing and selling software applicationsEliminate the need to sell and service hardwareApplications available worldwideBusiness ChallengeQ-Path was gaining momentum as an on-premise solution for healthcare practices Barriers existed to the use of ultrasound at the point-of-careLack of training / Ultrasound experts not available locally Significant potential for customers (medicaloffices) to offer ultrasound services without requiring an ultrasound specialist, to rapidly share ultrasound images with other practices to provide rapid diagnostics for patients.SolutionQ-Path 2.0 is built specifically to leverage AzureReliable service and Security – very important in healthcare
- Key Points:Siemens Expands Software Delivery Service, Significantly Reduces TCO Siemens is a global powerhouse in electronics and electrical engineering, operating in the industry, energy, and healthcare sectors. The company has around 410,000 employees, and a worldwide reputation for innovation and achievement.Situation/Solution:To deliver software efficiently, reduce costs, and get more complex software packages to more devices, Siemens wanted to expand the capacity of its software distribution system.Siemens used the Windows Azure™ platform to deliver software packages from a central Internet-based storage location to thousands of devices.Key Advances:Dynamically scale global software distribution while reducing costs, enhancing services, and avoiding significant new capital investmentLink to case study and video: http://mscomapps/gcrpinternal/Case_Study_Detail.aspx?CaseStudyID=4000005945
- Transition In:So we have heard about those who have gone before you, those active in the SaaS market and making it work for them.Speaking Points:To recap, the biggest revenue and growth opportunity in computing today is in the cloud with SaaS applications – so it is time and the time is NOW.The Windows Azure Platform has the technology, partner support, and marketplace programs to ensure your success as you branch out into the cloud.Succeeding requires new thinking, new strategy and new ways of doing. Engage your whole company to ensure you are set up for success.In closing…Microsoft has a long history of bringing to life powerful visions of the futureand is committed to collaborating with thousands of you, our partners, in the cloud. We are here to support youand at Microsoft, we are ―all in.
- Find the local Windows Azure Incubation contact name and email via the Field map posted to the Windows Azure ISV wiki at:http://sharepoint/sites/Azure_ISV_wiki/SitePages/Who's%20Who.aspx
- Key point: As your organization evaluates the multiple environments available to create a cloud based offering, it is important to understand that only PaaS takes away all of the extraneous management tasks that are not directly related to your value add.Across different types of hosted and cloud offerings the resources your organization manages are different:On-Premise: If you develop, test and help customers deploy your offering on-premise, all the components of the stack starting from the base hardware to middleware and right up to the application are managed by you. The place where your organization adds value however is at the very top where the application and the data sits.Managed hosting: If you have already moved part of the way to a hosted environment that manages some of the components of the hardware and may manage middleware partly as well, you still spend a lot of energy on managing the remaining parts of the stack where you don’t add value. You also have to predict usage, rent servers and hope you predicted right. There is no inbuilt process for scaling.IaaS: In an IaaS offering some of this headache of managing non-value added components of the stack goes away however you still manage the databases and security and integration services….so this is better than the 2 prior alternatives but still not ideal.PaaS: This is the offering where your organization is able to use its energies and talent most effectively – in creating more innovative applications, in reaching new markets, and in overcoming your businesses challenges versus managing infrastructure or middleware. The only components of the stack that you manage and focus on are those where you add value and therefore those that are tied to your revenue-stream directly.
- Transition In:When it comes time to offer your solution, you can also turn to the online Windows Azure Marketplace where you can list and/or sell your SaaS apps and premium datasets to customers across the globe.Speaking Points:Key Points: There are 2 ways in which ISVs can work with Microsoft on the Windows Azure PlatformThe ISV is the direct interface with the customer The customer buys application and Windows Azure from the ISV, then the ISV pays MicrosoftThe ISV builds the app for the customer, but Microsoft owns the billing relationship with the customer