Posts tagged service
Open Source Release of ‘Hibari,’ A Database for Big Data
Jul 27th
SAN MATEO, Calif., July 27 /PRNewswire/ — Gemini Mobile Technologies (″Gemini″) announced at ″Wireless Japan 2010″ in Tokyo that it will release Hibari (meaning ″Cloud Bird″ in Japanese) as open source. Hibari is a database optimized for the highly reliable, highly available storage of massive data, so-called ″Big Data.″ Hibari can be used in Cloud Computing Applications such as web mail, Social Networking Services (SNS), and other services requiring storage of tera-bytes and peta-bytes of new daily data.
Hibari, developed by Gemini, is based on distributed non-relational database technologies of key value store and chain replication. These technologies bring benefits of low cost and high reliability by enabling data storage on tens or hundreds of PC servers, instead of costly special-purpose storage appliances such as SANs. Development started in 2005, and has been deployed and commercially proven in a number of large telecom operators, storing everything from SNS digital goods to Cloud Mail for millions of users.
″Big Data″ applications are growing rapidly, fueled by tremendous growth in digital content, social media, automatically-generated data such as logs, histories, and telemetric statistics (electricity utilization, vehicle location information, etc.). By releasing Hibari to open sourcing, Gemini expects its commercially-proven, non-relational database technology to be used in a variety of fields, including enterprise private cloud computing, digital entertainment, e-commerce, financials, and telemetries.
Hibari is developed in Erlang, and is released under the Apache license. Hibari provides highly-versatile APIs including Amazon S3, JSON-RPC-RFC4627, Universal Binary Protocol, and soon-to-be-released Thrift, Avro and Google’s Protocol Buffers; Hibari supports Java, C/C++, Python, Ruby, and Erlang. Gemini plans to provide Hadoop Map-Reduce integration as well as a commercial license which includes updates and support.
- Hibari download site – http://sourceforge.net/projects/hibari/
- About Gemini Mobile Technologies – http://www.geminimobile.com/
CONTACT: Giorgio Propersi of Gemini Mobile Technologies, +1-805-312-6379, gpropersi@geminimobile.com
SOURCE Gemini Mobile Technologies
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Is ‘cloud computing’ the future of video games?
Jun 16th
Los Angeles, California (CNN) — Playing high-profile video games quickly from portable devices such as your iPad might get easier after this week’s Electronic Entertainment Expo.
While the E-3 “game changer” tag has been reserved largely for innovations such as 3-D and motion-sensor systems, several companies hope using cloud computing to store games will be the real shift by letting gamers play high-end titles anywhere, on almost any machine.
If fully realized, they say, cloud gaming could be a console killer.
Gaming company OnLive announced Tuesday that it will make 23 popular console games, including “Assassin’s Creed II,” “Batman: Arkham Asylum” and “Mass Effect 2,” available through an online subscription service.
“Today we’re taking the first step toward a future where video game content is increasingly free from the restrictions of device and location, while showcasing the ability to instantly play the latest, most advanced games at the touch of a button,” said OnLive founder and CEO Steve Perlman.
Cloud gaming uses rapid data compression to let users store their games “in the cloud” — on Web servers — and then pull them down and play them using a regular Web browser. It’s the same concept as storing photos on a site such as Flickr or music videos on a MySpace page.
The user doesn’t actually have those files on any one particular computer but can access them from anywhere.
OnLive has partnerships with gaming companies such as Electronic Arts, UbiSoft and Warner Bros. Interactive and announced several new ones, including Sega, on Tuesday. More titles were expected to be available as they are released.
OnLive’s service, which launches Thursday, will offer free subscription for a year, with an announced price of $4.95 a month for an additional year. Individual games will, of course, cost extra.
OnLive isn’t the only one in the cloud-gaming business though. Rival Gaikai announced this year it had raised $10 million for a streaming game service that will let users sample games before buying them.
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Cloud computing saves L.A. millions in IT costs
Jun 9th
Why did the City of Angels move to the cloud? Given that the Los Angeles city budget was constrained by the Great Recession, the driver was simple: cost savings. When the reality of a legacy IT infrastructure that couldn’t meet the needs of an increasingly mobile workforce was added to that driver, LA’s chief technology officer Randi Levin put out a request for proposal for the cloud.
“We’ve been cutting services,” she said. “We are now completely in what I would call ‘survival mode.’ Two or three years ago, we had a $116 million expense budget. Next year, it’ll be $80 million. It might even be less.”
After due diligence, Levin said her team recommended that the City of Los Angeles implement Google. “We predicted — and are on track — to save about $5 million over the next three years,” said Levin. “Those are hard dollar savings.”
Levin is looking ahead to where she can best use her staff. What are the important tasks? “It’s not running servers,” said Levin. “The city will get much more bang for their buck if we’re developing applications and websites, or making processes more efficient. As a general rule, we’re going to start moving out of that business and letting somebody else do it who can do it more efficiently.”
Read the Rest at: O’Reilly Radar
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Cloud Computing: Security’s Friend And Enemy
May 14th
It’s no secret that cloud computing’s worst enemy right now is security, or at least the perception that the cloud lacks adequate security capabilities and functions is causing pause.
Even President Barack Obama knows it. “The very technologies that empower us to create and to build also empower those who would disrupt and destroy,” the president has been quoted as saying.
But Senior Vice President and General Manager of McAfee SaaS Marc Olesen took a different approach. At the All About The Cloud conference in San Francisco this week Olesen likened cloud security to “The Force,” more specifically the battle between good and evil portrayed in George Lucas’ Star Wars franchise and the epic battle that ensued between Obi-Wan Kenobi and Darth Vader.
“The cloud is our friend and our enemy,” he said.
According to Olesen, roughly $1 trillion was lost last year due to cyber crime and spam and phishing attacks still rain down on us and are getting more sophisticated. Meanwhile, companies are still expected to do more with less — and that means they’re eying the cloud.
By attacking cloud security in three ways: security from the cloud, security in the cloud and security for the cloud, there’s a better chance at thwarting threats before they cause trouble.
Security from the cloud comprises security-as-a-service offerings; security in the cloud is threat data that is stored in the cloud to combat incoming threats, like McAfee’s cloud-based Global Threat Index; and security for the cloud includes standards and certifications like ISO 27001 and SAS 70 along with other cloud security certifications performed more frequently.
And the industry is already seeing results. Olesen cited an Aberdeen Group study that examined on-premise e-mail security versus cloud-based e-mail security and found 47 percent fewer incidents of spam and malware in the cloud; 34 percent less data loss; and 50 percent less security-related downtime.
Highlighting another recent study, this one by the Tolly Group, Olesen pointed out that the cost of security from, in, and for the cloud can also be cheaper. He said the study that found the total cost of ownership (TCO) over a three-year period was dramatically cheaper for a cloud or SaaS based solution versus an on premise solution. In that instance, on-premise ran around $903,870 for three years, while SaaS costs $438,500, just 51 percent.
Still, Olesen said, “security is the primary inhibitory to cloud adoption,” adding that IDC found 87.5 percent of customers highlighted security concerns as their main cloud hindrance.
Olesen said McAfee, along with cloud providers, have put measures and solutions in place to secure the cloud. And the cloud is ready for prime time and can be protected.
“We’re at a unique place right now in the adoption of the cloud because it’s not ubiquitous yet,” he said, adding that building security into the cloud on the ground floor gives enterprises the opportunity to put the cart before the horse and be proactive.
By Andrew R Hickey, Full Source: CRN
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SaaS Set To Explode In 2010: Survey – Cloud Computing News
May 6th
Software-as-a-service (SaaS) usage is on a staggering path to growth, according to a recent survey by Gartner.
According to Gartner, more than 95 percent of organizations will maintain or grow their SaaS use through 2010 fueled mostly by integration requirements, a change in sourcing strategy, and total cost of ownership.
“SaaS applications clearly are no longer seen as a new deployment model by our survey base, with almost half of those surveyed affirming use of SaaS applications in their business for more than three years,” said Sharon Mertz, research director at Gartner, in the survey. “The varying levels of maturity within the user base suggest growing opportunities for service providers along the adoption curve, as organizations seek assistance with initiatives ranging from process redesign to implementation to integration services.”
Despite the pending upswing in SaaS use, Gartner also found that many companies don’t have policies governing the evaluation and uses of SaaS. The survey revealed that 39 percent of respondents had policy or processes governing SaaS, which was up just one percent from 2008.
Gartner conducted the survey in December 2009 and January 2010, querying 270 IT and business management professionals involved in the implementation, support, planning and budgeting decisions regarding enterprise application software.
The survey found that the most popular SaaS applications include email, financial management and accounting, sales force automation, customer service and expense management, with more than 30 percent of survey respondents using those applications.
Additionally, 53 percent of organizations expect to increase their SaaS investment slightly over the next two years and 19 percent expect to boost SaaS investments significantly. Still, about 25 percent of respondents expect SaaS investments to remain level and 4 percent will reduce their SaaS spend slightly. Meanwhile, 72 percent of respondents believe SaaS investments will increase compared to current investments while 45 percent said on-premise budgets will increase compared to where they currently are.
And while it appears SaaS is ready to rapid and strong enterprise growth, the Gartner survey did reveal that some organizations find SaaS solutions less than optimal. Sixteen percent of respondents said they are transitioning from SaaS to on-premise solutions. While Gartner found now specific reason for the shift away from SaaS, organizations moving to on-premise software were faced with significant integration requirements and were unsatisfied with the TCO.
“These issues aside, organizations are becoming more savvy when it comes to renegotiating their SaaS contracts,” according to Mertz. “A key survey finding was that more enterprises are renegotiating contracts for greater functionality, additional users and improved financial terms. Thirty percent of respondents said that they had renegotiated their SaaS contracts before the end of the initial term.”
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Cloud Computing: Sharpen Your SAAS Smarts Before Committing to the Cloud
Apr 27th
The cloud revolution has taken the software industry by storm, heralding wholesale changes in how applications are consumed and delivered. As with prior shifts in the software industry, cloud computing has created new opportunities and shaken up the positioning of market leaders. The industry is again seeing a new game changer with companies like Salesforce.com, NetSuite and Workday taking the limelight with their cloud-only SAAS (software-as-a-service) delivery models. Many software companies, or ISVs, struggle with how they should begin offering cloud versions of their products to customers. While moving from a traditional licensed software business model to a SAAS model is by no means trivial, there is good reason to make the switch—the market is hungry for cloud-based software options, and the SAAS model offers significant competitive advantage to the ISV when implemented properly. In this presentation, Apprenda, which develops its own platforms called SaaSGrid, lists what companies should know when moving to the SAAS model.
Source: eweek
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Cloud Computing Technology – A Checklist for Cloud Computing Deals
Apr 9th
Cloud computing has become a technology buzzword. Its definition is elusive, but a working definition could be: A service offered by vendors with large computer server networks to provide infrastructure such as processing capacity, storage for electronic data and records, software as a service or provision of services such as e-mail (see, Open Cloud Manifesto).
The idea, as e-commerce and tech-savvy counsel may know, is to use a multilayered network of servers and computers to provide computing and hosting power when needed — sort of a front-end and back-office architecture with a backup system, without much of the in-house worries that go with investments in IT infrastructure.
Cloud computing can help e-commerce ventures in a variety of ways, including by allowing expansion of services and support during business peaks, such as holidays, or other seasonal or special shopping times. For expansion to cloud computing where formal contracts, or regulatory, fiduciary or other obligations are involved, e-commerce counsel will be called on to ensure all arrangements are proper and beneficial. More on that below.
THE CRUX OF CLOUD COMPUTING
According to the Open Cloud Manifesto, a consortium that promotes standards for and openness to cloud computing, the practice — by no means new, but recently rising in prominence and use — has several components, including:
• the ability of the customer to scale up or down as business needs require;
• avoidance of overinvestment in infrastructure and unavailability of in-house resources when such resources are needed;
• reduced start-up costs; and
• reduced reliance on in-house computer resources.
The National Institute of Standards reports that in cloud computing, the cloud’s shared pool of resources “can be rapidly provisioned and released with minimal management effort or service provider interaction” (see, Peter Mell and Tim Grance, “The NIST Definition of Cloud Computing, Version 15“).
This article sets forth a number of the questions, and answers, that the parties will need to address and settle in a cloud computing arrangement.
What’s the Agreement?
Is there a single agreement with schedules for service levels and pricing, which is subject to a merger clause delineating all attachments as being within the “four corners” of the document? Or, are there references to outside documents, such as online acceptable use policies that the vendor may unilaterally change over time?
To attain a level of certainty, the customer will want to have a static AUP as a schedule to the agreement, subject to amendment only by the written consent of both parties.
On the other hand, the vendor will want some flexibility with respect to the AUP to be able to adapt it to changing circumstances.
Where Does the Data Go?
The movement of data within the vendor’s cloud may involve transfer from servers in one jurisdiction to servers in another. This may invoke different jurisdictional-dependent discovery rules, privacy laws, and data-transfer restrictions (particularly for data transferred out of the European Union).
The customer may want to restrict or prohibit the relocation of customer data to avoid exposure to this hodgepodge of laws, regulations, and rules.
The vendor, on the other hand, will want the flexibility to use its assets in an efficient way and to take advantage of economies (such as tax perks) arising from its facilities being in various locales.
Does ‘One Size Fits All’ Work?
Vendors of software-related cloud computing services often provide those services based on a model of limited, or no, customization of the software, and a fixed schedule for installing software updates and releases. This standardization simplifies the vendor’s operational workload and minimizes costs.
The customer should assess whether it needs the right to have the vendor run a particular version of the software, or have software customized for the customer, and whether the software update schedule reflects the customer’s needs.
In the end, the customer should realize that changes to the vendor’s standard approach may increase the vendor’s costs and, subsequently, the charges to the customer. Similar issues apply to refreshing of equipment during the term.
How Reliable Is the Service?
Does the agreement contain service levels for uptime and availability?
The customer will want an appropriate standard for availability, whether it refers to the customer’s ability to access stored data, or to operate the application in a software-as-a-service environment.
Other service levels, such as support response time, may also be appropriate from the customer’s point of view.
The customer should keep in mind that an overabundance of service levels increases management effort for the vendor and for the customer. The customer may also want to establish a regime for calculating credits based on the vendor’s failure to meet the service level standards.
The vendor, if willing to grant such credits, may want them to be the customer’s sole and exclusive remedies for service-level failure, without the right of the customer to seek damages for these failures.
What Are Other Standards for the Services?
The customer will want the agreement to contain a warranty provision with standards to which the vendor is bound, such as compliance with “industry standards,” “performance in a workmanlike manner using qualified personnel,” as well as particular obligations of performance that the customer requires, including help-desk services and support.
The customer may also want specific obligations for:
• hardware and software maintenance;
• use of firewalls and intrusion detection;
• monitoring and maintenance of physical security;
• environmental requirements; and
• frequency and duration of scheduled maintenance.
The parties will need to come to an agreement on these services and related charges. The parties also must agree on the allocation of responsibility for compliance with applicable laws, including privacy laws, as well as the extent to which the vendor is obligated to update the service to maintain such compliance.
When and How Can the Customer Get Its Data Back?
The customer will want the right to get its data back at any time, and particularly at termination of the agreement, at no charge and without any other restriction.
The vendor may seek to charge for returning data in a format other than the vendor’s standard format — and if so, the customer will want to assess whether the vendor’s format allows for transition to another vendor running a different platform.
How Safe Is the Customer’s Data?
For the customer, security of its data is paramount. Some customers may enter into contracts only with vendors committed to procuring SAS 70 Type II audits and/or who have attained ISO 27001 certification regarding security.
Also, the customer may want the agreement to allow the customer the option of having a “private cloud” for its data, and also the ability to restrict data access to certain groups of vendor employees.
The customer may want the vendor to commit to other standards, too, or other particular requirements for data segregation, access and encryption (e.g., HIPAA, Gramm-Leach-Bliley, and specific state information-security laws, such as those in Massachusetts).
Fulfilling any of these requirements may affect the vendor’s cost of providing the service, which the vendor may seek to pass along to the customer.
The parties will also need to agree on the vendor’s data backup and restoration obligations.
What if There’s a Data Breach?
The agreement should address:
• how and when the customer is notified of a data breach;
• the allocation of responsibility for remedying a data breach; and
• the responsibility and cost allocation for notification of such breaches to the owners of the data (as required by state breach-notification laws and, e.g., compliance with data-breach provisions under the HITECH Act).
Also, the agreement should specify the vendor’s obligations in the event of the introduction of a virus, the occurrence of hacking, or denial of service attacks.
What if There’s a Disaster?
The agreement should address the parties’ responsibilities in case of a disaster that shuts down the vendor’s data center, including the service-level agreements for return to service, and the requirements for periodic tests in which the customer may want to participate.
The customer needs to understand what the vendor’s disaster-recovery and business-continuity plans are and how they mesh with the customer’s.
What if There’s a Dispute?
There should be a clear mechanism for resolving disputes, including an expedited process between the two parties, before going to litigation or arbitration.
Also, the customer will want there to be no circumstances under which the vendor can suspend services during a dispute.
How Much Does the Service Cost?
The pricing should be clear and complete in the agreement, presented so that it is understandable to a third party such as a judge or arbitrator, and address issues such as who bears the costs of obtaining the third-party consents necessary for the vendor to provide the service and other costs of transitioning to the vendor’s service.
The customer should conduct a thorough review of its current internal costs so that comparison to the vendor’s pricing is “apples to apples.”
The vendor should ensure that it has a complete understanding of the customer’s requirements and the costs of meeting them.
If either party fails in this part of due diligence, a failed relationship can result. If the customer has a right to terminate for convenience, then the customer should assess the relationship of the termination fee to the vendor’s unamortized costs of providing the service.
How Is Risk Allocated?
The parties will need to agree on an appropriate cap on direct damages and whether there will be any exclusions from this cap, and from the “no consequential damages” provision, such as for breaches of confidentiality and security.
The parties will also need to agree on the indemnifications given by the customer and the vendor (e.g., for infringement claims), and whether these should be without limitation.
What if the Agreement Terminates?
The agreement should address the vendor’s obligations to assist the customer in transitioning to another vendor (or in bringing the service back in-house) in the event of termination, as well as the rights the customer has to buy the equipment or license the software used to provide the service.
The customer may also want a license to the software used to provide the service (which the vendor may not be able to grant) and/or have the source code placed in escrow to be released on termination (which may be impractical).
If there’s an AUP as part of the agreement, then the customer will not want the vendor to terminate immediately for violation of the AUP, but will want to allow the vendor to, at most, suspend service with a cure period, while the vendor may want immediate termination to protect its network and its other customers’ data.
Is It Really Your Vendor Holding the Data?
To what extent does the contract allow the vendor to subcontract the services to a third party? The customer may want approval or control over the vendor’s use of subcontractors.
How Can the Customer Review the Vendor’s Performance?
The customer may want the agreement to address periodic audits of charges, and have reviews of data security and performance by the customer, its representatives and those agencies with regulatory authority over the customer. These, of course, add to the vendor’s costs and may also be viewed by the vendor as a distraction from the normal course of business — the final point being one that should be dealt with before vendor protests surface.
The customer may also want the agreement to allow for periodic benchmarking to compare the services to the marketplace and require the vendor to meet the market.
Assuming that the vendor agrees to benchmarking, the vendor will likely want any benchmarking results only to trigger discussions between the parties and not be automatically binding.
Full Source: Law.com
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Cloud Computing Technology – References and Pricing for SaaS Startups
Apr 6th
Getting the pricing right is a pretty critical part of any startup’s early stages. And it’s hard. The first task when selling business software (I differentiate from the consumer software experience) is getting anyone to pay anything for it and then be willing to talk about it so you have references. Indeed, there is often some software that is essentially given away in the early days.
Why?
Give it away in order to get a list of referencible customers started. It’s very hard to sell business software without some references. Your first task is therefore to get references together. You will need at least 3 or 4 to have a credible start. The more impressive the three or four initial references are, the easier it will be for you to grow. But you’re not really done with three or four. In my experience, it isn’t until you have six to eight solid references that you’re starting to get beyond the point where you need to beg, borrow, or steal to get references. And in fact, if your business depends heavily on verticals, you may need three or four in each vertical before you can start to open up that vertical.
Okay, how do you line up your initial references? If you’re waiting on Marketing to produce those leads, it’s going to be a long lead. The initial references are going to come from networking. You already know them, or you know someone who does. Hopefully your salespeople have some of them in their contact lists (I almost said Rolodex then realized some may have no idea what that is). Your executives will have some. Your investors and Board will have some. This is no time to be shy, network like crazy. At Helpstream, I had every single person in the company sign up for LinkedIn and then made sure the sales people had everyone in their contact lists. This meant that whenever sales wanted to check up on a prospect, they could immediately see if anyone in the company had a contact that could help. The way LinkedIn works, they didn’t even have to ask, it would just come up on the searches.
Now get out there and talk to everyone you can. Wheel and deal like crazy. This isn’t about extracting revenue. This is about building credibility and learning something about the world’s reaction to you product. We would tell everyone we talked to at this stage that we were offering “friends and family” pricing specifically to get some referencing going and to get started. To give an idea, we would sell these early deals for 1/2 to 1/4 of what we’d sell for a year later. We’d give away the professional services to install the software too. And the CEO and VP of Engineering need to make double sure these customers know they’re going to get the extended red carpet treatment for a long time.
There’s really only a couple of things to be cautious of at this stage. First, you need prospects who really will be referencible. That’s the quid pro quo for the deal. They have to be willing, and they have to be decent references too. Think about whether the next tier of customers you get will be impressed with those references. Sure, they’re likely going to be venture companies just like yours, but are they larger? Do they have first tier VC’s? Are they getting buzz? Second critical thing is that they are real customers. They come from real markets you want to target. They will really use your software because they need it. And your software will give them a good experience they will want to talk about. This all matters.
Okay, you’ve established two or three referencible customers by almost giving away your software, working hard to make them happy, and jumping through whatever flaming hoops it took. What’s next?
An old friend and mentor once told me companies earn their way to their ultimate pricing. He was right. You earned your way to charge a little more for the next tranche of customers, but you’re still not likely to be at “full retail”, whatever that is. However, you have some tools at your disposal to think about. Are you publishing prices? Even if you’re not, you’re certainly quoting them. Set your price schedule up and get religion about it. You need to break your sales staff of the “Let’s make a deal” mentality before it becomes too thoroughly part and parcel of your culture. Insist they can discount no more than a certain amount off the schedules. Let the VP of Sales discount a bit more. The CEO has to approve the final discounts. Choose some list pricing that is not yet full retail, and use discounting to get the deals done. But don’t just give it up. The CEO needs to be the approver of deep discounts, and they need to start testing the waters to see what the market will bear.
Thus begins the stairstep process of setting prices, discounting until you sell, reducing the discounts, and then raising prices again when discounts are low enough. The deep discounts right after you raise prices provides transitional flexibility so that pricing moves up more smoothly. Initially your prices are not based on competition so much as they are based on your credibility. That’s what this stage is all about: building credibility. BTW, if you have not realized it yet, this means you have to get the early customers live as soon as possible and they need to be successful. It’s the number one priority for your engineering and other non-selling staff. The CEO and Executive Staff should be all over that process making sure it goes exceedingly well so the customer will be happy. Smother your customers with service.
Second thing to keep in mind–make sure your friends and family customers know they got a special deal and that they’re not to pass that along during a reference call. I would straight up tell them what you’re charging others. They will appreciate you all the more for the discount you’ve given them. They’ll also understand when the time comes for you to raise prices, because this is a SaaS deal after all, and they will eventually need to renew. So you will have telegraphed what’s happening and you can still cut them a little better deal at renewal time. We did well by trying to keep the discount rates constant for older referencible customers as we raised the list prices. That way, the early customers knew they were still “special” because they were getting the deepest discounts even though the pricing was going up.
Do you get a sense of how important it is that your pricing, even the discount rates be codified? These are stakes in the ground and progress must be visible and measurable, not random and all over the map. Everyone is not going to have perfect knowledge of it, nor should they. But customers know what they paid. They know what list was and what the discount to list was. They should have some sense of where you’re going with pricing as they renew. Some customers will want to sign on to longer terms. Get them to give up some discount in order to look in list for a longer period. Just as importantly, your Board will be monitoring this process carefully to understand what the market thinks your product is worth.
What about terms? SaaS is paid in advance, and you should be able to get a year in advance. Again, some customers will sign up for more to lock in what they feel is a good price. That’s fine. Prepayment is cash you can use to grow your business. Just make sure the pricing is on some rational path. Some customers will ask you for month to month. That’s nuts. I would not do that except under very special circumstances. Just the work to bill it is painful. Month to month plans should only be for customers that represent significant new milestones, and the month to month should end after some “pilot period” no longer than six months after go live. If they still can’t figure out whether they want you after that, they’re just taking advantage of the situation. Quarterly is a little better, but I like the same approach. Only do it for milestone customers and it has to end and go to annual some point after they’ve had a chance to learn to love the product.
As an aside, the bigger SaaS companies that no longer need as much capital to bootstrap with are now starting to push month to month deals. It’s a competitive advantage for them and it helps starve little companies of much-needed cash. Keep an eye on that in your space. They’re pushing a lot of rhetoric about how they’re doing it for customers, but we all know the reality of what that’s all about.
What can you expect to do in terms of raising prices? At Helpstream, our ASP’s (Average Selling Prices) went steadily upward. Within the first 2 years after launch, and really within 18 months, they had tripled. We cranked the pricing schedule every 6 months or so, and used renewals as a prime opportunity to increase prices. Frankly, we had customers telling us we needed to increase prices due to the value we created, so there was not much squawking when we did so.
How should pricing be done relative to competition? First, you need to understand how you are competing. Are you the price leader? If so, that’s a different thing. It will infuse everything you do. Are you the best product? That’s different. If you are the best product, you may also be the price leader at times, but that is never the point of your spear. Be clear with customers about this. Early on you will know if a prospect is looking for the cheapest solution. Your answer is that you are not the price leader, so-and-so is, so if that’s really all they care about, you’re probably not the right choice. However, while we are just getting started, yada, yada, we are both the best deal in town and the best product. At Helpstream we started out at about half the cost of the low-cost players. By the end of my tenure we were at half the cost of the highest cost players, and that by dint of discounts and much lower friction (more on lowering friction in a future post) in terms of professional services to install. Had we been given another couple of years, we would have been up there at the high-end of the pricing scale, but able to justify it by virtue of our ROI.
This post is dragging, so I just want to make a few of other points to finish up:
- If you want to lower friction in your sales cycle, make your pricing simple and transparent. Ours was by the seat, and towards the end, we only charged for customer service representative seats not for our customer’s customers. This was a competitive advantage because all of the other players wanted to charge for it all. Even though we had the same list price as a Salesforce seat ($1500 a year per agent), this left a substantial advantage. If we charged at Salesforce’s list price for customer’s customers and didn’t discount, we would’ve had a $50M a year business (theoretically, of course). Our pricing by agent seats was also much easier to understand. Most SaaS companies have way too complicated pricing. Most salespeople hate pricing schedules and simple pricing, though the smart ones realize the value. The others just look at it as interfering with their ability to play “Let’s make a deal” and with forcing them to say “no” instead of “yes.”
- Align pricing with value received. Our ROI proposition was around enabling agents to be vastly more efficient. It only made sense to charge by the agent in that case.
- Push negotiation on discounts higher in the org. Most sales people are about saying, “yes”, and negotiation is about saying, “no”. What’s hard is to get the customer ready to buy from you. Maximize the value of that difficult chore through the final negotiation.
- Think about pricing all along the demand curve so as not to leave an exposed flank at some price point. This borders more on packaging since it means low-end versus high-end modules, which I’ll be posting about at some point too, but it is an important long-term strategy piece. Full Source
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SaaS a big winner in health stimulus
Mar 8th
One conclusion I was able to draw from last week’s HIMSS show is that Software as a Service (SaaS) is the only way clinics and small medical practices are going to get health IT in time to collect that sweet, sweet stimulus cash.
From big SaaS companies like AllScripts to smaller ones like Practice Fusion, the buzz was electric and the lesson obvious.
(Practice Fusion CEO Ryan Howard is shown at his HIMSS reception last week. He’s expecting a better year than the Phillies slugger of the same name. Which is saying something. (Then again, I’m a Braves fan.))
Most large hospitals have their solutions in place, or are in the process of implementation. This vendor relationship may be the most important thing on a hospital CEO’s plate right now.
From what I gathered on the HIMSS show floor, most of these vendors are lining their customers up to collect cash on investments made long ago.
Collecting on the 2011 meaningful use guidelines, watered down as they’re expected to be, will be fairly simple, and lobbying by both hospitals and vendors could water down the 2013 and 2015 guidelines so they don’t have to spend anything above current plans to collect on them.
Many small practices have been assuming that the hospitals will bring them their health IT. Admitting privileges are a powerful weapon. If the hospital mandates you go with McKesson, you may have no choice.
But small practices may well ask, what’s in it for me? Going with the hospital’s IT solution only ties you closer to the hospital. You have your clinic because you want to stay independent. And many hospital systems were not really designed to scale down.
Thus, SaaS. There is little up-front expense, no server in the closet. You can back up records overnight with Carbonite or a USB-linked hard drive — you can backup 2 terabytes at Costco now for under $300, including software.
SaaS vendors can scale quickly thanks to cloud computing. The biggest problem may be assuring clinics that their broadband connection won’t go down mid-day. But a lightweight version of the software, again on a nurse’s station, can handle that eventuality.
Services like SharEHR claim to require no training while others like Practice Fusion cost nothing thanks to ads. If the hospital demands your records, you can talk to them about that later.
Contrast that with the cost of putting in servers, wiring your office, training your staff, and learning it yourself, which is what many EHR vendors were offering clinics just a few years ago. The horror stories from that are many.
Personally I am still waiting for the glorious tech revolution to strike the doctors I use most often. My pediatrician has a PC on his desk to help with billing, but the kids’ records are still on paper. My internist is also paper driven. My dentist is a computer hobbyist but still brings out a file folder each time I visit. Last time I got new prescriptions I still drove them to the pharmacist.
This tells me there is still an enormous opportunity to automate small practices, but 2011 will be here before you know it and the only way I can see them going is to buy it as a service, stimulus cash or no stimulus cash.
