This interview was originally published in SIIA’s Vision From the Top. The 2013 Vision From the Top will be released at All About the Cloud, May 7-9 in San Francisco.

Are traditional on-premise mega-vendors really committed to Cloud, or is it just a strategy to perpetuate and protect their on-premise legacy?

The short answer is “yes”. While SaaS is highly disruptive, mega-vendors cannot simply eject their on-premise legacy as these lines of business typically represent massive portions of revenue and earnings.

More broadly, the idea that cloud will completely displace traditional on-premise technology is far-fetched. At certain scales, the economics and other qualities of on-premise technology deployment outweigh the benefits of cloud-oriented technology strategies. Over time, the technology use cases most appropriate for cloud and on-premise delivery will find their levels. Some use cases will clearly fall into one category or the other, and the grey area in the middle is where technology vendors will fight for competitive advantage with a range of delivery models.

When the dust settles, the term “enterprise” will come less to describe a set of on-premise technologies, instead representing a spectrum of on-premise and cloud technologies that work together, but each delivering their own specific benefits, to address various needs within a single business or related lines of business.

What factors are driving the mega-vendors to buy pure-play SaaS/Cloud vendors?

For many (but not all) businesses, cloud and SaaS business models can offer agility, visibility and margins that are extremely attractive. Much more automated delivery models can be measured far more effectively and remove variability, which in turn increases predictability. Less variability and more visibility means that key components of marketing and distribution can be isolated, closely examined, and iterated to improve key metrics like conversion rates. This level of granular control and almost scientifically precise isolation of business factors can deliver almost unbelievably actionable business intelligence.

SaaS models often migrate towards self-service subscription models. This can often enable a business to penetrate smaller markets that would be prohibitive in terms of marketing and distribution costs. As a stand-along marketing approach, this can be compelling. By adding such approaches to existing products, services or SaaS offers distributed to the higher end of markets via more traditional models, a business can enjoy engagement of a far larger addressable market, and can retain customers more effectively as their needs scale up or down. Subscription models are also attractive in that they offer the positive effects of accumulation and recurrence, making the long-term value of a customer much more compelling than traditional license-and-maintenance revenue models.

From a technical perspective, delivering SaaS offers can be far less complex and costly than delivering traditional on-premise software. Software upgrades happen to all customers at once, retroactive version support becomes simplified, and support organizations have far greater consistency in features that must be supported. Removing some or all hardware, operating system, network and dependent software requirements also makes customer onboarding and support faster and less costly.

The earlier mega-vendor adopters will move because they’ll see the competitive advantages and the general business benefits of cloud-oriented models, especially SaaS. Later in the adoption cycle, their competitors will feel increasing competitive pressure to respond, and will follow suit. Across the board, I believe that very few mega-vendors will be able to remain competitive without cloud/SaaS/on-demand distribution and delivery models strategies.

The mega-vendors are buying up pure-play SaaS companies. Will they succeed in using those acquisitions to help change their companies to the SaaS culture and business model?

This depends on a number of factors. Instead of answering “yes” or “no”, here is a list of considerations that will drive the degree of transformation that occurs as a result of a SaaS acquisition:

• What are the acquiring company’s goals for SaaS relative to their larger business?
• How effectively the acquisition itself is positioned and executed as a change catalyst? Is the acquisition truly the beginning of a transformation, or an extension of an existing, stable and non-SaaS-oriented business?
• What is the overlap between existing product portfolio and the SaaS offer itself? Does the SaaS offer displace or extend existing products?
• How effective and prepared is the company itself at and for affecting major transformation?
• When the acquisition being transacted relative to the SaaS adoption cycle within the acquirer’s specific industry? Has the acquiring company moved early enough to transform itself in time to dominate an emerging market or market disruption, or are they attempting to re-create themselves too late in the cycle for the effort to be sustainable?

Rhianna Collier is VP for the Software Division at SIIA. Follow the SIIA software division on Twitter @SIIASoftware

This interview was originally published in SIIA’s Vision From the Top. The 2013 Vision From the Top will be released at All About the Cloud, May 7-9 in San Francisco.

With various forces combining to transform the IT landscape, how do you see the role of the IT department evolving?

The combined forces of Cloud, SaaS, Democratization, and Consumerization of IT are transforming the role of IT departments. The smart IT departments will move to focus much more on supporting and enabling business agility and end-user efficiency related functions, and a lot less on maintenance and infrastructure upkeep. The other IT departments will be replaced, or the businesses they are a part of will go under. More and more businesses will move in that direction and will do so faster.

I think the need for businesses to move faster and leverage new technology is much stronger and clearer now than it ever has been. With the exception of very few cases, there really is no justification for businesses to run operations that are not their core-competency. Just like the vast majority of businesses don’t run their own power-plants for electricity, store their money in a vault in a basement, or operate their own telephone exchange, so too will the move their application and data consumption to service providers who can do it better, faster, cheaper.

IT isn’t going away, it’s evolving. The need to adapt technology and empower the business with the right mix of business agility and ability to focus on its core strengths through technical innovation while balancing the necessary controls and visibility are here to stay, and as we move ahead IT departments will be able to offer their businesses better and better solutions from more and more choices than they ever were able to, when they were chartered with building and running their own.

One example of IT department evolution is in the realm of Security where IT departments can allow businesses leaders the gain the benefits of cloud technologies and apply innovative offerings to balance the needs of security, compliance, regulation, and discovery without compromise, and in most cases even surpass existing solutions.

What’s the future for hybrid cloud strategies?

Hybrid clouds are here to stay, and rightfully so. The definition of “Hybrid Cloud” is morphing from purely “on-premise vs. cloud” to on-premise, private cloud, public cloud, and I believe the definition of “hybrid cloud” should expand even further to include mobile and cloud-connected devices, as well as SaaS applications that connect to and host business data and applications.

More and more organizations will invest in hybrid cloud solutions like Dropbox, box.net, and Google Docs that perpetuate the justification for having infrastructure that isn’t just virtualized and cloud, but also physical infrastructure that you can carry with you to use when you’re on the go, off-line, or otherwise want offline access. I think that the balance will shift from mostly on-premise legacy systems doing the heavy lifting, to most of the workload being done by cloud vendors that specialize. Wherever possible (which is almost everywhere) the on-premise piece of the puzzle will be reduced to end-point devices focused on content creation and consumption and local mobile usage.

Increased awareness of the availability and variety of capabilities coupled with the reality of increased security in the cloud, will drive adoption exponentially. Public cloud will be the biggest piece in the hybrid-cloud equation within this decade, and Software-as-a-Service will be the biggest within the public cloud.

Are traditional on-premise mega-vendors really committed to Cloud, or is it just a strategy to perpetuate and protect their on-premise legacy?

The short answer is both.

There are two types of mega-vendors, those that refuse to accept that the world is changing and will continue to invest and promote antiquated solutions that have worked for years, and those that understand that there is a C-change happening. Those that “get it”, are faced with an interesting dilemma, do they wait-and-see how the market plays out and then make a move, or do they try to innovate. Most mega-vendors aren’t great innovators and do so mostly through acquisitions of smaller more agile businesses that can traverse an emerging market.

Even if a mega-vendor “gets-it” and has the technology and business model to take on the cloud opportunity at hand, there is still the internal battle with those that are milking the cash cow and want to perpetuate and protect their on-premise legacy offerings.

When I was at EMC in the early 2000′s, our CEO, Joe Tucci talked about seizing the opportunity of the changing landscape to innovate and cannibalize our own offerings, before somebody else would. He was right, and EMC was smart enough to embrace commodity hardware in storage, expand their software to heterogeneous platforms, invest in (through the acquisition of VMware) virtualization, which ostensibly erodes hardware sales, and come out stronger and faster, and better positioned to succeed in the market.

Mega-vendors are just as vulnerable to failure as smaller vendors, it just take longer, and makes a bigger sound when they hit the floor. It’s usually because of a failure of imagination and failure of understanding what value they provide to customers. Customer don’t want to buy specific technology, they want to buy technology-based solutions that fit their needs. Needs change and evolve.

Rhianna Collier is VP for the Software Division at SIIA. Follow the SIIA software division on Twitter @SIIASoftware

This interview was originally published in SIIA’s Vision From the Top. The 2013 Vision From the Top will be released at All About the Cloud, May 7-9 in San Francisco.

What’s your philosophy on maintaining a focus on innovation?

Maintaining a focus on innovation requires leveraging technology to do new things that couldn’t be done before. Making sure your team understands that is critical. Porting software from DOS to Windows and from Windows to the Cloud requires no new innovation. While some basic functionality maybe ported, the more innovative approach is taking the manual process that exists today and moving it to an automated process.

The Cloud has provided a whole new platform for innovation. The sharing of data and services between customers and partners creates lots of opportunities to automate processes by using technology in ways that it has never been used before. Innovation in the cloud is not about using the latest technology but instead it is about how a specific technology can vastly improve the day to day processes that we all have. You can’t deliver on innovation without a focus on customers, how they operate today and how to provide that leap forward that will transform their lives.

What do you do as CEO to keep your organization focused on customers and value?

I start with the basics. First we have an open environment where all the employees sit in a bullpen with no cubicles or offices. This allows information to flow from sales and customer service to marketing, product management and engineering. That constant energy between groups is where we see lots of collaboration focused around real customer pain points. In addition, we surround all the employees with customer testimonials and our core values painted on the walls. There is no escaping what we are focused on.

Great product management always starts with the customer. Whether it is a one on one conversation, a focus group or quantitative survey, the lessons learned are invaluable. Each of these is part of the fabric of how we do things. At a minimum, we screen for it when we hire and then we all lead by example; talking to customers and prospects whenever we can. Ultimately, when we are discussing strategies or product roadmaps, I always ask what does the customer think? As a result, employees understand our expectations and reflect this in their day to day work.

Finally, we offer stellar support. We love talking to customers via phone, chat and email. We build it into the application itself to encourage interaction with the customer and then we track customer satisfaction on every interaction. These numbers are reported weekly and monthly for all to see. Annually, we conduct a Net Promoter Survey where we take the data and use it to celebrate successes and evaluate areas of improvement with employees. I believe this is why we have an industry leading Net Promoter score in the mid 60′s.

This type of focus and innovation leads customers to say that they save 50 – 75% of the time it takes to manage the back office while getting paid 2 – 3 times faster.

In 2020, looking back on this decade, what will be the single most impactful technical advancement driving business growth?

I can remember hearing of the information economy as a kid and yet I think this will be the first decade where that phrase means something to everyone. At the core of the information revolution is the Cloud. At the core of the Cloud is Shared Data and it changes everything. It creates transparency across and between users and developers.

We have had central data before but the data was not shared. You only have to look at Facebook to see that people value transparency and are willing to give up some privacy to have better relationships and services. Extending the Shared Data concept to the business world will allow businesses to grow faster. It improves collaboration with their employees, their accountants, their customers and their suppliers, all in real time and accessible from anywhere. Being able to securely share payment information and documents between interested parties accelerates business transactions and overall growth. What is most exciting to me is that the applications of Shared Data have only just begun. By 2020, businesses and the world at large will be connected and doing things we never imagined.

Rhianna Collier is VP for the Software Division at SIIA. Follow the SIIA software division on Twitter @SIIASoftware

This interview was originally published in SIIA’s Vision From the Top. The 2013 Vision From the Top will be released at All About the Cloud, May 7-9 in San Francisco.

Given that the economic outlook in many parts of the world seems uncertain:
What’s your philosophy on maintaining a focus on innovation?

The software market is undergoing massive change driven by the rise of cloud computing. Last year only a third of all software was distributed online either as a digital download or as a service in the cloud. By 2014, this figure will climb to over 70%. This is a sea change in the world of software – a change that is making the software market even more competitive. The key to survival is continuous innovation. The winning software vendors will be those that can successfully transition to a “frictionless” self-service transaction model, rapidly expand to new channels and markets, and be agile in their response to market feedback.

At Avangate, innovation stands out as a critical component not only for our success, but for the success of our customers. For that reason, innovation and customer delight are constantly at the forefront of our minds and an integral part of our company values and processes. One example of how we keep the focus on innovation is providing our development team a day a week to work on ideas they want to champion – whether it’s a good idea they heard from a customer or an experiment with a new technology that has the potential to improve our platform capabilities. While some companies adopt a strategy of growth by acquisition, our strategy is to grow by innovation and excellent customer service.

How do you encourage and foster a growth mindset with your employees and partners?

Avangate helps software and SaaS companies market and sell their solutions online in exchange for a share of the revenue we generate. Our business model is therefore fundamentally based on the success of our customers. As such, we forge a strategic partnership with each of our customers, with Avangate’s mission being to grow their business. We monitor the growth of our customers very closely and set key objectives against which we measure ourselves weekly.

Because our growth is dependent on the success of our customers, we are insanely focused on helping our customers grow their business. Leveraging our deep expertise in the software and SaaS markets, we go beyond simple online transactions to open up new markets for our customers – whether international, eMarketplaces, or rapidly emerging software and SaaS niches. We also help our customers improve sales by leveraging the rich set of best practices we have accumulated through measuring sales data across our thousands of customers.

What do you do as CEO to keep your organization focused on customers and value?

As I mentioned before, our growth strategy is based on innovation and excellent customer service. A testament to our strong customer focus is our high client retention rate which in 2011, was an industry leading 98%. How have we been able to achieve that? Part of the answer is the strong customer loyalty program we have developed, but more importantly is the focus on customer service as one of our core company values.

As CEO, I take the time to speak to the entire company on a monthly basis. Along with updating the team on our achievements and progress against objectives, I make sure to call out key customer stories that highlight the value we provide and underscore the importance of making our customers truly happy. We regularly communicate with our customers to ask them how we are doing and how we can improve. Using metrics such as the Net Promoter Score, we set company-wide customer satisfaction objectives and regularly measure how we are doing against them.

As you look around the globe, which markets will provide the best opportunities for tech companies in the next five years? Why?

First, the software industry has extended its impact to nearly every industry. Coupled with the lowered barriers to entry enabled by selling online, opportunities are opening up for software companies to expand to new and emerging markets. The advent of software is transforming the automotive, healthcare, retail, government and financial industries, among many other industries. Both consumers and businesses are driving the need for software, and its use is showing no signs of slowing in the foreseeable future.

Second, with respect to what are the attractive geographic markets, we are seeing tremendous growth in the classic BRIC countries. We also see longer-term growth opportunities in the Middle East and Northern Africa. That said, one of the exciting things about the industry’s shift to cloud commerce is that it gives software and SaaS vendors the opportunity to distribute their solutions anywhere in the globe, anywhere there is demand. Avangate helps vendors make this transition to the cloud providing the deep localization capabilities to penetrate global markets, including local payment methods, currencies, ordering interface languages, and local shopper phone support.

With various forces combining to transform the IT landscape, how do you see the role of the IT department developing?

I see two mega-trends continuing to impact the world of IT. The first is the “Consumerization of IT” which is not only blurring the lines between consumer applications and business applications but also driving businesses to buy more and more like consumers. Perhaps we can thank Apple for ushering in this trend, but the growing expectation in the workplace is that business applications are as easy to procure and as easy to use as an iPad app. The second trend is the increasing importance for IT to align with the business. Technology is no longer under lock and key by the high priests of IT – technology is available to anyone thanks to cloud computing. Therefore, it is critical that IT shift from their traditional role as the keepers of technology to a business partner role focused on optimizing the use of technology, ensuring the infrastructure is available to leverage the technology, as well as integrating increasingly disparate solutions to achieve business results.

Rhianna Collier is VP for the Software Division at SIIA. Follow the SIIA software division on Twitter @SIIASoftware

This interview was originally published in SIIA’s Vision From the Top. The 2013 Vision From the Top will be released at All About the Cloud, May 7-9 in San Francisco.

What’s the future for hybrid cloud strategies?

The future of the hybrid cloud strategy is the all cloud strategy.

As Nicholas Carr will tell you in his very readable book, The Big Switch: Rewiring the World, From Edison to Google, the delivery of IT services is consolidating into centralized, utility-type organizations like today’s electric power utilities consolidated the 30,000+ independent electric power plants run by enterprises across the U.S. 100+ years ago.

After decades of many in the high tech industry talking about utility or grid computing, we are finally approaching the day when enterprise CEO’s will no longer be burdened with the difficult decisions of upgrading major ERP systems or making enormous capital expense decisions and hiring armies of people to run their underlying IT infrastructure. They will be able to look to their cloud utility service providers for much of what they are obligated to run today.

Before we arrive at this attractive future vision however, there is a migration and a long, often arduous path ahead. In some cases, it will be fraught with danger as enterprises cross the chasm to true utility computing and centralized IT services. That chasm is the hybrid cloud where enterprises are operating some applications in their own data centers, some at third party hosting centers, some purchased as complete end-to-end application service (e.g., salesforce.com), and balancing a variety of other types of hybrid operating models.

Just like the hybrid automobile, for example the Prius, helped us migrate from fossil fuels to battery operated, electrical cars, there is a very lucrative business during this interim hybrid phase of our industry evolution and it will extend for a while.

Many of our clients are telling us that they fear that the transition to this hybrid cloud state will introduce lack of control and visibility resulting in business, operating, and regulatory risks of concern. Similar to what car manufactures like Toyota did when they launched the Prius, by going overboard to make sure that the batteries last longer than any other component of a conventional car, I believe that those who are enabling this IT transition should proactively address the fear of lack of visibility and control during the hybrid stage as we head towards our desired future vision.

Of course some believe not all IT assets or applications will migrate to the Cloud and the same was true for power generation a hundred years ago. Many buildings, for example, have back up power generators today. Ultimately, however, there is a massive capacity utilization gain, economies of scale, and best practices benefits to be gained from the migration of IT assets and services to the Cloud. The real wins will be towards the end point.

While your hybrid strategy should be thoughtful and lucrative, its future lies in the 100% Cloud model.

With various forces combining to transform the IT landscape, how do you see the role of the IT department evolving?

The evolving role of the IT department may be at one of the most interesting stages of this function’s history.
Given the migration of enterprise IT operations and data center operations to centralized outsourced providers or application providers, the IT professional has an opportunity to raise the bar of their role at their companies. Instead of being bogged down with lots of the administrative work associated with managing infrastructure or addressing device level performance, the IT professional now has an opportunity to focus her efforts on how to leverage IT resources and applications to make a real impact on an organization, to be a game changer!

Many of our clients are currently shifting the IT role in two ways: (1) IT is increasing its ability to relate and deliver directly to business improving activities and (2) the IT professional is migrating into more of a project management role on the execution side.

While many large enterprise organizations are hiring MBAs to help with this first shift, I believe this may be a temporary fad. There is enormous value in having someone who understands the IT process and capabilities interface with the business users and it seems to me the MBAs would be the business users. Regardless, the IT professional does have an opportunity to evolve, moving up a series of stages of relationship to the overall business that the CIO Executive Council has defined as migrating from Service Provider to IT Partner to Business Peer and ultimately to Game Changer.

CIOs will continue to broaden their conversation at the management team level and bring more strategy to bear. They will spend less time worrying about daily operations that their vendors are managing and focus on how to best leverage those resources to move the dial on key performance metrics of the business – not of the devices deep in the guts of the IT utility.

On the execution side, IT professionals will need to get better and better at managing vendors, negotiating costs, facilitating the collaboration and implementation of these various vendors.
While all jobs have some “grunt work” associated with them, none are as lucky as the enterprise IT professional whose seeing the grunt taken out of their work and the interesting stuff ramping up like crazy!

Rock on!

Rhianna Collier is VP for the Software Division at SIIA. Follow the SIIA Software Division on Twitter @SIIASoftware