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  • Posts tagged ‘Socialtext Appliance’

    SaaS Appliances Bring the Cloud to the Enterprise

    Software Appliances were initially created for high performance network and security infrastructure with lower administration costs. Over time the Appliance model moved up the stack from email appliances to a diverse set of business applications. This trend has continued in parallel to the rise of SaaS and Cloud Computing. SaaS Appliances provide pre-configured, self-contained applications with on-premises deployment that can be automatically updated and upgraded. While the Cloud is the center of attention these days, SaaS Appliances have been quietly evolving up the stack while adapting the best of web-oriented architecture for clouds inside companies.

    Whenever there are security or regulatory constraints that demand on-premises deployment, SaaS Appliances can deliver where the Cloud cannot. While several years from now these constraints may change, this is the reality for many enterprises and government agencies. Any SaaS vendor who does deliver both Cloud and SaaS Appliance deployment models from a single image of their software is simply reducing their total addressable market.

    Compared to traditional on-premises software, SaaS Appliances provide rapid deployment that shortens technical pilots, fast upgrade cycles without degrading service level and a lower Total Cost of Ownership (TCO).

    Combined with subscription business models that let the enterprise right-size the deployment, the ability to deliver or turn on additional applications (e.g. upgrading a Microblogging Appliance to a full Social Software Appliance) provide the flexibility and fit for adoption concurrent with business value.

    Traditional enterprise applications such as CRM or ERP will move to the Cloud, but not just because a customer chooses the Cloud over traditional deployment. The Cloud will come to them. For example, I can’t wait for a customer to migrate apps and users to the Cloud so we can enable the integrated value proposition of Social Software working across organization and application silos.

    Selling a SaaS Appliance

    Socialtext is hiring sales people right now. As I conduct the interviews, I’m impressed by smart and highly skilled candidates that have dropped by our headquarters in Palo Alto.

    In each conversation, one question inevitably comes up: “It was my understanding that Socialtext is a SaaS company, but you guys deploy on an appliance. Isn’t that a little weird?”

    The truth is, our customers love our managed appliance, and it’s actually quite in line with our SaaS business model. The appliance brings customers the best of both worlds. It provides them with a system that is easy to set up and implement with nearly zero management. At the same time, the data is secure, onsite and adheres to the company’s internal data requirements.

    Although Socialtext has strict requirements around our data center that runs our hosted service, for some companies, the complex requirements of their industry might require them to run our software on site, and we’re happy to provide that option.

    The conversation typically goes like this:

    Customer – I can put it in behind my firewall, control when updates are installed and not have to worry about learning languages or procuring a bunch of hardware?’
    Me – Yep
    Customer – And it’s secure?
    Me – Yep
    Customer – How many heads do I have to allocate to manage it?
    Me – About 15 – 30 minutes a month to make the calls for the updates.
    Customer – And it hooks into LDAP & SharePoint?
    Me – Sure does.
    Customer – Where do I sign?

    Of course, it isn’t always quite that easy, but I’m confident the Socialtext Managed Appliance gives us a great competitive advantage.

    And we see it as an asset in the wide array of industries that purchase our enterprise social software. Financial services firms love it because it aligns with their compliance requirements. Healthcare organizations jump all over it because all the data is stored on site. Media companies get it because it is simple to deploy and easy to access by all employees. Even the US Federal Government uses it because it exceeds their security requirements. Most importantly, all of our customers choose Socialtext because our social applications are flexible to the way their business works. The appliance makes this easier.

    Is the idea of an on-premise, SaaS solution weird? Not at all. Google, Barracuda and many others have been doing it for years. Is it unique to Socialtext for social software? Most definitely.

    By the way, if you know any good candidates, send them my way.

    SaaS Forces Alignment between Customers’ Success and Socialtext’s Success

    During the past month, I’ve spoken with a lot of analysts, journalists, bloggers, customers, and prospects about the great momentum in our business and explaining the underlying reasons for our success. One topic I always emphasize is Socialtext’s business model, which is all SaaS (Software as a Service). In the software industry, the term SaaS can mean many different things. To me, it means that all our contracts with customers are on a subscription (usually 12 month term) basis.

    Many folks (investors especially) like the SaaS model — and its “gift that keeps on giving” annuity feature, but that’s only true when renewal and retention rates are sufficiently high to cover the costs of customer acquisition and support. For Socialtext, the good news is that we’ve been in business long enough to be in what I call the “SaaS economic leverage zone.” What I mean by that is our renewal revenues are a healthy chunk of our ongoing business, and our renewal rates have increased by an order of magnitude during the past two years. I’m really proud of this achievement. It can be attributed to the combination of major product enhancements, coupled with more pedestrian operational improvements, including faster contract-to-launch times , improved coordination with customers pre-launch (often pre-contract), and more intimate partnerships with our customers throughout their lifecycle.

    Adhering to this this SaaS model has great benefits for us and our customers. Here are some of the benefits we have seen and what about the Socialtext offering that’s different than other vendors out there:

    SaaS forces alignment

    What I love the most about this business model is that it completely aligns my team with the goals of our customers. If our customers don’t realize the value from our platform that they were expecting, then they just won’t renew. If they do find value, they renew. If they achieve results beyond their expectations, they’ll increase their Socialtext footprint. The best testament to our progress on this front is that our business from customer expansions tripled in Q3 and Q4 of 2009 vs. our previous average.

    Socialtext’s appliance is secure on-premise SaaS

    For Socialtext, “SaaS” does not have to mean “cloud-based solution.” While we offer a shared hosted service like other SaaS vendors, we also provide our customers the option of deploying via an on-premises Socialtext appliance. This secure, behind-the-firewall, 1U rackable box is easily integrated into the customer’s existing datacenter (and enterprise directories, backup, etc.). It comes pre-configured, so there is nothing to download, install, or configure. Our Services team works with the customer to schedule monthly updates which are pushed down to the appliance, requiring no time or cost of administration on the customer side. Finally, for those customers who want the privacy of a single-tenant service, but don’t (yet) have a datacenter of their own, we also offer a “hosted appliance” option. It provides all the benefits of the appliance model combined with the convenience of having the server hosted by Socialtext.

    It’s all about customer success and business value

    The official job titles for our team members that work with customers during their deployment is “Customer Success Manage.” This isn’t just fancy business card blather – these people are measured and goaled on pretty much the same metrics that our customers use to measure their deployment success – timeframes, usage metrics, and most importantly, business value. Our software is fully instrumented to measure a wide range of user activity, and these reports are shared (assuming the customer gives us access) between the customer team and our team during our periodic scheduled update calls.

    By contrast, vendors who continue to follow the perpetual license sales model will continue to be motivated to sell you as many seats as possible up front, which I believe is why there are so many Enterprise 2.0 Adoption “support groups” out there, and why that topic dominates many of the industry conferences and forums.

    Customer-Driven Innovation

    I’ve often used the line “the best ideas come from your smartest customers – are you organized to listen?” A great deal of our product enhancements and innovations have come from feedback and suggestions from our customers – not just in the form of feature requests on a one-off basis, but rather in the context of an ongoing relationship we are proud to build with them. One example is the way Socialtext’s new groups capability works the same way whether you are using groups defined in your corporate LDAP/Active Directory or setting up ad hoc groups for cross-functional teams.

    We only succeed if you do

    An amazing amount has been written about the SaaS model and why it’s good for customers. These include lower up front costs, better matching your expenses with adoption and deployment, reduced risk, less capital needs to self-host software, and lower IT headcount requirements (to name a few). But I think the biggest advantage is that your vendor only succeeds if you do.

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    About This Blog

    Weblog on gaining business results from social software.

    On this blog, Socialtext staffers and customers explore how companies can gain the most business value from their use of enterprise social software, including microblogging, social networking, filtered activity streams, widget-based dashboards, blogs and wikis.


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