Search Content

WhitePapers


Sales Force Automation Comparison Guide

Businesses of all sizes can benefit by automating all aspects of their sales processes with an SFA (Sales Force Automation) solution. But due to the sheer number of features that most SFA solutions...Read More


Which CMS Is Right For Me?

If you're wondering which CMS is the right one for your organization, this comprehensive guide will take you through the various options available, detailing the pros and cons of each. Download...Read More


Oracle Magazine

Oracle Magazine contains technology strategy articles, sample code, tips, Oracle and partner news, how to articles for developers and DBAs, and more. Oracle (NASDAQ: ORCL) is the world's largest...Read More


How to Buy a Phone System

Considering a new phone system for your business? The Phone System Buyer's Guide from VoIP-News provides you with all of the information you need to make a more informed decision. The Guide helps you...Read More




View All Whitepapers

Sequoia Capital Meeting

There's a lot of talk today about a meeting held earlier this week at Sequoia Capital, Appirio's lead backer, with the CEOs of their portfolio companies. The headlines grab your attention: Sequoia has emergency meeting, Sequoia sounds the alarm, Sequoia says to cut expenses now. The meeting was held in confidence, but we thought we'd share our perspective on the condition of the economy, what it means for Appirio, and, most importantly, what it means for customers considering the adoption of on-demand.

Macro-economic conditions are critical for every business to consider. This is the time for the leader of any organization to take a sober look at their spending plans and chart a prudent path given the uncertainty in the economy. That's our approach at Appirio, and we recommend that all of our clients do the same.

What does this mean for the adoption of on-demand? While nothing is certain, we remain optimistic that very bad news for the traditional enterprise IT industry will be very good news for cloud computing, companies like Appirio, and customers who are adopting on-demand solutions.

Let's take a closer look at how the economic conditions are impacting one of the stalwarts of traditional enterprise software-- SAP. SAP announced this week that they experienced a "very sudden and unexpected drop in business activity" last month. The announcement led to a 12% decline in SAP's stock price. Here's how they explained the shortfall in revenue, and why we think things are different in on-demand:
  • SAP customers faced difficulty financing upfront license fees. On-demand customers, on the other hand, pay for their solution as they use it. They dont need to finance a big up-front investment in a monolithic solution with an uncertain business benefit.
  • SAP customers balked at difficult-to-justify maintenance fees. On-demand customers, on the other hand, know what they are paying for they see continual enhancements to their solutions without expensive upgrades or patches.
  • SAP only learned of this in the final days of the quarter. On-demand customers, on the other hand, dont need to engage in the edge-of-the-cliff negotiations with their technology vendors at the end of the quarter. These vendors know that they will only keep their customers for as long as they are able to create value, and need to be working every day to keep their customers happy.
It's striking that the very things that make current economic conditions so difficult for traditional enterprise technology vendors will drive customers towards adopting on-demand. Does that mean that spending in on-demand technology is counter-cyclical? Its too early to say. But we have compared cloud computing to the Toyota Prius an automobile that gets more popular as economic conditions worsen and gas gets more expensive.

Let's take an example: One of our customers built a business case comparing Microsoft to Google Apps for communication and collaboration. When they added up what they were spending on hardware, software, and people for on-premise software, storage, and backup, the total came to almost $700 per year for each of their 10,000 users. Switching to Google Apps saved this company $12M a year. Clinging to Microsoft Exchange is an expensive luxury, one that's going to be increasingly hard for CIOs to justify.

The average company spends 4-6% of revenue on IT-- for a customer at $1B in revenue, that is $40M - 60M in annual IT expense. Organizations that 'cloud-source' their IT infrastructure to on-demand providers can reduce this to 2-3%... a 50% reduction. This model provides cash critical in a down economy, and also provides executives flexibility and innovation that on-premise vendors cannot.

Despite these benefits, today SaaS represents only $10 billion of the $100 billion spent on enterprise software and $1 trillion spent on enterprise technology. It's easy to imagine dramatic declines in these traditional markets while SaaS and PaaS continue their rapid pace of growth. We've always believed that it was just a matter of time before SaaS moved from 10% of the market to 70%...CIO concerns over TCO amidst economic uncertainty could certainly catalyze this shift.

So in the midst of all the headlines, here's our message to you, our partners and customers:

Appirio is committed to helping our customers weather this storm. Youll hear us talking more about the cost savings possible by moving your IT infrastructure to the cloud, and the rapid ROI possible from our custom application development. Creating real business value for our customers using on-demand technology remains our first priority.

Appirio is committed (as are our investors) to continued investment in our mission to accelerate the adoption of on-demand in the enterprise. We believe that this is a great time to develop new products, launch new service offerings, and enter new markets-- stay tuned to hear more.


Related Salesforce Mobile Articles

Why implementing CRM may or may not be easy....


I was asked this week what the pit-falls were of implementing CRM technology. This is the sort of question that can tempt you into gushing out a long list of potential hazards, but, when you come to think about it, for many, maybe most people there...

Read more about Why implementing CRM may or may not be easy.......

Google and salesforce.com - Like Peanut Butter and


Today, salesforce.com and Google announced a new toolkit to link Force.com applications to Google Apps. Now, Appirio already has five commercial applications that connect Google Apps and Salesforce.com. That's more than any other vendor, and three...

Read more about Google and salesforce.com - Like Peanut Butter and Jelly...