lustratus REPAMA

Archive for the ‘research’ Category

I’m kicking off some research into the Decision Making Unit (DMU) for Cloud Computing services and software.

I’m interested to see how much, if at all, the cloud computing decision making unit differs from that of tradition data centre or infrastructure software sales. And if it does differ (as I suspect it does) then what is the impact on traditional marketing elements like audience, message, value propositions, supporting materials, etc.

I want to examine the decision making units for each of the different high-level segments in the Lustratus REPAMA market landscape / taxonomy / segmentation model for cloud computing.

For each of these segments, the basic question I want to answer is:

Within a B2B Cloud Computing transaction, what job roles are involved in the decision making process, what do these individuals need in order to arrive at a decision and how does this differ from traditional enterprise software sales?

It’s important to first stress that “marketing”, in the sense of the departmental responsibilities of the marketing team within a vendor or service provider, can only achieve certain things with respect of the decision making unit. Much of the responsibility for managing the technical and commercial sale obviously lies with the “sales” team. So in my analysis I will limit myself at the moment to exploring the influence that the marketing discipline can bring on the decision making unit.

First some terminology. We think about the roles of the DMU in the decision making process in the following way and refer to it using the acronym – IGIDBU (because the world needed another acronym).

IGIDBU – Initiator, Gatekeeper, Influencer, Decider, Buyer, User. I recognise that it isn’t the most simple or memorable acronym or mnemonic to remember, but saying it that way preserves some of the implied “chronology of contact” in the sales process. First we meet the initiator, then we deal with gatekeepers, etc. until the user “uses” the software or services.

This categorisation of the roles in the decision making process is quite common and is documented in many places – a good piece of background can be found in Strategic Marketing Planning and Control -Drummond, Ensor, Ashford published by Butterworth-Heinmann. I have seen some models that add another entity that owns the budget – “budget holder” or “Financier” but for our purposes we’ll wrap that role up in the Decision Maker because in my experience in infrastructure software sales the decision typically comes from where the budget is.

As I mentioned above, for each cloud computing market segment I’m going to identify the most likely job roles that fall into the IGIDBU categories above. Alongside them I want to map their needs and the likely marketing materials and messaging that is needed to help them arrive at the “right” decision.

The Change in Perceived Risk

Of particular interest to me is the change in the perceived risk of the ‘purchase’ with Cloud Computing. With an enterprise software licence, the degree of perceived risk in purchasing comes from a number of key areas including:

• Will the product meet the functional needs of the users?
• Will the performance of the product match the requirements?
• Is the vendor stable/credible/’suable’?
• How large is the capital outlay – and can we afford to write it off if the project fails?
• etc.

Cloud computing adds or at least adjusts a number of these categories of risk:

• Will the committed service level meet our needs?
• Will the service level delivered match what was committed to?
• etc.

With an on-premise purchase of licensed software, hardware, etc. the onus for ensuring performance and functional fit after the sale is with the company making the purchase. However, in a cloud situation where performance and more than likely functional capabilities will be documented within a service level agreement, the risk is mitigated to a degree. As long as the SLA is specified correctly, the onus for ensuring that the service level is met now lies with the service provider.

So the question is, will this perceived lower risk, speed-up or otherwise streamline the decision making process? And if so how will that change the way vendors/service providers market to the DMU?

The Change in Expense Accounting (Cap-ex to Op-ex)

Another significant change that Cloud Computing introduces is how the cost is accounted for. Instead of tying up significant capital expense and watching it depreciate on an on-premise solution involving physical hardware and software licences, a comparable cloud solution can be paid from operating expenses, based on actual usage over time.

As mentioned above in traditional sales, the size of capital outlay and the thought of having to write that off if the project fails is a key determinant of the level of perceived risk in arriving at a decision to ‘buy’. Again, the rhetorical question is whether this reduced capital commitment will change ‘purchasing’ behaviour and if so what impact that will have on vendors’ sales and marketing efforts.

I plan to publish the research later in the year. I am in the process of recruiting a number of vendors/services provider who are willing to provide input anonymously in return for access to the research. If you represent such an organisations, please contact me for more information.

As usual I will document the process in these pages.

Danny Goodall

...falling in 2009. No great surprise there then as marketing budgets have been used by many struggling organisations as a “profit shock absorber” .

But what is of interest is what that reduced budget has meant to the shape of marketing organisations and their priorities. How are they actually allocating remaining budget in these tough times? What has this meant to marketing headcount? etc.

That is the focus of IDC’s Michael Gerard in his annual analysis of marketing spend. Some snippets of the study have been released publicly and I’ve listed some of these below:

• Large organisations’ marketing budgets have on average reduced by 8.3% and their headcount has reduced by 10%
• 6000 IT vendor marketing roles have been lost worldwide in 2009
• Lack of budget has forced process improvements and in particualar has meant closer collaboration with sales
• Broader, product portfolio marketing has been sacrificed to allow for more tactical themed campaigns.
• Sales enablement has become a focus

Michael makes some other general observations and recommendations in his blog which is well worth a read.

Danny Goodall

Steve and I had an interesting and refreshingly different call this morning with GigaSpaces.

They had reached out to us to make sure we knew all about them so that they could be fully represented in each of the categories in our cloud computing market landscape / segmentation / taxonomy where they have a solution.

And after the call I can see that instead of just being in

• Cloud Software / Compute

They also have a valid claim to

• Cloud Software / Data

and may be even

• Cloud Software / Cloud Management ( /Application Services Management )

This raised a bit of a dilemma for me. I certainly want to represent vendors and providers accurately in the segmentation model but I want to avoid vendors appearing in lots of different segments just because they believe that some esoteric feature or other qualifies them.

Instead I want the segmentation model to reflect where the vendor/provider specifically and actively addresses a market need with a specific capability and value proposition. So if I hear from a vendor/provider “yes we can do that too”, I’m reluctant to simply add them to a segment. After all the motivation behind producing the segmentation model was to remove some of the confusion present in the Cloud Computing not to perpetuate it.

So I think we’ll need to reflect on what we heard this morning from GigaSpaces and think how best to represent those vendors in our market segmentation document that have a single product with broad capabilities. Having said that I think there is enough about the XAP proposition that means I will be adding it to at least one more segment of the market landscape.

Anyway, the refreshing part of the call was that GigaSpaces’ marketing seems to focus on what they can do for organisations rather than simply placing the “Cloud Computing” term before, after and in the middle of their product name everywhere it appears. In fact you have to go digging on their web site to find references to the cloud-enablement features of their product line. I’m not sure whether they have taken this approach consciously or if it is that they’re not sure how best to position their offering in the cloud market. The risk I guess is that as they are not positioned specifically as a cloud computing vendor, they may not be placed on clients’ long lists. But it certainly differentiates them and different is usually good unless you’re selling 8-fingered gloves.

These calls with vendors are useful for many reasons but mainly to test some of my assumptions. As with many of the products and companies I have looked at in compiling the segmentation model, I had “assumed” that I knew what the product was and what it did. It turns out there are many more strings to XAP’s bow than I had at first realised. I knew GigaSpaces as a purveyor of extremely scalable application servers but that, it turns out, is only half the picture.

One interesting feature of GigaSpaces’ XAP product is its application services management layer (my term not theirs – they use application management services!). This layer understands service level commitments for the infrastructure as well as the applications that are deployed to it. It’s common practice for the infrastructure to “understand” the service level that is expected from the infrastructure itself – usually measured in CPU percentages, data volumes or some such. However it’s not so common for the infrastructure to understand the commitment that the application developer has made about the service level that the application will deliver. These application layer service levels are usually described in some business metric and to then have the infrastructure react to automatically provision more infrastructure to meet the business’ requirements to ensure that application SLA commitments are met is a certainly an interesting claim. One that we will dig into a little further over time. GigaSpaces’ Jim Liddle explains a little more here – whist also picking a fight with TIBCO over whether its claim that “self-aware elasticity” is something unique to Silver.

Interestingly, it appears that with a number of GigaSpaces recent Cloud Computing customer wins (they claim to have 75+ “cloud” customers) they have in fact used this application management services layer to control and manage Amazon’s EC2 infrastructure. This ability to manage application services outside of its own compute infrastructure goes some way to answering my rhetorical question of whether any vendors were focussed on providing a pure play layer for application services management. It appears that there are.

So I’ll make some changes to the segmentation model in light of our conversation this morning and I’ll also keep an eye on how GigaSpaces’ cloud proposition develops – specifically following their Platform as a Service partnership with ServePath’s Go-Grid announced earlier today.

Danny Goodall

I’ve completed the first draft of the cloud computing segmentation model upon which we will build our REPAMA studies.

As I’ve mentioned before along my journey to arrive at this model, I’ve found the cloud computing market to have quickly become crowded and confused. This is largely due to the ease at which “traditional” vendors have re-repositioned themselves to catch the cloud computing wave.

The other issue of course is that over time cloud computing will cease to be a new paradigm and will quickly become the way consumers and businesses avail themselves of computing services. So what I’m seeing here is a market in transition where just about every category in traditional software sales will have an offer in the cloud computing space until on-demand models becomes “the norm”.

So I guess it’s really not that surprising to see so many vendors present in the space. But at the same time it is very confusing for legitimate prospects to cut their way through the mass of terminology to then examine vendors and service providers who appear to have broadly identical capabilities and value propositions.  How do they decide the best way to take their first steps into cloud computing? It’ll be interesting to see what our REPAMA studies say about how each of the vendors/service providers’ takes their products to market.

Anyway, I’ve uploaded a set of slides to slideshare.net which I think is probably the best way to make the material available but if anyone wants a copy of the slides please let me know. The slides are embedded below.

As I’ve said before, this segmentation model will undoubtedly develop and change over time as I look in more detail at the marketing efforts of the various vendors involved. The definitions for each of the functional areas are a little woolly right now. But at least I now have a structure that allows me to decide which segments and vendors/service providers I will include in our studies moving forward.

I’d like to once again acknowledge the significant role that Brad Buck, Peter Laird and Christofer Hoff played in helping to form the ideas on market segmentation and the role NIST has played in crystallising definitions on cloud computing and software/platform/infrastructure as a service.

Danny Goodall

Products and vendors included in the segmentation model are shown below. If you represent a vendor below and I haven’t represented your organisation correctly, or if you represent a vendor that isn’t included but should be, please contact me and let me know a little bit about your company and your proposition and where you feel you fit in the segmentation model.

10Gen MongoDB, 3Tera App Logic, Aconex, Advologix, Altor Networks, Amazon EBS, Amazon EC2, Amazon S3, Amazon SimpleDB, Amazon SQS, Amitive, Apache CouchDB, Apache HBase, Appian Anywhere, Appistry, AppJet, AppNexus, AppZero, Aptana, Aria Systems, Aster DB, Beam4d, Beowulf, Blink Logic, Boomi, Box.net, Bungee Labs Connect, Caspio, Cassandra, Cast Iron, Clickability, Cloud42, Cloud9 Analytics, CloudFoundry, CloudStatus, ClusterSeven, CohesiveFT, CohesiveFT VPN Cubed, ColdLight Neuron, Collabnet, Concur, CrownPoint, CTERA, CTERA Portal, DataSynapse, Desktoptwo, DirectLaw, DocLanding, DropBox, Dynamsoft, Dynect, Elastichosts, Elastra, EMC Atmos, Engine Yard, Enomaly Enomalism, enStratus, Etelos, Eucalyptus, eVapt, FathomDB, Fios, Flexiscale, Force.com, Gemstore Gemfire, Gigaspaces, Globus Toolkit, gnip, Google App Engine, Google Apps, Google BigTable, GridLayer, Hadoop, Hosting.com CloudNine, HubSpan, Hyperic, Hypertable, IBM Lotus Live, iCIMS, InfoBright, Informatica iTRICITY, Joyent Accelerators, JungleDisk, K2 Analytics, Kaavo, Knowledge TreeLive, LayeredTech, LiveOps, LoadStorm, LogiXML, LongJump, LucidEra, memcached, Mercury, mezeo software, Microsoft BizTalk Services, Microsoft SDS, Mosso Cloud Files, Mosso Cloud Servers, Mosso Cloud Sites, Mozy, MS Azure Services Platform, MSDynamics, MuleSource Mule OnDemand, NetDocuments, NetSuite, NewRelic, Ning, Nirvanix, Oco, Open.ControlTier, OpenCloud, opencrowd, OpenNebula, OpenQRM, OpenRSM, OpSource, OpSource Connect, Oracle Coherence, Oracle On Demand, Panaroma, Parallels, ParaScale, Parature, PingIdentity, PivotLink, Platform, Qrimp, Quantivo, Questys, rackspacecloud, Redi2, Reductive Labs Puppet, Responsys, Rightnow, RightScale, Rollbase, rPath, Salesforce.com, Scalr, Sertifi, Serve Path GoGrid, SkyTap, SnapLogic, SnapLogic SaaS Solution Packs, SOASTA, SpringCM, Sterna, StreetSmarts, Success Metrics, Sun Grid Engine, Symplified, Syncplicity, Taleo, TerraCotta, Terremark, TIBCO Silver, Tokyo Cabinet, Trigence, Vertica, VMWare vSphere, Vordel, Workday, Workxpress, Xactly, Xero, Xeround, Xythos, Ylastic, Zembly, Zmanda, Zmanda Cloud Backup, Zoho, Zuora, Mezeo Software, Workxpress, Trigence, AppZero, Platform, OneNetwork, SpringSource, Vaultscape

Just a quick note to say that I’ve updated the Lustratus REPAMA Guide to version 1.1. I’ve added three more studies that have been part of our analysis for some time but hadn’t quite found their way into the guide.

These are:

• Depositioning focus
• Differentiation strategy
• Perceived threat

All of these studies are concerned with interpreting how the vendors under scrutiny approach competitive differentiation in one way or another and are now explained in the guide.

The Lustratus REPAMA guide is available for download, and for the first time in HTML format. Click here for more information.