Archive for December, 2010

I was reading this story in a newspaper today: Indian firms go missing on the big cloud stage-show .  According to the article, all top Indian IT firms have had teams of engineers working on ‘cloud offerings’ for two or more years, but are yet to achieve global recognition for their products.

It would be naïve to assume that the Indian biggies would let a $48 Billion opportunity slip by them.  So if they’re missing on the big stage, it isn’t because of lack of “cloud engineering skills” – it’s due to the commercial model.  They probably feel the same as Tom Cruise in Jerry McGuire, demanding, “ Show me the Money.”

They’re still trying to figure out how to make money in this model. In the cloud, the deal sizes are typically very small. Depending on whether you’re selling products or services, it’s a very different model (See Products vs. Services in the Cloud). Also, most payments are made in hundreds/thousands (not millions) and delivery happens in hours/days/weeks (not years).

So the big Indian firms face two issues, when it comes to making money. Firstly, their size gets in the way, since they are very dependent on large commoditized services deals worth tens of millions of dollars each. Secondly, since the cloud offers their customers the ability to save money, those savings eat into the revenue these Indian firms can otherwise generate – or, in other words, the cloud cannibalizes their services revenues.

Some firms, such as Infosys, have also begun pursuing a non-linear revenue model for reducing their reliance on “project pricing based on heads involved in a project.”  However, I’m not sure if the non-linear model is targeted at getting a piece of the cloud pie.

To make money in the cloud, these firms would like the projects to grow in size as well as bring incremental revenue rather than eat into the current one.  They will probably campaign against multitenancy.  In other words, instead of them going to the cloud, they’d like the cloud to come to them.

It is therefore important to ask: who will be more successful in this marketplace for the foreseeable future? Smaller, nimbler companies without the “hourly-billing” baggage (see my post on Navatar Group) or the large “legacy” firms with big wallets.

Would love to hear your viewpoint.

Aurobindo Sarkar

Techno-Pulse started this debate, since a provider named Virtual Ark thinks otherwise. Here’s an excerpt from their CEO’s interview at Cloud Computing Journal: 

Marty Gauvin: No, not at all. Virtual Ark can manage dedicated instances of the application for specific customer needs as if they were “one” application instance. In our view, the security, integration and performance requirements of our target market, large enterprise customers, are ill-suited to multi-tenant solutions. We think this is a key reason why SaaS has not been taken up more strongly by this market segment, and why many ISVs have not modified their applications to be multi-tenant. Virtual Ark sees this as an important differentiator in its value proposition.

Here was my response to this, at the Techo-Pulse site:

It may be hard to argue with Marty when he says “large enterprise customers, are ill-suited to multi-tenant solutions.” Large customers, usually, are too “high-maintenance,” both in terms of their unique requirements as well as their highly political environments. Had they been simple to deal with, consulting firms like Deloitte or PwC, that make most of their money from organizational complexities, would have gone out of business by now. No wonder, it’s hard for a vendor offering a multitenant solution to convince a large customer to buy.

So if you’re an ISV targeting large enterprise customers, an easier option may be not to be multitenant, so you can tailor for each customer’s unique needs. It’s a perfectly valid (and maybe lucrative) business model. The issue is that eventually you will turn into a services company – or, in other words, most of your revenues will come from services (see my InformationWeek post Product Cloud Or Service Cloud? Know The Difference).

If you want to be a viable cloud vendor selling products (see my InformationWeek post Why Multitenancy Matters in the Cloud), you have no choice – your product must be multitenant in order to survive in the cloud world.

I think this debate about multitenancy will go on, as long as ISVs believe there are “quickie” routes to having a cloud product. I have covered this subject extensively in my new book : Force.com as your Key to the Cloud Kingdom.

However, Marty’s comments do raise other important questions: Is it possible to sell and maintain multitenant cloud products to large companies? Are there examples of companies doing that?

Would love to hear from you.

Alok Misra

If you’re part of a Government agency that engages volunteers, you may be interested in this recorded webinar from HandsOn Connect and salesforce.com:

Transforming Government Volunteer Management in the Cloud

In this webinar, you will learn how HandsOn Connect, the volunteer management solution that runs in salesforce.com’s cloud, helps agencies:

• Manage volunteers and volunteer opportunities
• Track projects, events, sponsors, and donors
• Host and manage your public-facing web site
• Access real-time reports and dashboards for decision support and impact tracking

HandsOn Connect is an out-of-the-box cloud product that requires no hardware or software. Since Navatar built HandsOn Connect, I participated in this webinar. One of the several good questions that an attendee asked me was:  What is the advantage of managing volunteers through salesforce.com, as opposed to any other platform?

For answers to this and several other key questions, watch this webinar now:

Transforming Government Volunteer Management in the Cloud

Alok Misra

We couldn’t be more excited about having Alps Fund Services join Navatar’s Mutual Fund Cloud. It is a major milestone in our mission to bring Cloud Computing to Wall Street.

 
ALPS Fund Services is a big name in the Mutual Fund industry. It distributes Select Sector SPDRs and provides a full services suite for open-end, closed-end, exchange traded and alternative investment funds. Combined with ALPS Distributors, Inc., ALPS Fund Services services more than $240 Billion in client assets.

 
What ALPS gains with Navatar is Mutual Fund CRM and sophisticated sales reporting with transaction data from transfer agents and brokers, all delivered through the Navatar Cloud for a low monthly fee.

 
Why Navatar? ALPS Portfolio Solutions and Select Sector SPDRs, Regional Sales Manager,,Jeff Brainard says, “We found Navatar’s Mutual Fund Cloud for Salesforce to be the most complete out-of-the-box product for our industry.”

 
Thanks Jeff. We look forward to helping Alps achieve record sales!

Allan Siegert