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Enterprise SaaS: Service and Support is Vital for Growth

Too many Enterprise SaaS and Cloud vendors focus their efforts on marketing and spinning a good story to attract new customers, rather than spending time or money looking after those customers once they have signed on. Once the ink is dry on the contract ongoing service and support seems to be an afterthought.

According to newly released global research from The Enterprise Strategy Group (ESG), Enterprises value SaaS applications, particularly for email-management, but customers are facing significant service and support challenges plus a lack of ongoing aftercare from their SaaS vendors.

The “SaaS with a Face” report, which asked 248 global companies currently using SaaS-based e-mail management about their usage and service satisfaction, indicates the problem is so bad that of non-Mimecast SaaS customers 22% are looking for a new SaaS email management vendor.

Given some of the largest and most aggressively marketed vendors in the Cloud email management space are publically listed companies, it’s quite clear their drive to attract new customers is part of a shareholder-pleasing business plan. Ongoing aftercare and customer satisfaction seem not to be a concern to them.

If these vendors want to grow, they need to wise up about their customers’ expectations. Service and support is a vital addition to an Enterprise SaaS product offering; simply delivering a fancy Web 2.0 interface, or expecting your customers to fend for themselves on support forums is not enough. The ESG SaaS with a Face report identified that 66% of customers cited vendor support as an important vendor selection criteria, only 34% noted that they had actually achieved improved service and support compared to traditional software vendors. It would seem that well-known cloud vendors are letting their customers down.

The impact of bad service and support by SaaS email management vendors are wide and have a significant impact on their customers. When asked what service and support challenges customers faced with their SaaS email management vendor the list of problems indicates a severe lack of aftercare; for example 27% of non-Mimecast customers were not able to find the right person to solve their problem. A further 15% reported inexperienced support staff, while missed SLAs and long support wait times were reported by 18% and 17% respectively. Worryingly 12% of non-Mimecast customers cited that some problems were never resolved.

For a true Enterprise SaaS vendor, offering industry leading service and support is an essential part of the relationship we have with our customers. Unlike other SaaS and Cloud email management vendors who build their solutions by cobbling together a collection of acquired of OEMd products, Mimecast’s infrastructure is purpose built by our own team. This means we are not tied to 3rd parties for customer service and importantly can support our own customers in the high standards they expect.

This personal level of involvement by all our service, support, development and customer facing teams means the Mimecast difference, or out “SaaS with a face”, really shows; our customers rate our award-winning customer support highly and, as a result, report satisfaction well above the industry average – 85% of Mimecast customers have no plans to move to a different vendor.

To read the complete ESG SaaS with a face report, click here. We also hope you like our infographic, embedded in this post, which reflects the findings of the report.

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Placing Your Trust in the Cloud

Arguably the single biggest challenge for Cloud vendors is helping customers understand and justify the implications of handing over not only data but business processes to a Cloud Vendor, especially when the Cloud space has lacked maturity and standards.

And it’s becoming an increasingly important decision as Cloud becomes the “default” choice for many businesses, they need to understand where their data is and how safe it is.

Yes, Cloud Computing is still in its relative infancy, but it’s growing up fast.  To hear a highly respected and influential Gartner analyst saying that he rarely recommends anything but SaaS solutions to companies looking to change their email security service shows that the die is well and truly cast.  It’s a similar picture in the archiving space.  SaaS vendors are growing far faster than their on-premise counterparts, although SaaS still accounts for a small share of the overall market.  And of course, with Microsoft’s strategic priority to transfer the on premise dominance of Exchange into the cloud (with Office 365), it’s fairly clear that at some point in the future, all these technologies will be delivered to customers from the cloud.

It’s a matter of when, not if.

What’s surprising however, there seems to be a two stream approach to Cloud adoption, the haves and the have not’s- those who have Cloud and those who don’t. Yet.

On the one hand, especially in the SMB and midmarket, cloud vendors are now dealing with a far more enlightened customer base.  Many CIOs are now on their second or third cycle of purchasing cloud services.  They have wised up to vendors who over-promise, or hide behind bogus SLAs, and they will have rejected out of hand any service that doesn’t do what it says on the tin.  Their next decision could potentially be based on a specific business or technical need, but more likely, it will be based not simply on the service but on the vendor’s approach to delivering that service.  In other words, it will be based largely on the vendor itself.

The second stream is convincing the have not’s to adopt, often larger enterprises that their data is safe in the cloud. This is a slower burning challenge, because these businesses often have massive legacy investments in on premise IT resources, both in terms of tin and human capital.  That makes a move to cloud technology not only a technological change in mindset but a cultural shift as well.  But it doesn’t matter how big the organization is, the pressure on IT departments to reduce costs while delivering more value is the same.  And most if not all roads lead to the cloud.

But IT departments needn’t fear- Jevons Paradox predicts that more IT will be required for the future, not less- it’s just going to be different to what they’re doing today. But that’s technology for you. When was the last time IT staff used their Windows 3.1 skills?

The danger here is that CIOs of large enterprises tend to ‘trust’ the biggest, most established technology brands with the deepest marketing pockets, best placed to “Cloudwash” their dated technologies. I use the term ‘danger’ because, when it comes to cloud, money can’t buy you trust.  The big brands have whole shoals of fish to fry and are usually more interested in wooing consumers than they are safeguarding the interests of customers and their data.  For smaller, pure play cloud vendors like Mimecast, this is ALL we do.  And that means we can’t slip up.  So we have to earn trust the hard way, and the only way.  And that’s by building a history of excellence in delivering Cloud Services.

For those CIOs who’ve already made the leap of faith and are committed to a cloud strategy, we’re now hearing – anecdotally at least – that customer service and support has jumped up the purchasing priority list alongside cost.  That is largely because customer support has been the single biggest pain point for consumers of cloud service over the last two years.  Why?  Because it is, arguably, the most underinvested business function in the cloud industry.

But of course, the economics of SaaS and cloud only work if you retain those customers for long periods.  At Mimecast we retain over 98% of our customers. It goes without saying that the product has to work.  But perhaps the key variable is our ability to look after our customers.  To put it politely, the cloud industry has a patchy record in providing customer service.

To some extent, then, in the SMB and mid-market space, there will be a period of ‘natural selection’, where the new breed of cloud savvy IT purchasers weed out the suppliers whose service doesn’t match the promise, for whatever reason — unreliable product, unrealistic SLA, non-existent support, dodgy security protocols, or fudged solutions built on OEM arrangements or poorly integrated acquisitions.  The cloud vendors who are playing the long game and investing properly where it matters will rise to the top through this process, and others will fall by the wayside.  (In fact we’re already seeing this happening in the early part of 2012.)

For first time purchasers and larger enterprises, though, we still have to help them with their trust issues, and we won’t achieve that by focusing on customer service excellence.  Instead, we have to put our weight behind meaningful industry initiatives that can turn ‘trust’ from an intangible to a tangible purchasing criterion.  One example of this is Cloud Security Alliance’s Security Trust and Assurance Registry, or STAR, which is addressing the need for Enterprises moving applications and data to the cloud, or consuming a provider’s services, to understand cloud provider security. Another is an organisations willingness to adhere to security standards such as ISO 27001. But providers remain hesitant to give up proprietary information, or expose themselves to exploitation.  In fact, to date, only Mimecast, Microsoft and Solutionary have agreed to publish their STAR controls.

Transparency is clearly going to be a major factor in the success of cloud technology, particularly as a means of building confidence amongst enterprise CIOs that their data is safe and secure in the cloud.  But while we will continue to embrace standards initiatives such as STAR and ISO27001 that make trust a tangible factor, our growth in the mid-market will most likely come from good old fashioned values, such as delivering strong after-sales support, and from sharing stellar recommendations from existing customers.

STAR launched in the fourth quarter of last year and its aim is to be a public repository of providers’ security controls. Providers who are STAR members can fill out either the CSA’s Consensus Assessments Initiative Questionnaire or the Cloud Controls Matrix framework questionnaire, both built according to the ISO 27001 standard, and ultimately agree to have that data published online and publicly accessible. 

Image CC Flickr- Lyncis

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Cloud = New Lego (building blocks of compute)

Lego figures installing RAM in a computer

A really old post by James Urqhart from 2007 surfaced on Twitter the other day and it got me thinking- Is Cloud the new lego- i.e. the building blocks of computing?

Let me explain.

I posted the other day about the build v.s. buy dilemma and I argued that cloud is changing that debate because it’s loosely coupled and continuously innovating. Why would you want to build non-differentiating assets when you could buy them cheaper, better, faster etc. Allow yourself to focus on your differentiation.

I realised this week that we’re actually talking about a new type of building blocks in computing- a new type of computing lego if you will.

But it’s a pendulum that’s been swinging for a long time and I’m a relative newcomer. As with each of the previous paradigm shifts, the next paradigm brings advantages that were expensive or hard to achieve in the previous shift. Cloud represents that shift today. Back to James’s post:

John Holland (as told in Waldrop’s history) defined complex systems as having the following traits:

  • Each complex system is a network of many “agents” acting in parallel
  • Each complex system has many levels of organization, with agents at any one level serving as the building blocks for agents at a higher level
  • Complex systems are constantly revising and rearranging their building blocks as they gain experience
  • All complex adaptive system anticipate the future (though this anticipation is usually mechanical and not conscious)
  • Complex adaptive systems have many niches, each of which can be exploited by an agent adapted to fill that niche

Now, I don’t know about you, but this sounds like enterprise computing to me. It could be servers, network components, software service networks, supply chain systems, the entire data center, the entire IT operations and organization, etc. What we are all building here is self organizing…we may think we have control, but we are all acting as agents in response to the actions and conditions imposed by all those other agents out there.

He’s right- that does sound like enterprise computing and it’s interesting as his viewpoint has migrated from 3 years ago being a data centre / SLA / SOA specialist then to a Cloud specialist now.

So it was with ire that I read this Computing.co.uk article, BBC mulls cloud support for London 2012 coverage:

The London 2012 Olympics are a little under two years away, and the BBC is considering cloud computing as a way of meeting the enormous viewer demand that the games will create.

But in the current economic climate, simply throwing money at the problem is not an option, as BBC CTO John Linwood explained: “We’re looking at what is the most cost-effective way of delivering what we need to do. Clearly we have to find ways of [covering the games] which don’t involve going out and building huge amounts of infrastructure that won’t be used beyond the Olympics. We’re looking at everything from straight-forward caching to on-demand cloud.”

However, the cloud can bring more benefits than just an elastic response to viewer demand, according to Linwood.

Using the cloud to facilitate digital storage of broadcast output and other information is something the BBC was considering before the question of Olympic coverage was raised.

It would be criminal if the BBC wasn’t thinking of using the Cloud for some of Olympics- it’s got a perfect use case! They went on:

“Virtualisation is the first step to get us into a position to use the cloud. We’re looking at providing centralised storage, rather than having storage sprinkled around the BBC. We could have a centrally managed storage cloud that’s used on demand by different parts of the organisation,” Linwood said.

Using the cloud for storage brings additional security concerns to an organisation, as information is stored on servers outside a company’s direct control. Linwood admitted: “There’s clearly content we’d never put into the cloud, for example licence fee and viewer information, and source information from our journalists. We’re working with potential cloud providers around their security models to make sure it’s safe.”

Oh, and lets confuse people even more by dropping the “V word”  in there why don’t you. Virtualisation does not equal cloud! How and why would you virtualise storage? Oh and let’s sprinkle some security concerns too ARGH! :(

The reality is today that Cloud technology represents the next type of building blocks for compute- both public and private.

Now where’s my lego?

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Has Cloud Fundamentally Changed the Build v.s. Buy Debate Forever?

When you consider the classic “build v.s. buy” argument you would think that the science might be straightforward.  But anyone involved with the process knows the decision is not:

Decades of trial, error, and egghead analysis have yielded a consensus conclusion: Buy when you need to automate commodity business processes; build when you’re dealing with the core processes that differentiate your company.

But I think the build v.s. buy argument has changed forever….

With Legacy software, what you bought stayed pretty much the same until you upgraded- assuming it worked at all :p But with SaaS the provider is continually innovating, so the software doesn’t actually stay the same- it continually improves. And if it doesn’t work, you leave, having only spent the monthly payments in the interim, not the capex like before.

Let’s put it into the context of billing software- how many people continually innovate on their billing engine? Not many I think, there are differentiating features to be getting out the door to beat the competition! And certainly not with as many bright minds as a SaaS vendor does. When the vendor releases a new version, the API increments and the customer get’s to implement the new features at their leisure, ensuring backwards compatibility.

Recently, I had discussed this with Dan Burkhart, President of Recurly at HostingCon in Austin, Texas. Dan put’s this down to a sort of Engineers optimism- the belief that they can solve anything.

Most companies generally underestimate the level of effort required to build their own internal billing management system- most software developers are problem solvers by nature and they think Gosh I can do this, I’ve either done something similar or I know I have the chops to get it done and what tends to be underestimated is the level of effort required to maintain, to own and manage internal billing in an ongoing fashion.

We’ve got a lot of companies who actually built this in house and they come to Recurly and say Gee, we’ve built this in house and we’ve got 3 to 4 FTE’s against it and so you do the math…. call it $150k a head- that’s a significant investment. So the build path ends up typically being much more expensive than the buy path.

The question they should be asking is- are they solving the right problems? Problems that will differentiate themselves from the competition.

httpv://www.youtube.com/watch?v=fLlM-Ece9WM

Dan and I also talked about their competition- Chargify- they’re both playing the innovation game right now and competing for customers. It was by chance that I ran into Jonathan Kay from Grasshopper / Chargify later that week when I was visiting Mimecast’s Boston office. This is one of the brilliant features of the SaaS business- competition is driving innovation- delivering better services (software) to customers.

I’m incredibly proud to be part of this IT revolution- a revolution in which Customers are in the driving seat and are winning.

I think the Cloud, and SaaS in particular has changed the build v.s. buy debate forever.