What big enterprises want from on-demand vendors

Summary:Large enterprises are just as interested in on-demand applications as smaller companies, but providers have to package them to suit their requirements.

Large enterprises are just as interested in on-demand applications as smaller companies, but providers have to package them to suit their requirements. That's the thinking behind the Enterprise SaaS Working Group, set up last month to spread the word about software-as-services to large organizations. The group's four charter members are Ariba, RightNow Technologies, SuccessFactors and Venda.

Earlier this week, I asked Greg Gianforte, RightNow's CEO, what he believes are the key differences for on-demand vendors when dealing with large enterprises. He says there are five factors:

Flexibility in deployment. RightNow has always given customers the option of installing its software on-premises. Less than one in ten take up that option (compared to around half five years ago) but it's a critical tick-list item for large enterprises, even if they never make use of it.

Payment terms. The notion of a variable monthly fee is anathema to large enterprises. It's not how they work. They want to negotiate the price up front and then know exactly what they'll be paying over the course of a two-year contract.

Upgrade choice. "Everybody else in software-as-services has a big Frankenstein switch," says Greg. He's referring to the way on-demand vendors flick a switch and upgrade all their customers simultaneously at a time of their choosing. Large enterprises hate that. "You have to give customers control over when and if upgrades occur," he says.

Integration. It's inevitable that large enterprises will need to integrate the hosted application with existing installed software.

Customization. Large organizations expect to be able to configure applications to suit the way they operate, not the other way around.

A lot of these elements, especially the first two on the list, are to do with how the hosted solution is packaged and presented to customers rather than anything that's core to the on-demand model. The remaining three are down to how the technology is implemented, and again, none of them imply a dilution of the core model. It's just a matter of taking the right approach.

One might even argue that the first point about deployment choices is largely a matter of pandering to customer prejudices. (RightNow charges the same for either, since it has found the cost of supporting a customer installation is at least the same as what it would otherwise spend on hosting costs). Greg told me the story of one customer who signed up intending to take the on-premises version, but found there was a big event coming up in a few weeks' time and the only way to be ready in time was to go with the hosted option.  The original plan was to move across to an on-premises implementation once the event was out of the way, but five years later the customer is still on the hosted version. That pattern is repeated at quite a few of RightNow's customers, says Greg. Once they've started hosting, they rapidly get comfortable with it.

Topics: Tech Industry

About

Since 1998, Phil Wainewright has been a thought leader in cloud computing as a blogger, analyst and consultant. He founded pioneering website ASPnews.com, and later Loosely Coupled, which covered enterprise adoption of web services and SOA. As CEO of strategic consulting group Procullux Ventures, he has developed an evaluation framework t... Full Bio

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