How Informatica Built and Launched a Successful SaaS Business

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2 Being successful with SaaS isn t just about web -based software and multitenant architectures. You need to support the right business models. You need flexible, self-service account management. You need usage-based pricing and no-contract subscriptions. And for all that you need a commerce solution like the one from Zuora. Overview Industry: Software and Services Business Type: Data Integration Darren Cunningham, VP of Marketing, Informatica Corporation The Challenge The Solution The Benefit Moving from traditional software licensing model to SaaS-based subscriptions with a variety of pricing tiers. PCI-compliant, usage-based subscription billing, with selfservice account management, deployed in less than 60 days. Support for new business models, market expansion, monetization of popular free tool, and new upgrade paths. Introduction Informatica Corporation enables more than 4,350 enterprises worldwide to gain a competitive advantage in today s global information economy by empowering them with timely, relevant and trustworthy data for their top business imperatives. Through the Informatica Platform, the company offers data integration, data quality, B2B data exchange, information lifecycle management (ILM), complex event processing (CEP) and master data management (MDM) solutions. Delivering cloud-based data integration is a key component of the Informatica Platform and a high-growth area of business for the company. In 2005, an important shift in the software industry was gaining momentum. Companies like salesforce.com had proven software-as-a-service (SaaS) to be a legitimate and compelling new model for delivering software value to customers. Further, the SaaS model was being used by an ever broader array of applications. SaaS was emerging as a new frontier for revenue growth as well as a competitive threat across the software industry. At the same time, Informatica had identified some interesting new data integration trends Neovise, LLC. All Rights Reserved. Page 1

3 According to Darren Cunningham, VP of Marketing for Informatica Cloud, The realization for us was that that data integration use cases were fairly straight forward. Customers just needed to load, synchronize, replicate and cleanse data. We also saw that the people who needed to do the work were not the traditional IT developers and DBAs. They were often CRM administrators, sales operations personnel and marketing staff. We saw a lot of midsized companies as well as divisions and departments of large companies adopting and managing cloud services. These were not the people typically running our data integration platform. A new opportunity for cloud or SaaS-based data integration was emerging. Extending the Business with SaaS Informatica established a separate cloud business unit within the company, complete with its own sales, marketing and R&D functions. The company leveraged its existing intellectual property and established a partnership with salesforce.com to build a data integration connector. Over time, Informatica developed a more complete SaaS product line. We introduced a secure, multi-tenant repository that gave customers confidence and allowed our business to cost-effectively scale. We also ensured seamless version upgrades to relieve customers of costly and time consuming administrative responsibilities, explained Cunningham. We were establishing a new venture and made our decisions to take advantage of the benefits of SaaS. Informatica also created a tool called Data Loader Service for Salesforce and made it available for free on the AppExchange, salesforce.com's marketplace of business applications and services. The tool introduced prospective customers to Informatica Cloud and gave them a taste of the company s data integration capabilities. By 2010, the company s Data Loader Service for Salesforce had established itself as the most popular application of all time on the AppExchange in terms of installs. Informatica had achieved notable success in SaaS-based data integration, including being voted Best Data Integration Application on AppExchange for three years running by salesforce.com customers. Yet two important issues remained. Challenges Beyond the free Data Loader Service for Salesforce, the lowest priced entry point for Informatica SaaS solutions was about $1,500 per month. This was attractive pricing for a highvalue enterprise data integration solution and sales were going well. In fact, SaaS solutions often entice new customers that could not afford the capital investments associated with onpremise solutions. Still, there appeared to be an additional market segment for SaaS data integration customers that wanted less Using aggressive discounts was not the answer. We needed a way to deliver distinct benefits at different prices depending on the customer needs. capability at a lower price. According to Cunningham, Using aggressive discounts was not the answer. We needed a way to deliver distinct benefits at different prices depending on the customer needs Neovise, LLC. All Rights Reserved. Page 2

4 At the same time, Informatica was seeing some interesting use of its free Data Loader Service. Cunningham explained, Some consultants would use the Data Loader Service for Salesforce to transfer millions of records for data migration projects, which had an impact on operations and could potentially degrade customer service for all of our paying customers running the multitenant service. A SaaS solution made sense for organizations of all sizes, but for many small to medium sized business, moving from free to $1,500 a month was a big jump. Informatica needed to readjust its SaaS offerings to keep up with an expanding customer base and shifting requirements. The company also needed a commerce solution that would let it properly monetize services with a wide range of pricing models and provide automation to enable selfservice purchases. The company also needed a commerce solution that would let it properly monetize services with a wide range of pricing models and provide automation to enable self-service purchases. Solution Informatica met with Zuora in September 2010 to discuss the possibility of using Zuora s Subscription Commerce solution. The potential was tremendous, but we were very busy at the time, said Cunningham. It was the end of our third quarter and we had the Dreamforce conference looming in December. Our general manager decided it was time to go ahead with an enhanced, usage-based paid version of the Data Loader Service. This approach would not only help monetize the value of the Data Loader Service, it would provide an even more accessible entry point for Informatica Cloud customers. The requirements were quickly scoped and the implementation project began in October. The new service was going to be a flexible, self-service, pay-as-you-go SaaS offering. Customers would use credit cards to purchase monthly subscriptions so PCI compliance was mandatory. Subscriptions included pricing tiers based on data volume. If the customer went beyond the data volume specified in their pricing tier, they would be moved to the higher tier the following month. The Zuora Subscription Commerce solution would handle billing, payments and renewals. It would also be part of the usage monitoring and service upgrade processes. There were some mixed emotions about moving forward so quickly with all of this. I was excited but also a little leery, said Cunningham. Frankly, I wondered if we could do all this in just a couple months. The goal was to announce the new offering at Dreamforce in December Results The Zuora Subscription Commerce solution was deployed in under 60 days and Informatica Cloud Express was announced at Dreamforce in December As a major provider of 2011 Neovise, LLC. All Rights Reserved. Page 3

5 enterprise software to 84 of the Fortune 100 companies, this marked a significant milestone for Informatica. The availability of a $99 per month SaaS offering from a company that also sells million dollar on-premise software solutions epitomizes the ongoing transformation of software companies today. The new Informatica Cloud Express service is shown in Figure 1. Figure 1. The new Informatica Cloud Express Service Zuora gave us the flexibility, automation, scalability and ease of use to expand our addressable market once Zuora gave us the flexibility, again, said Cunningham. We re monetizing our popular automation, scalability and ease Data Loader Service for Salesforce offering without of use to expand our addressable alienating users. We ve put data integration within reach of smaller businesses and non-it staff with the first payas-you-go model in the cloud integration space. We ve market once again. also created a growth path to more advanced Informatica Cloud editions through upgrades. Zuora empowers customers to buy only the services they need, when they need them, with optimal convenience and cost-efficiency. Cunningham adds, The great thing is that people we ve never talked to are signing up. We had over 60 new subscriptions in just the first month. Some are moving themselves up from the Data Loader Service and others are completely new customers. It has been a very successful new product launch for us and we re considering using Zuora with our other Informatica Cloud editions in the future. Cunningham outlines some of the principles behind the company s recent achievements. Being successful with SaaS isn t just about web-based software and multi-tenant architectures. You need to support the right business models. You need flexible, self-service account management. You need usage based pricing and no-contract subscriptions. And for all that you need a commerce solution like the one from Zuora Neovise, LLC. All Rights Reserved. Page 4

6 About Neovise Neovise delivers essential knowledge and guidance to key members of the IT community including IT leaders, IT staff, business executives, technology vendors, systems integrators, and service providers. While each of these roles has a separate focus, they all require value added information and advice in order to formulate winning strategies and make optimal decisions. Based on decades of industry experience and ongoing market analysis, we are your trusted, independent source of Business Driven IT Insight TM. For more information, visit Neovise, LLC. All Rights Reserved.