Beyond App Stores: The Five Biggest Myths About Cloud Services
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Cloud services are the IT industry's fastest growing sector, yet misconceptions about the technology are common. In this on-demand webinar, Jeff Kaplan, Founder and Managing Director, THINKstrategies, and Stephen Banbury, VP of Worldwide Marketing at AppDirect, lead an engaging discussion on how you can be involved and gain a foothold in this exciting space.
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Beyond App Stores: The Five Biggest Myths About Cloud Services
- 1. 1 BEYOND APP STORES The Five Biggest Myths About Cloud Services View full presentation with audio at go.appdirect.com/webinar-cloudservicesmyths
- 2. Stephen Banbury Vice President, Worldwide Marketing Jeff Kaplan Managing Director
- 3. MYTH Here’s Where the Investment Goes: The market for cloud services is too small (or too niche) to really matter1 Faster than the IT industry overall.6X Increase in the number of cloud-based solutions.10X Over the next few years, the cloud services developer community is expected to triple, which will help drive an Market Snapshot Cloud services are quickly becoming an essential party of business strategies for providers, distributors, and customers alike. In fact, companies are spending more on public cloud services than ever before. 2013 2014 2015 $45.7B $56.6B $127B 72% SaaS 14% PaaS 14% IaaS
- 4. 4 MYTH Selling cloud services isn’t right for my business 2 Retail Telco Financial Services Business Services
- 5. 5 MYTH It’s hard to make money selling cloud services 3 X per cost for each individual = YEAR 10 YEAR 5YEAR 1 Recurring Revenues Consumer Apps Business Apps
- 6. 6 MYTH Cloud services sell themselves 4 REPEAT PURCHASES INSIDE SALES 95% 3X RECURRING REVENUE 12+ MONTHS
- 7. MYTH Selling cloud services is too technically complex 5 BILLING PROVISIONING APP CATALOG IDENTITY MANAGEMENT
- 8. 8 1. The market opportunity for cloud services is tremendous. 2. No matter your industry, there's an opportunity to sell and distribute in the cloud. 3. Companies selling cloud services outperform traditional software models. 4. Cloud services are sold, not bought. 5. Consider using a centralized platform to sell and consume cloud services. Evaluating your Cloud Service Opportunity
- 9. 9 SELECT AWARDS MEET APPDIRECT • Founded in 2009; launched in 2011 • One of the fastest growing cloud companies in the Bay Area • 250+ employees; San Francisco headquarters with global offices • Deployed across 8 industry verticals and 4 continents; all customers are top 20 in their space SNAPSHOT OF OUR NUMBERS 250+ CATALOG APPLICATION S 12% MONTHLY TRANSACTION GROWTH 100K+ COMPANIES SERVED 150+ COUNTRIES TRUSTED BY LEADING GLOBAL ORGANIZATIONS DEVELOPERS Integrate cloud services PROVIDERS Sell cloud services CONSUMERS Consume cloud services The AppDirect Cloud Service Commerce Platform unites developers, providers, and consumers into a single ecosystem. Best Use of Cloud 2014 Cool Vendor 2012 Most Promising Companies 2015
- 10. 10 “Your Guide to the AppDirect Monetization Suite” Join us June 2nd, 2015 to learn how your business can benefit from the only end-to-end monetization solution for cloud service commerce. Register now for the next webinar in our series. THANK YOU FOR ATTENDING For questions and information please contact info@appdirect.com
Editor's Notes
- Jeff Kaplan will welcome attendees and begin the session; briefly state the overall objective of the webinar
- 1.) The market for cloud services is too small (or too niche) to really matter. Not true. Cloud services are the fastest growing segment of a rapidly growing technology sector. Cloud services are fast becoming an essential part of business strategy for providers, developers, and customers alike. In fact, companies are spending more on public cloud services than ever before. $45.7 billion in 2013 $56.6 billion in 2014 $127 billion in 2018 Those numbers represent a CAGR of 23 percent, 6x faster than the IT industry overall. Here’s where the investment goes. 72% SaaS - This includes solutions like CRM, productivity tools, email, etc. 14% PaaS - This includes application development platforms like Red Hat OpenShift and Cloud Foundry 14% IaaS - This includes tools like Amazon Web Services, Rackspace, etc. Not only that, but over the next few years, the cloud services developer community is expected to triple, which will help drive a 10x increase in the number of cloud-based solutions.
- Selling cloud services isn’t right for my business. Not true. Companies in a wide range of verticals offer cloud services. Here’s just a sample of the industries selling cloud-based software: Financial services, telecommunications, mobile, retail, business services. For telcos, the use case is pretty straightforward: Customers are used to going to their providers for essentials like Internet and phone services, so it’s a logical next step to bundle something like Microsoft Office 365 with that and sell them as a package. But let’s look at a business services example. Take ADP; they have an online solution that HR teams can use to manage payroll and other administrative tasks. They offer cloud service add-ons, software that complements their core solution, which brings even more value to those HR teams. This is an ecosystem play, and it’s becoming increasingly common. According to some recent research we did, nearly one in five Fortune 100 companies offer a public developer program or toolkits to make this sort of ecosystem building possible.
- It’s hard to make money selling cloud services. A better way to think about this myth might be: It’s hard to justify the business model for cloud services. It’s true, at the beginning, you’ll spend money to acquire customers. But eventually, the ROI on your acquisitions will take off. Why is this? When many people think “apps,” they imagine 99 cent games you play on your smartphone. However, business applications are in an entirely different class than one-off mobile app downloads. Business app sales can be large, multi-year contracts that provide recurring revenue. To see just how much business application sales differ from mobile apps, consider Microsoft Office 365 Enterprise edition. This version is priced at $20 per user per month and requires an annual commitment, which means the yearly cost per user is $240. Even a relatively small enterprise—with, say, 30 employees—will spend $7,200 per year on Office 365, a sizeable contract. Going further, an enterprise with 100 employees will spend $24,000 on Office 365, a company with 500 employees will spend $120,000, and so on. Of course, with larger dollar amounts like these at stake, most businesses will need some handholding, which means a sales team becomes an essential part of the purchase process.
- Cloud services sell themselves. Not true. This is a nice segue into talking about maybe one of the most surprising myths about cloud services: they don’t sell themselves. People may go the the App Store and download Candy Crush, but when it comes to buying cloud services, customers want expert advice and guidance. In fact, a knowledgeable sales team can be the biggest asset in successful cloud service sales. Here’s a real life example from our partners. They’ve asked to remain anonymous, but the data is still very relevant. This service provider has seen some of its most dramatic marketplace sales numbers as a direct result of the efforts of its sales team. For example, assisted sales drive more than 95 percent of its cloud services purchases, and these types of purchases are more than three times greater, on average, than purchases made at the marketplace website. Moreover, the majority of the sales include a 12+ month contract, and these sales include multiple products bundled together. Not only that, but many customers return to make subsequent self-serve purchases at the web-based marketplace, often buying higher-priced products when they do. So, investing in a sales team is a good idea if you want to succeed at selling cloud services.
- Selling cloud services it too technically complex. Well, this is partially true. Selling cloud services is complex. It requires sophisticated billing, provisioning, identity management, and more. But, there are now advanced platforms that can provide an end-to-end solution. Here’s what to look for in a provider: First, the technology: Does the provider handle the things I just mentioned? Billing? Provisioning? Identity management? Maybe more importantly, is the solution cost effective? For example, some providers might offer a platform with low upfront costs, but then charge you for every cloud service that you want to add and sell. Second, a catalog of the cloud services you want to sell: This is related to the point I just made. If it’s hard or expensive to add the apps you want to sell, then success will be nearly impossible. Look for a provider with an existing catalog of the apps you want to sell, or make sure they have a very easy, flexible way to add them. Third, industry experience and expertise: Work with providers who already have experience in cloud services. This includes deploying cloud service marketplaces, integrating new applications, migrating users from one platform to another, and more. Of course, we have some ideas about who the best cloud service commerce solution provider is, but we welcome any comparison to any other provider in the industry.