The ASPs Value Proposition or Valueless Preposition? Paul Greenberg President, The 56 Group, LLC...

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The ASPs Value Proposition or Valueless Preposition? Paul Greenberg President, The 56 Group, LLC Author: CRM at the Speed of Light, 2 nd Edition (McGraw- Hill 2002) 3 rd Edition, May 2004

Transcript of The ASPs Value Proposition or Valueless Preposition? Paul Greenberg President, The 56 Group, LLC...

The ASPs

Value Proposition or Valueless Preposition?

Paul Greenberg

President, The 56 Group, LLC

Author: CRM at the Speed of Light, 2nd Edition (McGraw-Hill 2002)

3rd Edition, May 2004

14%

69%

10%7%

1 2 3 4

What is an ASP?

1. A snake.

2. Software provider.

3. A utility company.

4. Who the heck knows?

What is an ASP?

Application Service Provider (ASP)

• More than one Variety Net Natives a.k.a On Demand Utility

Hosted Solutions

Other Permutations

• Hybrids

• Both: Online/On Premise

ASP: The Rise & Fall

The hosted solution model failed miserably in 2001 after a brief, meteoric rise• Fears about data security – some real, some

imagined

• Hosted software, not a services model

• Cost was still too high – paying for licenses and administrative fees and consulting

• Lousy marketing strategy – spent lots of money before delivering anything real at all

ASP: The Fall & Rise

New business model intersected bad economy

• Money was an object to most companies

• CRM was still on the table

Traditional CRM had hit a brick wall with its “large enterprise” problems and slow ROI

Net Natives able to swoop in with great marketing and smart value proposition

ASP: The Model

Software As Subscription

• Service oriented, multi-tenant architecture

• Regularized, flexible fee structure (monthly,

annual)

CFOs love this approach – low risk, amortized

cost, little bit upfront

ASP: The Model

On Demand Services need SOA• Service-Oriented Architecture (SOA)

Collection of business components and IT functions driven by evolving business reqs

Web services (XML, SOAP, WDSL, etc.)

• .NET or J2EE compliant platforms Vendors vary (Netsuite J2EE; Salesnet .NET)

ASP: The Value Proposition

The Upside - CFO

• Much lower TCO than traditional vendors

Approximately 20% of traditional

• Pricing model is subscription fees

Per user per month

Can be flexible

Easy to plan for

• Cost overruns not an issue

ASP: The Value Proposition

The Upside – CIO/CTO• No downtime during upgrades

• IT personnel overhead outsourced to ASP – significant reduction of administration time

• Much shorter deployment times 30 days is not at all unusual Compare to 4 to 18 months for traditional CRM

• Customization is now configuration, though custom applications can be built w/provided tools

ASP: The Value Proposition

The Upside – VP of Sales (or Marketing)

• Salespeople able to work offline,

online or mobile – always up to date

• Adoption rates high due to easy to use

interfaces

ASP: The Value Proposition

The Downside

• ASP claims are often excessive While benefits great, just not as great

ASP: The Value Proposition

The Downside

• Don’t provide strategic services Change management

Value creation services

Other performance related benefits

Are a system and a technology, not a

strategy and a philosophy – missing those

pieces

ASP: The Value Proposition

The Downside

• Competitive beyond Reason Always sending out press releases on which

client they’ve stolen from whom

Some will make unfounded claims about

their competitors that under scrutiny aren’t

true

ASP: The Myths

Security Myth

• “My data is not secure, because I don’t have it”

Mythbuster

• ASPs have multiple levels of security Physical

Internet

Network

Operating System

Application Level

ASP: The Myths

Integration Myth

• “Its impossible to integrate because the

hosted services don’t integrate well with our

on-premise systems”

Mythbuster

• Use of web services makes integration less a

chore, though issues will be there APIs, service oriented architectures

ASP: The Myths

Functionality Myth

• “The ASPs might be cool, but they don’t have

anywhere near the functionality we want”

Mythbuster

• The net natives and hosted services provide

all the functionality you need

• Not in all circumstances (manufacturing

environments, etc.)

ASP: The Market

Growing Rapidly – Here to Stay

• Aberdeen - $8.0 billion by 2007 28% CAGR

• IDC – 65% interest in using “on demand utility”

• Gartner Group – “in 2004, there will be increased acceptance of the hosted model for sales automation for all enterprise sizes, with an understanding of its limitations”

ASP: Who are Those Guys?

Salesforce.com

• 8,400 customers, 120,000 users

• One of two vendors providing end-to-end

“value chain” services

• Put “software as services” model on the map On Demand Utility

• Major force in changing CRM paradigm

ASP: ASP: Who are Those Guys?

Netsuite

• Over 7,000 customers

• The other end-to-end value chain provider Even include modest Partner Relationship

Management capabilities – uniquely

• The only net native that is an Oracle-focused alternative

ASP: ASP: Who are Those Guys?

Salesnet

• Easily the deepest sales functionality of all the

net natives

• First net native to understand the process-

driven transformation of CRM

• Uses business analysts to work with you to

configure or customize Salesnet to your needs

ASP: ASP: Who are Those Guys?

RightNow

• Deepest customer service functionality

• 20 straight quarters of profitability

• Unique selective upgrade capability

ASP: ASP: Who are Those Guys?

Siebel CRM OnDemand

• Alliance with IBM OnDemand services

• Aimed at mid-sized companies

• Siebel did a 180° wheelie on hosted market

after initial failure

Siebel CRM OnDemand: Upshot Edition

• Siebel acquired Upshot in 2003

• Aimed at smaller business users within Siebel

world

ASP: The Other Players

Hosted Solutions – Conservative Cousins

• Corio, USInternetworking, Surebridge• Surebridge has best value proposition with

hosted version of MSCRM 1.2

• Represents 40% of their revenue even

though MSCRM out only a year

ASP: Protect Yourself

The Service Level Agreement (SLA)

• Must be tightly binding and detailed

• Consider Scope of services Performance benchmarks Time to problem resolution Security Uptime guarantees Credits for great performance, penalties for poor

performance So much more

THANK YOU

For further information:

Phone: 703-551-2337

Email: [email protected]