How to really transform a service business

Using the cloud and SaaS can totally transform how a business operates, but I only see a few innovative companies really taking advantage of the potential -- the big guys are missing it completely.

Every time I go to a NetSuite event, I wonder to myself why other vendors don't make more of a song-and-dance about the potential for highly impactful business transformation that SaaS enables. Maybe it's the particular sector of the market that NetSuite targets, where the early adopters are companies that want to find some way of differentiating and gaining a new edge, and therefore there's nothing to lose from proselytising a disruptive vision. Whereas other vendors perhaps are more afraid of scaring off their more conservative prospects.

At this point I ought to disclose that my client roster is skewed towards the vendors that like to talk up transformation — most notably NetSuite, Workday, Appirio [for a full list, see disclosure page]. And I'm developing some material that outlines the scope for business transformation through cloud. So I'm biased: stories that emphasize and illustrate the transformation message are music to my ears.

Yesterday, I (along with some ZDNet and Enterprise Irregulars blogging colleagues) was at the European launch of NetSuite OpenAir, its new 'service resource planning' suite, which fuses the OpenAir acquisition with its core financials and CRM products. The event promised to be a showcase of how SaaS and cloud is transforming the professional services space. It was good to see the potential for change getting top billing, but to be honest, there was a bit too much incremental change on display for my liking — with one exception, which I'll come to in a moment.

Admittedly, transformation is not just about radical change. NetSuite says its OpenAir customers are realizing from one to eight percent improvements in their utilization rates, which even on the scale of incremental improvements, can add up to big numbers in a large organization. For Software AG, one of the customers on stage yesterday, that was the entire justification for the implementation. "We told the CFO, if we get just one percent increase in utilization, it will have paid for itself," said Markus Küpper, senior director of global consulting services at the company.

For me, though, the story that stood head-and-shoulders above the others at this event came from Nick Oulton, CEO of m62 visualcommunications, a specialist consultancy with just 32 employees. If you want business transformation, this is the real thing, and I've yet to see compelling stories on this scale from larger companies. The sweet spot seems to be 30-60 employees — another example I've cited recently is FinancialForce.com, which by the way is sponsoring EuroCloud UK's next member meeting, at which Enterprise Irregulars blogger Vinnie Mirchandani will be talking about his new book, The New Polymath. I'm sure Vinnie would class m62 as another example of a polymath business.

The company is quite literally a business that would not be possible on its current scale without the cloud. This is what business transformation is really about — not incremental improvements in performance, but being able to do things that simply were not possible before the cloud existed.

What it does is a commonplace enough activity; it makes Powerpoint presentations (and now Keynote, in response to a big acceleration in demand for iPad presentations). But these are no ordinary slideshows; CEO Nick Oulton is author of the book Killer Presentations. These are slideshows that close multi-million dollar business deals, with customers reporting close rates of up to 85%. Currently handling about thirty projects a month, m62 handles anything from corporate presentations to sales pitches and undertakes to turn presentations round in as little as 48 hours if needed. The ability to frequently replan projects and resources at short notice was the key reason for implementing OpenAir, both for the flexibility of the application itself and for the on-demand scalability of the underlying cloud platform.

Its 32 employees are spread across three continents, clustered in New York, Singapore and at its headquarters in Liverpool, England. Just 17 come into the office on a regular basis, while the rest work from home. That makes it possible for m62 to recruit its highly specialized graphics designers wherever they are located. It uses a variety of online collaboration tools to co-ordinate their work and to serve its global customer base, including web conferencing. For example, a few days ago, Oulton was on a conference call planning a presentation at midnight UK time with a customer on the US east coast and a designer based in Singapore.

Oulton says that the company was able to double its revenues last year while recruiting just a handful of extra staff thanks to its decision to put all its IT in the cloud. "The limiting factor on our growth is our ability to produce work," he explained. His brief to the company's COO a couple of years back was simple: build a system good enough to run a $30-45 million company — "without spending any money." The cloud computing model of paying only for what you use means that m62 can tool up its information systems to scale without having to pay for that capacity upfront. In fact, it has found OpenAir so effective for project management that it was able to redeploy several of its project managers to other roles last year, and actually reduced the number of seats it needed to license.

But m62's story shows that cloud computing isn't just a way of consuming IT more cheaply. It enables a globally distributed team whose specialist talent can be located wherever they choose to live and work. Cloud sub-contracting plays a part too in the company's success. For example, it uses the cloud to find and work with local translation services so that it can make sure presentations are localized by native speakers, avoiding clumsy translation errors. This is a business that lives in the cloud and maximizes its use of cloud services to deliver world-class quality with a remarkably low cost base.

I don't yet see the same level of business transformation being picked up by larger, more established organizations. That's good news for innovative smaller companies like m62, FinancialForce.com, Appirio and others, who can seize new opportunities before others discover them. It's not such good news for managers and employees at those larger enterprises, who may find their numbers and their prospects fading as this new generation of cloud-savvy businesses grows stronger.