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TDWI Upside - Where Data Means Business

Cloud Deployments: Benefiting User, Developer, and Vendor Communities

Vendors should consider the cloud as more than another direct revenue channel. Don't overlook the ways you can benefit from offering a cloud-based solution.

Most of us understand how customers benefit from cloud-based software. Such software allows them to minimize upfront capital expenses and deployment costs, scale on demand to satisfy increased usage loads and seasonal peaks, reduce or eliminate in-house data center expenses, avoid software maintenance expenses and associated downtime due to software updates, and outsource the responsibility for meeting service level requirements.

Cloud computing also provides numerous benefits to the vendors that offer it. The most obvious one is the ability to reach new prospects that might not otherwise be able to afford the product, thus gaining immediate revenue and increased market share. This also presents the vendor with the opportunity to later up-sell cloud users to potentially more lucrative in-house licenses.

Furthermore, a cloud-based trial software deployment can allow vendors to dispel any FUD (fear, uncertainty, and doubt) that their products are overly complex or not well suited for the average user.

For example, SAS Institute's competitors, while admitting that SAS has powerful technology, frequently misrepresent its technology as so complex that it can only be used by actuaries or someone with a Ph.D. in statistics. I suspect that if prospects could be convinced to try some of SAS's technology through a cloud-based offering, many would be able to see through the FUD.

However, there is another major way -- often overlooked -- that a vendor can benefit from offering a cloud-based solution. A vendor can use the cloud to expose implementers, consultants, and developers to its technology in the hope that they will then introduce the vendor's solutions to their own customers and/or utilize the vendor's technology in their own software solutions.

In general, when consultants are called upon to implement an IT solution, they will either use software they are already familiar with or view it as an opportunity to gain experience (on the client's dime) with a new "hot" technology that will augment the consultant's resume and skill set.

I have often advised start-up software vendors seeking to break into an established market to offer free training to third-party implementers. Implementers and consultants are frequently asked by clients to recommend software. Once they are comfortable and have experience with a vendor's products, they can recommend the vendor's technology to their own clients.

One relatively simple way to accomplish this is to offer free cloud access to implementers and consultants. By doing so, the software vendor provides them with the opportunity to master its technology and perhaps even become evangelists for the vendor's technology. In a similar fashion, it will allow application developers to learn the software in the hope that they will deploy it in their solutions.

Although many software vendors offer free or relatively inexpensive short trial periods, I encourage vendors to expand the length of their trial periods when targeting implementers and consultants and make every effort to provide them with education and technical support.

The bottom line is that software vendors, especially those offering tools (e.g., database, data integration, business intelligence, and analytics) rather than complete application solutions, should consider the cloud as more than another direct revenue channel. They should also consider using the cloud as a low-cost method to expose prospects to their technology, thereby winning important converts in the consultant, implementer, and developer communities.

About the Author

Michael A. Schiff is founder and principal analyst of MAS Strategies, which specializes in formulating effective data warehousing strategies. With more than four decades of industry experience as a developer, user, consultant, vendor, and industry analyst, Mike is an expert in developing, marketing, and implementing solutions that transform operational data into useful decision-enabling information.

His prior experience as an IT director and systems and programming manager provide him with a thorough understanding of the technical, business, and political issues that must be addressed for any successful implementation. With Bachelor and Master of Science degrees from MIT's Sloan School of Management and as a certified financial planner, Mike can address both the technical and financial aspects of data warehousing and business intelligence.

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