orbitera isv ebook - clarity in the cloud
TRANSCRIPT
CLARITY IN THE CLOUD | eBOOK
8252 ½ Santa Monica Blvd. West Hollywood, CA 90046 www.orbitera.com • [email protected] Copyright © 2016 Orbitera, Inc. All rights reserved.1
Clarity in the CloudThe ISV’s Guide to Doing Business in the Cloud
an eBook from the team at Orbitera
THE RECENT HISTORY OF CLOUD SELLING
Given the growth of cloud computing, it’s no secret that
enterprises are increasingly deploying and running software on
cloud platforms. Selling software and services in the cloud is
no longer an afterthought or an add-on capability: if you aren’t
making it easy for customers to find, purchase, and deploy your
software on cloud, you can bet your competitors are. While
2013 and 2014 laid the groundwork for businesses to capitalize
on cloud commerce, 2015 saw smart companies using unique
strategies to remove friction at all stages of a transaction.
History has shown that the success of cloud services is
predicated on the ease with which customers can buy and use
services, and the ability of ISVs to deliver these services.
Visibility into cost and usage of services are increasingly critical
factors on which buyers base purchasing decisions. ISVs need
to ensure they deliver products that provide their customers
with the tools they need for billing, analytics, and seamless,
complete visibility into usage and other data. Ideally, software
vendors bill customers only for what they use, allowing
customers to scale usage of the software based on the
value they derive from it. As with cloud infrastructure, the ISV
“Selling software and services in the cloud is no longer an afterthought or an add-on capability... History has shown that the success of cloud services is predicated on the ease with which customers can buy and use services, and the ability of ISVs to deliver these services.”
CLARITY IN THE CLOUD | eBOOK
8252 ½ Santa Monica Blvd. West Hollywood, CA 90046 www.orbitera.com • [email protected] Copyright © 2016 Orbitera, Inc. All rights reserved.2
benefits from the reduced purchase friction
and the customer benefits by never having
to worry about purchasing shelfware.
Traditionally, vendors were able to sell
discrete SKUs to customers. Customers
knew how much they were buying ahead
of time, issued a purchase order to a
vendor, and received an invoice for the
purchase. ERP systems, internal processes,
even compensation was designed around
this concept. Cloud has turned this
paradigm on its head. Cloud vendors have
proven that a model where customers
pay in arrears, only for what they consume,
outperforms the shrink-wrapped model.
As a result, a transition has been underway
from an era when consumers bought
shrink-wrapped solutions to a landscape
where businesses are purchasing fully-
managed cloud-based services.
These services are pay-as-you-go, use-
what-you-need, and try-before-you-buy.
Customers self-serve further along in the
buying process, changing the traditional
role of sales rep from gatekeeper to
enabler. For an ISV to succeed, they
must adapt to that model by offering
transparency and the very services
people can get themselves. ISVs can
further enhance the value of the solution
by providing support and education.
This shift has created a unique set of
operational challenges for ISVs as
they adapt their processes, controls,
pricing, and billing to enable customers
to consume solutions in this fashion.
This challenges the largest producers
of software, such as IBM, who has seen
the impact on their top and bottom line.
According to a recent Jefferies report1,
“Management noted that software results
were negatively impacted by weakness
1 “Software IBM 4Q15: Weak Software Results,” Jefferies Equity
Research America, January 20th 2016
in transactions (e.g. license) from large
customers during the quarter. This part
of the business makes up about 30% of
total software, and is being negatively
impacted by the flexibility of consumption
options IBM is offering to its clients.”
While customer behavior has changed with
the rise of hyperscale cloud platforms—
customer demand is what drives the
phenomenal growth of AWS, Azure, and
Google Cloud—there’s a vital role and
opportunity for ISVs. While cloud providers
often have basic services that may mimic
many ISV solutions, these are often
one-size-fits-all, generalized options. ISVs
bridge the gap with higher-performing,
portable, and well-integrated solutions.
Forward-thinking software vendors
are adopting the principles of cloud
consumption to enterprise software.
Nowhere is this more prevalent than
with AWS marketplace and Azure
marketplace, where customers can
browse solutions and deploy them onto
the aforementioned platforms.
Marketplaces still play a critical role
by allowing consumers to educate
themselves, kick tires and see what
solutions are available. Marketplaces
also present challenges for ISVs—how
to stand out against the other available
solutions, connect with customers, and
maintain control over distribution.
Simply put, an ISV’s solutions have to be
present in the large marketplaces, but
cloud provider marketplaces represent
only one route of many to ISV software in
CLARITY IN THE CLOUD | eBOOK
8252 ½ Santa Monica Blvd. West Hollywood, CA 90046 www.orbitera.com • [email protected] Copyright © 2016 Orbitera, Inc. All rights reserved.3
the cloud. ISVs are realizing the need to maintain control over
the customer experience and enable sales models that aren’t
available through third-party marketplaces.
How do ISVs accomplish this? First, decide on how your
software is sold—direct, through the channel, or a combination.
Next, decide on a platform to expose your software to
customers. The platform must be cloud-agnostic, support both
on-premise and external clouds, support consumption and
usage billing, and support the go-to-market models that are
critical for your business. Lastly, make it easy for customers to
deploy your software while protecting your intellectual property.
Today, large companies have missed out by focusing on the
marketplace as the only place where they’re selling their
software. ISVs can be more agile and satisfy more customers
by leveraging marketplaces as one of many channels for
customers to consume their products.
SERVE YOUR CUSTOMERS IN THE CLOUD
Your customers are already doing business everywhere,
especially in the cloud. They’re leveraging speed and flexibility
in everything they do and expect the same benefits from
the solutions they use. They want the best tools—especially
those that provide clarity of billing and analytics. How much
data is being used; what is driving demand; are there analytics
available continuously and immediately?
Because of the way you’re tracking and selling to your customers—
via the cloud—there’s another new challenge: they want to
know why they’re paying what they’re paying. Ultimately, the
How to Control the Customer Experience and Enable Sales Models
1. Determine sales model
(direct, channel, or a
combination)
2. Decide on a platform to
market your software to
your customers
3. Make it easy to deploy
your software
CLARITY IN THE CLOUD | eBOOK
8252 ½ Santa Monica Blvd. West Hollywood, CA 90046 www.orbitera.com • [email protected] Copyright © 2016 Orbitera, Inc. All rights reserved.4
landscape has changed and packaged or shrink-wrapped
software is no longer the norm. Delivering solutions virtually is
how business is done.
Which brings us to the three main problems you face when
leveraging cloud-commerce solutions for your customers.
Let’s take a look at your biggest obstacles to success.
THE THREE CLOUD COMMERCE CHALLENGES FOR ISVs
DISINTERMEDIATION
When software is being sold to customers through third-
party marketplaces, ISVs lose the opportunity to connect
with customers directly. Without a direct link to customers,
ISVs are at a disadvantage when marketing features of their
solution which impacts both customer retention and the
ability to upsell additional products. It’s harder for sales reps
to get access to the data they need to determine how to best
approach a customer.
It’s also harder to reward customers for their loyalty through
volume discounts and similar strategies. Finally, customer usage
data is extremely valuable, and giving third-parties access to data
about how your customers are using your products can erode
competitive and IP advantages over the long-term.
CLARITY IN THE CLOUD | eBOOK
8252 ½ Santa Monica Blvd. West Hollywood, CA 90046 www.orbitera.com • [email protected] Copyright © 2016 Orbitera, Inc. All rights reserved.5
OPERATIONS
Cloud has enormously accelerated the rate
at which customers can try and purchase
new technologies. The reduced friction
is a win for all parties as customers grow
consumption and ISVs get predictable
recurring revenue. Unfortunately, most
organizations are not equipped to deal
with the deluge of data coming their
way from consumption models while
keeping their businesses humming along.
Automation is key—manual touch points
create friction and must be eliminated
requiring investment in tooling and
building new processes to support the
cloud model.
Ideally, this apparatus is abstracted
from the customer experience
completely—the customer only sees
the tip of the iceberg—with all the
processes supporting the sale and
deployment of your service operating
seamlessly to provide an excellent,
streamlined experience.
CONTROL
Don’t be out of control by letting
someone else manage implementation,
support and on-boarding. ISVs can take
charge and be in control by managing
the customer experience. The best thing
for an ISV in keeping cloud commerce
reins tight is they can respond quickly
and effectively to any issues that arise.
Customer service is maximized and
happier customers are the ones that buy
more from you in the long run.
Some software companies maintain
control by paying attention to all these
factors. They help deliver security
storage, efficient access, log management
and security, and a collection or suite of
other products that can make a business’
life easier. In fact, the functionality
provided to ISVs by some of these
software as a service vendors is nothing
short of amazing.
Through the services provided, ISVs
are able to give their customers an
experience that’s better than what’s
possible via the marketplaces. Further,
the capabilities in terms of tracking usage,
accurate and transparent billing, and
providing necessary bandwidth is the
ideal solution mentioned at the start of
this eBook.
The Three Main Cloud Commerce Challenges for ISVs
1. Disintermediation
2. Operations
3. Control
CLARITY IN THE CLOUD | eBOOK
8252 ½ Santa Monica Blvd. West Hollywood, CA 90046 www.orbitera.com • [email protected] Copyright © 2016 Orbitera, Inc. All rights reserved.6
CLARITY THROUGH A CASE STUDY
Some organizations require a bit more convincing when it
comes to earth-shattering breakthroughs that profess to
change the technology and business landscape. In the case
of ISVs using a relatively new service that makes life easier for
every entity involved, it’s perfectly understandable that there
might be skepticism.
One example of a broad change in the software delivery
model is the shift from a packaged software purchase to a
cloud subscription model. The company that leveraged this—
and seems to have succeeded—is Adobe. They have proved
that software no longer needs to be tied to a workstation or
delivered on disks or drives.
After years of providing creative professionals with software
to process photos, build marketing materials, create Websites
and essentially run advertising departments worldwide,
Adobe decided to streamline the process. They had
experienced some level of piracy, but more damaging was
their customer base was conditioned to use software well
past its planned expiration date. Some creative studios and
professionals, for example, could be found using version 3 of
their Creative Suite software even as Creative Suite 5.5 and
beyond were being introduced.
“The company that leveraged [a broad change in their software delivery model]—and seems to have succeeded—is Adobe. They have proved that software no longer needs to be tied to a workstation or delivered on disks or drives.”
CLARITY IN THE CLOUD | eBOOK
8252 ½ Santa Monica Blvd. West Hollywood, CA 90046 www.orbitera.com • [email protected] Copyright © 2016 Orbitera, Inc. All rights reserved.7
This customer behavior affected the
bottom line but worse, affected the
customer experience with the software.
New capabilities were introduced and
bugs were eliminated in new versions, yet
customers were still plugging away on
old software. So Adobe decided to move
to the cloud entirely and take control of
their product and the experience.
In 2011, Adobe announced the path
it was planning to take with a solution
housed only in the cloud. In 2013, they
followed up by telling customers they
would no longer print software disks
and distribute their product on DVDs.
The only way for their customers to use
future versions would be to sign up for a
Creative Cloud subscription. There was
a little backlash at first, but the method
worked for the most part and offered
some advantages to both Adobe and its
customer base.
Through this process, the software
is never out of date. For a nominal
fee—less than the cost of buying the
packaged version of software on DVDs—
users would enjoy unfettered access to
the latest creative software. Adobe even
provided a way for users to leverage
the software when not hooked up to
the Internet. In fact, the company bent
over backward to make it easy for users.
Currently, an Adobe customer only has
their software validated once per month
to ensure it’s been paid for and
up-to-date.
In a few years, Adobe has reeducated
its customer base to the benefits of
cloud-based software and has a much
more accurate method for forecasting
sales and revenue stream. They also
have exceptional control over the
customer experience and can upsell
with new products any time they see
the opportunity.
Problem
Adobe’s customer base was
conditioned to use out-of-date
software, affecting the bottom line
and customer experience.
Solution
In 2011 Adobe announced a solution
housed entirely in the cloud. By 2013,
distribution of software disks had
stopped. Customers now sign up
for a Creative Cloud subscription
enabling them to always use the
most current version of software.
CLARITY IN THE CLOUD | eBOOK
8252 ½ Santa Monica Blvd. West Hollywood, CA 90046 www.orbitera.com • [email protected] Copyright © 2016 Orbitera, Inc. All rights reserved.8
Interested in learning how Orbitera
can help your business transition
to selling cloud-based software
and services?
Contact us for a demo at:www.orbitera.com/demo
CONCLUSION
The growth of cloud services over the past several years
has been nothing short of spectacular. Customers that have
traditionally been forced to pre-pay for packaged software
and services can now unlock growth by closely tying what
they pay to the value they get. The friction between ISVs and
these customers is reduced and new products and fixes to
existing solutions can be done in the blink of an eye.
At Orbitera, we have helped a wide variety of software and
services ISVs build profitable businesses centered on cloud
services. We’ve also recognized that customers demand more
functionality from the solutions they purchase. Transparency,
insight, and customer experience reign supreme. If you’re
interested in learning more about how Orbitera can help
your business accelerate its transition to selling cloud-based
software and services, we encourage you to contact us for a
demo at www.orbitera.com/demo.