orbitera isv ebook - clarity in the cloud

CLARITY IN THE CLOUD | eBOOK

8252 ½ Santa Monica Blvd. West Hollywood, CA 90046 www.orbitera.com • [email protected] Copyright © 2016 Orbitera, Inc. All rights reserved.1

Clarity in the CloudThe ISV’s Guide to Doing Business in the Cloud

an eBook from the team at Orbitera

THE RECENT HISTORY OF CLOUD SELLING

Given the growth of cloud computing, it’s no secret that

enterprises are increasingly deploying and running software on

cloud platforms. Selling software and services in the cloud is

no longer an afterthought or an add-on capability: if you aren’t

making it easy for customers to find, purchase, and deploy your

software on cloud, you can bet your competitors are. While

2013 and 2014 laid the groundwork for businesses to capitalize

on cloud commerce, 2015 saw smart companies using unique

strategies to remove friction at all stages of a transaction.

History has shown that the success of cloud services is

predicated on the ease with which customers can buy and use

services, and the ability of ISVs to deliver these services.

Visibility into cost and usage of services are increasingly critical

factors on which buyers base purchasing decisions. ISVs need

to ensure they deliver products that provide their customers

with the tools they need for billing, analytics, and seamless,

complete visibility into usage and other data. Ideally, software

vendors bill customers only for what they use, allowing

customers to scale usage of the software based on the

value they derive from it. As with cloud infrastructure, the ISV

“Selling software and services in the cloud is no longer an afterthought or an add-on capability... History has shown that the success of cloud services is predicated on the ease with which customers can buy and use services, and the ability of ISVs to deliver these services.”



benefits from the reduced purchase friction

and the customer benefits by never having

to worry about purchasing shelfware.

Traditionally, vendors were able to sell

discrete SKUs to customers. Customers

knew how much they were buying ahead

of time, issued a purchase order to a

vendor, and received an invoice for the

purchase. ERP systems, internal processes,

even compensation was designed around

this concept. Cloud has turned this

paradigm on its head. Cloud vendors have

proven that a model where customers

pay in arrears, only for what they consume,

outperforms the shrink-wrapped model.

As a result, a transition has been underway

from an era when consumers bought

shrink-wrapped solutions to a landscape

where businesses are purchasing fully-

managed cloud-based services.

These services are pay-as-you-go, use-

what-you-need, and try-before-you-buy.

Customers self-serve further along in the

buying process, changing the traditional

role of sales rep from gatekeeper to

enabler. For an ISV to succeed, they

must adapt to that model by offering

transparency and the very services

people can get themselves. ISVs can

further enhance the value of the solution

by providing support and education.

This shift has created a unique set of

operational challenges for ISVs as

they adapt their processes, controls,

pricing, and billing to enable customers

to consume solutions in this fashion.

This challenges the largest producers

of software, such as IBM, who has seen

the impact on their top and bottom line.

According to a recent Jefferies report1,

“Management noted that software results

were negatively impacted by weakness

1 “Software IBM 4Q15: Weak Software Results,” Jefferies Equity

Research America, January 20th 2016

in transactions (e.g. license) from large

customers during the quarter. This part

of the business makes up about 30% of

total software, and is being negatively

impacted by the flexibility of consumption

options IBM is offering to its clients.”

While customer behavior has changed with

the rise of hyperscale cloud platforms—

customer demand is what drives the

phenomenal growth of AWS, Azure, and

Google Cloud—there’s a vital role and

opportunity for ISVs. While cloud providers

often have basic services that may mimic

many ISV solutions, these are often

one-size-fits-all, generalized options. ISVs

bridge the gap with higher-performing,

portable, and well-integrated solutions.

Forward-thinking software vendors

are adopting the principles of cloud

consumption to enterprise software.

Nowhere is this more prevalent than

with AWS marketplace and Azure

marketplace, where customers can

browse solutions and deploy them onto

the aforementioned platforms.

Marketplaces still play a critical role

by allowing consumers to educate

themselves, kick tires and see what

solutions are available. Marketplaces

also present challenges for ISVs—how

to stand out against the other available

solutions, connect with customers, and

maintain control over distribution.

Simply put, an ISV’s solutions have to be

present in the large marketplaces, but

cloud provider marketplaces represent

only one route of many to ISV software in



the cloud. ISVs are realizing the need to maintain control over

the customer experience and enable sales models that aren’t

available through third-party marketplaces.

How do ISVs accomplish this? First, decide on how your

software is sold—direct, through the channel, or a combination.

Next, decide on a platform to expose your software to

customers. The platform must be cloud-agnostic, support both

on-premise and external clouds, support consumption and

usage billing, and support the go-to-market models that are

critical for your business. Lastly, make it easy for customers to

deploy your software while protecting your intellectual property.

Today, large companies have missed out by focusing on the

marketplace as the only place where they’re selling their

software. ISVs can be more agile and satisfy more customers

by leveraging marketplaces as one of many channels for

customers to consume their products.

SERVE YOUR CUSTOMERS IN THE CLOUD

Your customers are already doing business everywhere,

especially in the cloud. They’re leveraging speed and flexibility

in everything they do and expect the same benefits from

the solutions they use. They want the best tools—especially

those that provide clarity of billing and analytics. How much

data is being used; what is driving demand; are there analytics

available continuously and immediately?

Because of the way you’re tracking and selling to your customers—

via the cloud—there’s another new challenge: they want to

know why they’re paying what they’re paying. Ultimately, the

How to Control the Customer Experience and Enable Sales Models

1. Determine sales model

(direct, channel, or a

combination)

2. Decide on a platform to

market your software to

your customers

3. Make it easy to deploy

your software



landscape has changed and packaged or shrink-wrapped

software is no longer the norm. Delivering solutions virtually is

how business is done.

Which brings us to the three main problems you face when

leveraging cloud-commerce solutions for your customers.

Let’s take a look at your biggest obstacles to success.

THE THREE CLOUD COMMERCE CHALLENGES FOR ISVs

DISINTERMEDIATION

When software is being sold to customers through third-

party marketplaces, ISVs lose the opportunity to connect

with customers directly. Without a direct link to customers,

ISVs are at a disadvantage when marketing features of their

solution which impacts both customer retention and the

ability to upsell additional products. It’s harder for sales reps

to get access to the data they need to determine how to best

approach a customer.

It’s also harder to reward customers for their loyalty through

volume discounts and similar strategies. Finally, customer usage

data is extremely valuable, and giving third-parties access to data

about how your customers are using your products can erode

competitive and IP advantages over the long-term.



OPERATIONS

Cloud has enormously accelerated the rate

at which customers can try and purchase

new technologies. The reduced friction

is a win for all parties as customers grow

consumption and ISVs get predictable

recurring revenue. Unfortunately, most

organizations are not equipped to deal

with the deluge of data coming their

way from consumption models while

keeping their businesses humming along.

Automation is key—manual touch points

create friction and must be eliminated

requiring investment in tooling and

building new processes to support the

cloud model.

Ideally, this apparatus is abstracted

from the customer experience

completely—the customer only sees

the tip of the iceberg—with all the

processes supporting the sale and

deployment of your service operating

seamlessly to provide an excellent,

streamlined experience.

CONTROL

Don’t be out of control by letting

someone else manage implementation,

support and on-boarding. ISVs can take

charge and be in control by managing

the customer experience. The best thing

for an ISV in keeping cloud commerce

reins tight is they can respond quickly

and effectively to any issues that arise.

Customer service is maximized and

happier customers are the ones that buy

more from you in the long run.

Some software companies maintain

control by paying attention to all these

factors. They help deliver security

storage, efficient access, log management

and security, and a collection or suite of

other products that can make a business’

life easier. In fact, the functionality

provided to ISVs by some of these

software as a service vendors is nothing

short of amazing.

Through the services provided, ISVs

are able to give their customers an

experience that’s better than what’s

possible via the marketplaces. Further,

the capabilities in terms of tracking usage,

accurate and transparent billing, and

providing necessary bandwidth is the

ideal solution mentioned at the start of

this eBook.

The Three Main Cloud Commerce Challenges for ISVs

1. Disintermediation

2. Operations

3. Control



CLARITY THROUGH A CASE STUDY

Some organizations require a bit more convincing when it

comes to earth-shattering breakthroughs that profess to

change the technology and business landscape. In the case

of ISVs using a relatively new service that makes life easier for

every entity involved, it’s perfectly understandable that there

might be skepticism.

One example of a broad change in the software delivery

model is the shift from a packaged software purchase to a

cloud subscription model. The company that leveraged this—

and seems to have succeeded—is Adobe. They have proved

that software no longer needs to be tied to a workstation or

delivered on disks or drives.

After years of providing creative professionals with software

to process photos, build marketing materials, create Websites

and essentially run advertising departments worldwide,

Adobe decided to streamline the process. They had

experienced some level of piracy, but more damaging was

their customer base was conditioned to use software well

past its planned expiration date. Some creative studios and

professionals, for example, could be found using version 3 of

their Creative Suite software even as Creative Suite 5.5 and

beyond were being introduced.

“The company that leveraged [a broad change in their software delivery model]—and seems to have succeeded—is Adobe. They have proved that software no longer needs to be tied to a workstation or delivered on disks or drives.”



This customer behavior affected the

bottom line but worse, affected the

customer experience with the software.

New capabilities were introduced and

bugs were eliminated in new versions, yet

customers were still plugging away on

old software. So Adobe decided to move

to the cloud entirely and take control of

their product and the experience.

In 2011, Adobe announced the path

it was planning to take with a solution

housed only in the cloud. In 2013, they

followed up by telling customers they

would no longer print software disks

and distribute their product on DVDs.

The only way for their customers to use

future versions would be to sign up for a

Creative Cloud subscription. There was

a little backlash at first, but the method

worked for the most part and offered

some advantages to both Adobe and its

customer base.

Through this process, the software

is never out of date. For a nominal

fee—less than the cost of buying the

packaged version of software on DVDs—

users would enjoy unfettered access to

the latest creative software. Adobe even

provided a way for users to leverage

the software when not hooked up to

the Internet. In fact, the company bent

over backward to make it easy for users.

Currently, an Adobe customer only has

their software validated once per month

to ensure it’s been paid for and

up-to-date.

In a few years, Adobe has reeducated

its customer base to the benefits of

cloud-based software and has a much

more accurate method for forecasting

sales and revenue stream. They also

have exceptional control over the

customer experience and can upsell

with new products any time they see

the opportunity.

Problem

Adobe’s customer base was

conditioned to use out-of-date

software, affecting the bottom line

and customer experience.

Solution

In 2011 Adobe announced a solution

housed entirely in the cloud. By 2013,

distribution of software disks had

stopped. Customers now sign up

for a Creative Cloud subscription

enabling them to always use the

most current version of software.



Interested in learning how Orbitera

can help your business transition

to selling cloud-based software

and services?

Contact us for a demo at:www.orbitera.com/demo

CONCLUSION

The growth of cloud services over the past several years

has been nothing short of spectacular. Customers that have

traditionally been forced to pre-pay for packaged software

and services can now unlock growth by closely tying what

they pay to the value they get. The friction between ISVs and

these customers is reduced and new products and fixes to

existing solutions can be done in the blink of an eye.

At Orbitera, we have helped a wide variety of software and

services ISVs build profitable businesses centered on cloud

services. We’ve also recognized that customers demand more

functionality from the solutions they purchase. Transparency,

insight, and customer experience reign supreme. If you’re

interested in learning more about how Orbitera can help

your business accelerate its transition to selling cloud-based

software and services, we encourage you to contact us for a

demo at www.orbitera.com/demo.

orbitera isv ebook - clarity in the cloud

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