Link: How the subscription paradigm flips the cloud financials market

In the subscription world, you must understand the lifetime relationship with the customer – all the upsells and renewals and how they all build on one another. You also must understand the revenue, billings, and cash derived from those-again, over the entire lifetime of the customer relationship.

In an ASC-606 world, you must track all performance obligations, which is a fancy term for your promises – both the ones explicitly written in your customer agreement and all those pesky side terms that your sales rep slipped into the free-text field on the quote. You must also know all the implicit promises that people make in the deal or that have become ingrained in your business processes.

Source: How the subscription paradigm flips the cloud financials market

Oracle losing legacy software sales, growing (public?) cloud sales

Once again, the key metric of new software license sales was off—falling 19% to $1.35 billion compared to last year, and missing analysts’ expectations of $1.44 billion.

On the other hand:

“Our cloud revenue will be larger than our new software license revenue next fiscal year, when the transition will be largely complete.”

And:

“Our cloud applications goal is to be the world largest and most profitable SaaS company. We are growing our cloud business much faster than Salesforce.com, and we can beat them to the $10 billion mark, but it’s going to be close,” Ellison told analysts on the call.

Also:

Database-as-a-service, which basically runs a company’s database on a third party’s cloud, is a fast-growing category for Oracle, according to the company. In fact, Oracle co-CEO Mark Hurd said that business was up 700% year over year, hitting $100 million in quarterly revenue.

Source: Oracle’s Cloud Business Has Yet to Surpass Its Falling License Sales

Lesson learned from India: Four common traits of a profound digital transformation

Agatha over at 451 visits Indian outsources, commenting on how they’re changing to do more cloud related work:

Aside from spending a great deal of effort on building a market-driven culture, the company has instituted a fundamental shift in workforce mindset by moving away from doing what they are told and on to identifying new opportunities to add value and delight customers.

Also:

Aside from spending a great deal of effort on building a market-driven culture, the company has instituted a fundamental shift in workforce mindset by moving away from doing what they are told and on to identifying new opportunities to add value and delight customers.

And:

Wipro reported that public cloud partners serve as a key building block of its hybrid cloud migration strategy. For public cloud deployments, it has teamed up with AWS, Microsoft Azure, SoftLayer, Oracle and vCloud Air to provide managed public cloud offerings. Meanwhile, public cloud partners increasingly represent an important sales and marketing channel for HCL Technologies, with a number of deals having significant public cloud roadmaps. There are a few providers that focus on building vendor-specific expertise and credibility, such as Infosys, which is the premier consulting partner for AWS, and CMI industry advisory group. CMI at TCS claims to have more than 120 certified AWS architects and over 800 trained associates.

Source: Lesson learned from India: Four common traits of a profound digital transformation

Link: Gartner: Cloud Email Adoption Still in Early Stages

“The cloud email market is still in the early stages of adoption, Gartner said, with 13 percent of identified publicly listed companies globally using one of the two main cloud email vendors, Microsoft Office 365 or Google Apps for Work, respectively. With the majority of companies opting for smaller vendors, the cloud email opportunity is still ripe for channel partners… According to Gartner, 8.5 percent of public companies in its sample of nearly 40,000 public companies globally use Microsoft’s Office 365 service, while 4.7 percent use Google Apps for Work.”

Seems pretty crazy, but I’m sure there’s sunk costs, security and data handling issues, and, well, sometimes it probably is cheaper.

Source: Gartner: Cloud Email Adoption Still in Early Stages

I’m always wary of discounting Office: the closer you are to the corporate world, the more you appreciate its reach, but on the flip side, the further away I get from that world the more I appreciate how much of Office’s importance is based on habit rather than need.

Ben Thompson in his April 30th, 2015 newsletter.

The flywheel go-to-market model

The Flywheel Model differs from the Traditional Model in one fundamental regard. The enterprise sales team is exclusively inbound. They are explicitly denied the option of seeking business outside the customer base, and must gin up business from only existing customers. The enterprise sales team is an up-sell and cross-sell team. In fact, so is the mid-market sales team. Only the SMB marketing team is permitted to acquire new leads. In short, the Flywheel flips the traditional idea of enterprise people as hunters and others as farmers.

Also, some constraints on market match, such as:

Flywheel models work very well in sectors where the ultimate buyer has is very difficult to sell or market to, (e.g., product managers and engineers). The high customer acquisition costs of these customer types are driven by their software evaluation and product purchasing behaviors which differ from the norm. These customer segments often prefer educating themselves than relying on a salesperson. Engineers don’t buy software the way marketers do.

The flywheel go-to-market model

Feedly grows subscribers 900% from 2013 to 2015

As a heavy RSS user, I care a lot about Feedly. So, when they announced that they’d gotten 50,000 paid subscribers, I threw together some quick math:

Feedly growth from 2013 to 2015
Feedly growth from 2013 to 2015

This isn’t a perfect comparision because the terms of subscriptions are different. The first 5,000 subscribers came from a Kickstarter selling a lifetime subscription for $99 (I was lucky enough to get in on that). The next batch – 45,000, I presume – are paying $45/year.

Still, there’s some cash. Hopefully it’s eough to keep it going. I actually just use Feedly for a backend as I do most of my reading in Newsify. What I’d really like is Flipboard to work with Feedly. But, you know, this isn’t the mid-2000s when things like that would happen.

ERP is moving to SaaS all the sudden

The proportion of enterprises that have replaced or plan to replace existing ERP systems with SaaS has doubled from 12 to 24 percent in the past year, according to research published this week by industry analyst firm Forrester.

In addition, the numbers planning to use SaaS alongside on-premise ERP — for example in ‘two-tier’ ERP deployments — leapt by more than half to 41 percent. Taken together, the survey shows that 65 percent of enterprises expect to be using SaaS in some ERP role before the end of 2015 — a massive increase of two thirds on what respondents were saying a year ago.

ERP is moving to SaaS all the sudden

By 2019, 67 percent of software programmers will primarily be developing in the cloud, up from 18 percent today, predicted Evans Research.

Evans prediction in the tail-end of this piece on IBM going SaaS

Rainforest QA speeds up continuous integration cycle with blended cyborg model for testing (451 Report)

When I spoke at HeavyBit sometime ago on how to deal with analysts, I meet a several interesting development tool folks. One of them was Rainforest QA. I did a recent write-up of the company, available to 451 subscribers (a free trial is just a lead-gen away!).

Here’s my take on the company:

As we opined last year, software development has changed dramatically, for the better, in recent years. The rise in demand for mobile and Web applications has been fueled by the broad availability of cheap, fungible infrastructure in the form of the cloud – seeding the ground for the code-slinging set that’s seeking to inject software into the world’s every nook and cranny. The testing, or QA, step in the software development lifecycle has always been a point of contention, often relying on labor-intensive manual testing or developer cycles to continually script automated testing: both are expensive, tiresome options for those wanting to deploy code weekly into production. Rainforest QA has an innovative approach to speeding up testing for Web UIs, and we look forward to seeing whether their method cures QA ills.

Read the full report over at 451.

Rainforest QA speeds up continuous integration cycle with blended cyborg model for testing (451 Report)

451 Research: Boundary wants to be your MOM – Boundary

Most of what I write professionally is behind a paywall now, so it’s fun when something gets unleashed. One of our clients, Boundary, re-printed a piece on them I wrote recently, which provides an update and overview of their business, and speaks to their new VPC-driven private cloud offering.

Here’s an excerpt of the customers section, which is good for a quick, numbers-driven take on Boundary’s momentum:

Boundary reports 100 paying customers and about 1,000 non-paying customers in its ‘freemium’ model. Its primary customer base thus far has been cloud-native customers such as SaaS companies – Okta and Urban Airship, for example. The company says these types of customers account for 50% of its customer base. Boundary does have ‘traditional’ customers like Johnson & Johnson, which accounts for about 80% of revenue. The company says its average deal size is now $60,000, up from $25,000 in July 2013 (both figures annually, per customer), with several customers spending more than $100,000 per year. In each case, these customers have been looking to support applications they’ve written that are deployed to the public cloud. Boundary says that many customers are from the IBM Netcool customer base and are looking for better event management. The private cloud version of Boundary should help address that pull further, allowing monitoring of applications on both sides of the firewall, not just in the public cloud.

451 Research: Boundary wants to be your MOM – Boundary

1/5 of surveyed IT buyers using cloud office suites

So says a recent survey of 155 IT buyers. Also, this depressing note for people who like innovation:

Ranking on the low end of priorities are features that get a lot of attention in the market for their razzle-dazzle but apparently aren’t very interesting yet in the real world. Those include the ability for multiple users to simultaneously co-edit documents, which is a big Google Docs feature, and mobile apps for iOS and Android devices, which indicates there isn’t a lot of interest in using office suites with tablets just yet.

1/5 of surveyed IT buyers using cloud office suites

One of SAP’s first SaaS attempts shifting around

While some reports had that SAP’s Business ByDesign was being slowly shut-down, the Enterprise Irregulars list pointed out a Tweet from Vishal Sikka that it was more of a transition, one that will ROCK no less.

Whatever the case, and perhaps this is all rumors as well, here’s a good chunk of info from the original piece in Wirtschaftswoche (I don’t read German, so I’m just going off the Reuters story):

The magazine reported, however, that the product, which cost roughly 3 billion euros to develop, currently has only 785 customers and is expected to generate no more than 23 million euros in sales this year.

I like keeping up with these early cloud build-outs – it’s good foder for figuring out how large, incumbent tech companies do with updating their portfolios. Back at RedMonk James covered ByD pretty closely, here’s a piece from 2009. It seems like a really good way to go down-market. As I recall, there was a lot of in-housing of the technologies, which has always been SAP’s, well, “thing.” And the fact that they’re moving it to HANA is more of that. NIH doesn’t portend failure at all: Google is rife with NIH, building its own platforms and such.

The bigger thing to pay attention to is (a.) enterprise software vendors need SaaS versions, or at least versions that will take advantage of private cloud technologies to ease management and cost control, and, (b.) making a SaaS that’s “enterprise grade” is hard.

One of SAP’s first SaaS attempts shifting around

LinkedIn’s Market Cap Passes Salesforce, Long The Bellwether Symbol Of Cloud Services

Alex Williams:

According to the Faber-Novel study, almost 50 percent of LinkedIn’s revenues come from its talent solutions offerings. The company updates its code three times a day, which helps fuel a rapid development cycle, continually offering premium services to see what has most resonance.

Am I wrong to think that LinkedIn would be a good investment? Too late?

LinkedIn’s Market Cap Passes Salesforce, Long The Bellwether Symbol Of Cloud Services

Survey: Email, calendaring, HR top list of SaaS buyers’ priorities

“Most IT decision makers have had personal experience with personal webmail or Web calendaring applications, such as Google Calendar,” Scavo wrote. “It is not surprising, then, to see these personal productivity applications leading the list of SaaS investment plans.”

I can’t wait for consumer tech to take over. More than likely it’s a generational thing – what I call a “retirement problems” the IT decision makers who are comfortable with the old white-collar toolchain (and haven’t “grown up” on the new, mostly Google- and Apple-driven toolchain) are the boy with his finger in the dike.

Survey: Email, calendaring, HR top list of SaaS buyers’ priorities

Integration is gonna be a problem for cloud

Enterprise software integration is hard and risky. Once you’ve invested in integrating your enterprise applications with one another (and/or with your partners’ applications), that integration becomes the #1 reason why you don’t want to change your applications. Or even upgrade them. That’s because the integration is an extension of the application being integrated. You can’t change the app and keep the integration. SOA didn’t change that.

Integration is lockin

“While sitting in a bar after work, Zill fired up the Workday app on his smartphone. A list of to-do…”

“While sitting in a bar after work, Zill fired up the Workday app on his smartphone. A list of to-do items appeared on the screen. Zill clicked on one item—a potential hire—and pored over the dossier compiled by his co-workers. Satisfied with the prospect’s credentials, Zill jabbed the approval button with his finger and hired a new worker—and did all that before finishing his Guinness. “We don’t recommend something like this happening at a bar,” Zill says. “But the reality is that life happens everywhere now.””

http://mobile.businessweek.com/articles/2012-06-14/the-two-horseman-of-the-enterprise-software-apocalypse

While sitting in a bar after work, Zill fired up the Workday app on his smartphone. A list of to-do items appeared on the screen. Zill clicked on one item—a potential hire—and pored over the dossier compiled by his co-workers. Satisfied with the prospect’s credentials, Zill jabbed the approval button with his finger and hired a new worker—and did all that before finishing his Guinness. “We don’t recommend something like this happening at a bar,” Zill says. “But the reality is that life happens everywhere now.”

Freemium Mechanics from Jeff Nolan

Ultimately the freemium model is a strategy that increases the catchment of leads as a result of using your product as the primary marketing vehicle through which you deliver a funnel to. Take care to structure your website so that every aspect of the content you are creating is designed to deliver a site visitor into a product experience or isolate them for followup through a traditional enterprise sales process.

For me the mechanics of a freemium business are some of the most interesting to be involved with in a modern software as a service company. The implications of billing and provisioning system dynamics, how you structure your website content, surface funnel analytics, build upselling cues into your application, and manage high volume sales nurturing processes are incredibly complex but increasingly normal for the B2C and even B2B markets.

–Freemium Mechanics | Jeff Nolan – Venture Chronicles.