Evaluating Business Solutions in the Subscription Economy

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1 Evaluating Business Solutions in the Subscription Economy Matthew Woodward President, NextCorp/SMB Suite 1 Winter, 2013

2 Agenda State of Business Solutions for Small to Mid-Sized Business Sub Fortune 1000 Philosophy of the ERP Subscription Economy How can Cloud Based Subscription Solutions Increase Productivity & your Bottom line 3 TCO Pillars for Evaluating Solutions for your business Using TCO Tools 2

3 Matthew Woodward Background Matthew Woodward currently works as President of NextCorp/ SMBSuite. NextCorp Delivers SMB Suite: a fully-integrated Microsoft Financial Accounting(ERP), Customer Relationship Management(CRM) & ecommerce cloud subscription for small to mid-sized business He brings nearly 20 years experience including 14 years of experience within Microsoft Corporation, executive responsibilities leading and executing as the Director of Dynamics Channel Partners, Director of Programs & Business Strategy, Telesales organization, & Microsoft US & Regional Marketing Specialties: Cloud Solutions, Small Business, Midsized Business, Microsoft Certified Partners, System Builders/OEM, VAPs, ISV & VAR, Cloud Dynamics GP, ERP, CRM & ecommerce Matthew resides in Dallas, TX with his wife and 3 Boys, with his favorite hobby coaching his boys sports teams 3 Confidential

4 Key Terms: Lets not get lost in Acronyms! Cloud and/or SaaS: Software as a Service delivered and managed in a highly scalable environment to drive down customer cost & increase delivery efficiency. (i.e. itunes & Future commodity like Electricity) Client / Server: Traditional method of installing servers dedicated to your local network & connected to your PC s. Software Licenses & Consulting Services VARs/ Channel Partners / Service Oriented Systems Integrators: Value Added Resellers who provide traditional consulting services, license sales & support The Subscription Economy: Operating Expenses vs. Capital Expenses driven through packaged/bundles offerings. (Think AT&T U-Verse) BackOffice Business Solutions: o o o o ERP: Enterprise Resource Planning or simply Financial Accounting Applications CRM: Customer Relationship Management Applications ecommerce: Buying, Selling, Trading Products & Services through B2C or B2B HCM/HR/Payroll: Human Capital Management 4 SMB: Small & Mid-Market Businesses o Small = Employees o Mid-Sized = Employees

Evolution of the Business Application Market 1980s 1990s 2000s 2010+ Mainframe/DOS Platform Delivery Client / Server Delivery Client / Server with ASP/Hosted Delivery Option SaaS/Cloud Scaled

ERP/CRM Enterprise Product Delivery Evolution: Primarily delivered by large service oriented vendors: EDS, IBM, Anderson, E&Y and further by vendors themselves such as Oracle & SAP Enterprise

5 Evolution of the Business Application Market 1980s 1990s 2000s Mainframe/DOS Platform Delivery Client / Server Delivery Client / Server with ASP/Hosted Delivery Option SaaS/Cloud Scaled Delivery I. ERP/CRM Enterprise Product Delivery Evolution: Primarily delivered by large service oriented vendors: EDS, IBM, Anderson, E&Y and further by vendors themselves such as Oracle & SAP Enterprise Application Integration provided by large/costly SOA Projects II. ERP/CRM SMB Product Delivery Evolution: Primarily delivered by small License & Consulting Service VARs Disparate Applications due to High Cost of Services & lack of VAR Skill Set 5 III. New SMB Product Delivery driven by Web 2.0 behavior: Cloud ERP/CRM/HR delivered as on-demand subscription solution and expectation of fully integrated applications.

6 Where is the Market moving? The NEW Cloud (SaaS) ERP Market Opportunity, including native cloud integrated application access for SMBs! We are quickly approaching The Chasm in which the majority of the market will be moving to BackOffice Solutions in the Cloud. , HR/HCM, CRM & ecommerce have already entered Late Majority Phase 6

7 7 The Subscription Business Economy & How you can benefit

8 Philosophy of the ERP Subscription Economy The End of ERP Tien Tzu CEO of Zuora Simplify & Exaggerate! How people consume products & services driven by cloud adoption. 20 th Century Buy Once vs. The 21 st Century Subscription Economy The Subscription Economy focuses on providing more solutions and services that a Customer wants & needs to consume as they are able. Drives higher value for consumer as providers must focus on adding more value and greater support, or consumer will shop somewhere else. We measure success by how many customers are using our service on a recurring basis and how successful we are at securing those recurring relationships 8

9 The Subscription Economy Business Model Market Expectation: Packaged Consumable Subscription offerings which allow easy path for growth (Value to Customer) Market expects Enterprise Class Solutions for Small/Mid-Market Budgets Application Integration should be a given, not a hurdle: Cloud Technology enables delivery of integration solutions vs. customer build Transparency: Customer should know exactly what they are buying with no hidden Fees or Functions Research & Evaluation: Subscription Solutions allow the consumer to evaluate at their own pace Online without Sales engagement pressures & forced timelines. Cash Benefit: Decisions based on Operating Budgets vs. Access to Capital / Debt Lower Total Cost of Ownership: Time to Market, Licensing/Hardware, IT Support, FTE Affordable & Predictable Consume what you need, when you need it with clear path to future cost/expense Demand Fixed Bid Solutions! 9

10 Differentiators meeting the New SMB Market Requirements Traditional ERP Service Model: Up Front Capital Investment: All licensing Paid Upfront & Services Paid as delivered. Requires Large Capital Investment with unpredictable ongoing cost Unleveraged Best Practices for SMB Segment Consultative Selling and Consultative Implementation: Pack as much as you can into the first engagement Support an Upsell Afterthought which affects Customer Attrition: Large turnover of customers across service organizations & vendors due to poor focus on going support services. Internal FTE & Management: Cost of managing NON- Core Functions of the business 10 Differentiators: New Economy Monthly Subscription: Licensing, Set-up, Training, & Support packaged as one monthly user fee requiring little to no capital outlay or investment and secures a predictable monthly Opex Solution and Industry Packaging: Unique packaging aligns to Customer requirements providing Easy to own and grow solution Accelerated & Packaged Selling and Delivery: Get in quick with as little as needed Sell solution they will get vs. how they want it. Add subscription packages as needed (Consumed) by customer. Unlimited & Fanatical Customer Support: Deliver it as a component of the subscription make it easy for them to do their job and they will stick (Churn) Outsource, Outsource, Outsource: Invest Capital in Core Business, NOT NON-Core

11 11 TCO: 3 TCO Pillars for Evaluating Solutions for your business

12 TCO: 3 TCO Pillars for Evaluating Solutions for your business Economic: Simple Subscription Pricing Plan It s flexible and scalable for your business Provides Business Continuity Business: Aligns with your current Business Processes provides a fully integrated cloud platform It s an Easy & Familiar User Interface to work with Cloud Solution Provides Ubiquitous Availability Anywhere Technology: Extensible to Other Systems such as billing & manufacturing Safe, Secure & Recovery Strong, Experienced, Safe Managed Operational Environment 12

13 Why is TCO Important in evaluating solutions? Quantify your investment Too often the vendor & buyer focus on cost of acquisition only, primarily driven by near-term Capital Access & budgetary cycles It is generally accepted that cost of Maintenance, upgrades, optimization, management, & training represent 3 5 X the cost of initial acquisition. Cloud Solutions provide Long-term solutions addressing all of these factors and your evaluation criteria should include items such as: 13 Cost per user, per month Consulting / Implementation Fees Training Costs Ongoing User Support Costs Upgrade Costs Maintenance Costs Extra Application Integration Costs Application/Environment Backup/Restore/Recovery Ease and Cost of Adding New Functionality or Module Ease and Cost of Adding New Users to the Solutions Uptime Commitments and Cost of Business Downtime

14 Evaluating your own TCO: On-Premise vs. Cloud Vendors Calculating TCO 14

15 Thank You! Q&A Matthew Woodward

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