I’m a large vendor with only Enterprise Clients – what’s the point for me going Cloud?

I meet many companies who mainly work for enterprise Customers. For many of them, it’s not completely clear what’s the gold in building a Cloud-based service. The problem is that they approach it from a perspective of migrating their existing enterprise Customers over to a SaaS offering and – obviously – they are afraid of making the big move. Before getting that volcano to erupt, let’s look at this question from a different point of view.

The packaging problem

OK, let’s say that you have an existing enterprise Client base, using your … let’s say … ERP software – right? You already learned how to deal with large companies, you most probably already suffer from the packaging problem – you have 17 versions of your product because you can’t build a product that suits all your Customers. Therefore, you end up customising your product for each and every one of them, over and over – does it ring the bell?

Your costs are getting higher because fixing bugs and adding features requires 17 different code base to be updated, tested, released and re-deployed. But there’s no other way to do business with enterprise Customers – unless you built your product in a way that fully supports your Customer’s customisations without re-building your code base (SAP did it and our Dynamics product range does it too, but it took decades and an army of developers to do it). On the other side, we are no different from your Customers here in Microsoft – for example, we used to run an “un-boxed” version of Clarify (recently replaced it) in our Support department for years and paid Clarify to customise and maintain it for us. Same story in Microsoft Consulting Services: Compuware ChangePoint, fully customised and maintained. Products will never be good enough for enterprise Customers. They will always want them to be tailored to their unique needs. And many ISVs are focusing on enterprise Customers, because that is where the big money lies … well, that’s fair enough …

The distinct worlds of large and small/medium companies from the SaaS perspective

In the other hand, there’s a segment of Customers who you – probably earlier – decided not to focus on, called small & medium businesses. These companies can’t afford your current licensing costs and services to introduce your ERP … er … product. Your current delivery model is too heavy for them and therefore, you guys don’t do too much business together. The good news is that most of these small & medium clients are happy to use products without customisation – happy with 80% of the functionality if they get it for the right price. This is how salesforce.com did it and this is how we did it with SharePoint Online in the Office 365 suite – cover 80% of the functionality for 20% of the costs … or something like that. Cloud Computing and a SaaS helps you access these companies and deliver an offering to them that is based on your current … er … product (or most preferably a simplified online version of it), that is based on all the lessons you learnt and on the good name you built for yourself on the market.

So, for your business decision makers (if it’s not you) … SaaS means getting a new stream of revenue from a Customer segment that you haven’t been touching recently and you have high chances of success given your name in the market. Is this good enough for a business case?

And how can Cloud help your existing Enterprise Customers? Let me address this in a separate post …

LinkedinDavid Szabo, Cloud Strategy Advisor, Firestarter and Rulebreaker at Microsoft. Startup-addict, SaaS & Cloud consultant, blogger at http://cloudstrategyblog.com and LEGO serious play facilitator. Follow me on Twitter!

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6 Responses to I’m a large vendor with only Enterprise Clients – what’s the point for me going Cloud?

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  3. taschr33 says:

    That’s exactly the road that we traveled. Problem is with sme’s that would also like a bunch of customizations for no or little cost… (immature markets!)

    • David says:

      Now, that’s interesting. Can you share which market/industry it is?

      ________________________________

      • taschr33 says:

        We operate in the Greek market and are currently trying to expand to USA.
        Our first attempt was with a vertical automotive solution (Dealership Management System – DMS (Started as a custom application, evolved in “version 2.0” for the same customer and then upgraded to include SaaS-friendly characteristics)
        Our second attempt was with a horizontal Accounting & light ERP system for the SMB. Starting from the baseline of our first attempt, we upgraded and enhanced, to come up with a “one-size-fit-all” light ERP for the SMB.
        Both attempts are working fine: error free and with low customer churn. We are also getting new customers but we are still in search of that “big bang”…

      • taschr33 says:

        What I forgot to mention is that, although SaaS monthly charges (and remote data location) are becoming more and more acceptable by the end user, they seem to forget that this fee does not include the effort to customize the app according to their wishes (“wishes” being the buzzword here). We often face demands to include “this and that” in our start-up fee, which obviously decreases our net result.

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