Document Objective
This document is a positioning document meant to be a tool that the sales organization can utilize while engaged with prospects and/or customers who are weighing the pros and cons of implementing hosted vs. on-premise CPM solutions - A quick fact sheet that will hopefully help to dispel the differences between hosted and on-premise CPM solutions.
This document outlines the following:
- Cloud definition:Common definitions that are used in the market place today, to describe hosted and cloud solutions.
- Common statements: Common statements that companies make when asked what cloud will offer.
- Type of purchase:Economical, functional and technical factors to consider when evaluating hosted vs. on-premise CPM solutions.
- Questions:Detailed questions that can be asked to discover what type of sale it is, what their requirements are and identify the prospects knowledge regarding a hosted solution.
- Definition: What is Cloud?
IMPORANT NOTE: This question should be the first question asked by Sales. Furthermore, what is the customer’s definition of cloud? Ask the customer to explain this in order to understand requirements.
“Go to the cloud” a catch phrase that was coined by Microsoft and it conveys the feeling that the cloud can fix everything without really explaining what it means. The successful deployment of technology depends on an understanding of what is needed and why. Applications and services need to be run where they are most efficient, and not just cost is the most attractive option. There is confusion in the marketplace as to what really cloud is and how it relates to the CPM market.
Our premier go to market model is an On Premise offering, however, Prophix has customers and partners who have deployed the solution in a private cloud and/or hosted infrastructure as a service (IaaS) environment successfully. IaaS will continue to be the short term cloud deployment strategy to provide customers with access to scalable compute resources. Although cloud and SaaS are on the radar of customers, the decision to go with Prophix has been based on the ability of our solution to solve their business requirements.
See below for types of cloud environments frequently discussed in the market, generally speaking there are three:
- Private Cloud -Common deployment environment using virtualization technology (VMware, MS Hyper-V, Citrix Xen). A pool of computing resources is allocated virtually which IT manages. Therefore, servers are now represented by files (VMs) instead of physical boxes.
- Public Cloud (Hosted, Adaptive Planning) -Computing resources (servers) are not physically located on-premise, but are offered through a 3rd party such as Amazon, MS, GoGrid or Rackspace. Hosted CPM solutions would use the 3rd party services to host their clients CPM requirements and push the cost back to the client through a SaaS business model. The hosted CPM vendor would be charged an IaaS (Infrastructure as a Service) fee. The resources may be dedicated solely to a customer or shared among many customers. I.e. the multi-tenancy vs. multi-instance environment.
Definitions: Multi-tenancyrefers to a principle insoftware architecturewhere a single instance of thesoftwareruns on a server, serving multiple client organizations (tenants). Multi-tenancy is contrasted with a multi-instance architecture where separate software instances (or hardware systems) are set up for different client organizations.
- Hybrid Cloud - An infrastructure where IT resources are managed both internally by an organization and hosted externally using public service providers. It contains elements of both private and public cloud. This model is often used to create redundancy and fault tolerance for IT resources (e.g. backups, colocation).
- Common statements made by prospects when asked what they believe cloud to offer...
- Multiple customers on the same instance (e.g. itunes, SalesForce) – multi-tenancy
- Lower costs involved –Accessibility through a browser
- No IT resources required
- A quick implementation and faster deployment
- Type of Purchase
Depending on the type of purchase a company is making; economical, functional or technical, there are various questions that should be asked to determine if cloud is the right solution. Please find below business reasons to consider when comparing cloud on-premise deployment of a CPM solution.
Economical
- Implementation:
- Understand the implementation costs upfront. Unmet expectations for rapid deployment can dampen the inclination for future purchases with a cloud solution.Are professional services financed or are you paying upfront costs for services with the hosted/cloud solutions. It starts to dispel the lower cost statement that hosted vendors use.
- Software costs, licensing:
- Cloud solutions typically have lower initial costs but will generally costs more over the long-term because of maintenance and services costs. With a hosted solution the software licensing costs is essentially a disguised lease.
- Cloud is usually a fixed annual cost, however add-ons, new users etc. can add up very fast.
- With cloud you now need redundant service contracts to ensure back-up services are available. Again adding to the overall costs in the long run.
- Server costs & maintenance:
- On-premise requires infrastructure and hardware to install the software. Past implementations can prove this requires minimal IT time and resources. Because Prophix utilizes Microsoft Smart client technology, “click once”, deploying and updating the software require very minimal IT resources.
Functional
- Limited flexibility:
- The difficulty and limited flexibility of customization creates issues and restricts adoption with a cloud solution.
- Need to understand what features/functionalities are add-ons, not included in the base price with a cloud solution.
- Some cloud solutions are not truly configurable and really do come as a prepackaged solution with limited flexibility for tailoring.
- Printing capability:
- When using Citrix or Terminal Services, there are some known limitations when using cloud/hosted CPM solutions for printing because of the lack of print drivers. Printing works transparently and there have been instances where certain local print drivers won’t work or fail to render output correctly.
Technical
- IT internal skills:
- On-premise does require internal knowledge on hardware, and software maintenance but given past experience it is very minimal given the way Prophix was developed.
- Network instability:
- Limited broadband availability and network instability restricts growth with a cloud solution.
- Outages with cloud/hosted solutions can have a significant impact on productivity. A disaster recovery plan is needed and the client is more at risk
- Example past outages: MS azure (common server used for hosted CPM providers) went down on July 26 (2.5hrs. effected Western Europe), Feb 28-29 (lasted > 24hrs. didn’t inform customers when the issue was resolved)
- Upgrading:
- Upgrading Prophix takes virtually little to zero time and resources because of the SmartClient installation.
- With hosted/cloud solutions your upgrades and in the hands of the provider. Timeliness, outages etc. are a factor that affects the level of risk.
- Data integration:
- Continual concerns regarding difficulties of actually getting to the raw data in a cloud environment exist. Customers can’t readily access the data they helped create. Thus, it may limit their ability to leverage investments in existing BI or Reporting systems.
- Example: “Over 33% citied issues with SaaS deployments – integration issues and network instability” (ReadSoft whitepaper 2012)
- Data Security & Regulations:
- Regulations governing data privacy and protection vary by country and might be restricting in certain areas, reducing the acceptance of a cloud solution
- If your data volumes, integration needs, or custom requirements are very high, then on-premise is a better option.
- With an on-premise solution you have your own separate environment to control the level of security and access protection of your data.
- With an on-premise solution you know where it is stored and who has access to it. You have local control of security when storing and processing sensitive information. Are you comfortable with your data being stored in the cloud until either processed or deleted?
- With cloud you may have datacenters in multiple locations/countries, how will your data be stored, protected, what happens when there is an outage?
- Example: “Most organizations still lack policies governing the evaluation and use of SaaS”
(ReadSoft whitepaper 2012)
- FAQ (Frequently Asked Questions)
Below are questions that should be asked to discover what type of sale it is and what their requirements are. These questions can start to create FUD around implementing a hosted CPM solution.
The first questionasked by Sale shouldbe – What is your definition of Cloud? Ask the customer to explain this in order to understand requirements.
After understanding their definition, Sales can use the categories below to further qualify the prospect’s requirements and their perception of what ‘the cloud’ offers.
Economicalquestions for a prospect to aska Hosted vendor
a)Their implementation methodologies, length and who makes up their PS team.
b)How do you handle user add-ons, user configurations?
c)What are the renewable terms?
d)What is your Service Licence Agreement (SLA)?
e)Are you services financed (training, hourly rates) or just the licensing?
Functional questions for a prospect to aska Hosted vendor
a)Is your ERP outsourced? If no, then why are they looking to put your ‘past’ behind a firewall but your ‘future’ in the cloud?
b)How much does integration cost per connection?
c)How much storage is provided to the customer to hold reports, data, etc. What are the overage costs?
d)Can they really do drill-through to transactional detail? If so how?
e)Mentions that they allow limited customization;configured or true customization? What are the typical limitations they run up against?
f)In the past we have understood that hosted vendors have strong Consolidations functionality, is this true? How do we compare, get them to demonstrate on the fly?
g)In the past we have heard thathosted vendors are very Excel like and leverage it for their templates – our assumption is that while the customer likes the sound of that it actually brings a great deal of maintenance issues into play:
- Centralized formulas versus formulas in a template;
- Excel formulas are difficult to read, i.e. instead of Account names hosted vendors use cell numbers;
- Spread methods can’t be used with out of the box functionality but they need to be written into the template = more work;
- How do hosted vendors provide line-item detail?
- How do hosted vendors capture comments? Do the comments follow the data or are they stuck to the cell?
- How do hosted vendors write formulas between spreadsheets?
Technical questions for a prospect to aska Hosted vendor
a)Does the hosted vendor for really have an OLAP database? How is this accomplished in a multi-tenancy environment? What is the DB technology, particularly for the OLAP aspect?
b)How do hosted vendors integrate to external databases for GL data, HR data, and Sales data? Does the information need to go through an intermediary and re-created in a flat file such as Excel? Run into the standard excel issues; data integrity, multiple versions of the truth, disconnected business logic.
c)What is the disaster recovery process if the hosted server goes down? How fast is the response time?
d)How is the software upgraded? How fast do we get the upgrade, will it alter current models?
Other questions for a prospect to aska Hosted vendor
a)Are they growing as a company or really just gaining/losing customers at an equal rate?
b)What do they say about us – i.e. what selling tactics do they use against us. Are there any misconceptions they have that we can play on?
c)Do they have any failed customer implementations we can point to?
d)Where do their leads come from? Is there anything we can learn from?
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