W HI T E P A P E R
Consulting in the Cloud: A New
Model for Partner Success
THE CASE FOR CLOUD COMPUTING......................................................................................................................2
CLOUD COMPUTING INVESTMENTS YIELD INNOVATION,SATISFACTION...........................................................................................................3
GOING FORWARD IN A CHANGED LANDSCAPE...............................................................................................4
FACT VERSUS FICTION ..........................................................................................................................................................................................4
Enterprise customers abound............................................................................................................................................................4
Success in cloud computing spans across the enterprise..........................................................................................................4
Cloud computing: business not-as-usual........................................................................................................................................4
FROM CUSTOMAPPS TO PRODUCTS:ALOGICALTRANSITION.........................................................................................................................6
JOIN THE WORLD’S LARGEST ECOSYSTEM OF LEADERS IN THE CLOUD........................................7
Consulting in the Cloud: A New Model for Partner Success 1
The multibillion-dollar cloud-computing sector has become the elephant in the room that consulting firms can
ignore only at their peril. At the same time, the opening of computing platforms to third-party development
represents an immense opportunity. Thousands of services are now available in the cloud, from raw
infrastructure and development tools to personal productivity applications—all of which are being
implemented both at the division and enterprise levels. For consulting partners surveying this altered
landscape, the term “game changing” comes to mind.
With cloud Consulting partners looking to retain their trusted adviser status face a two-fold challenge: separating the
facts from the fictions of cloud computing and then moving to take advantage of cloud computing’s hidden
computing for the opportunities. Some partners fear cloud computing will squeeze them out of the mix. However, other firms
enterprise, you can (including two profiled here) have seized the opportunity, formulating business plans that wouldn’t have been
executable even 5 years ago. Those abundant revenue opportunities—including traditional consulting, custom
bring your solutions application development, and even product development—compose cloud computing’s silver lining.
into production For the business clients of consulting firms, the current bleak economic outlook is both a challenge and an
faster, address your opportunity. The challenge is to closely watch their spending and do more with less while maintaining
control of their business, retaining their customers, and winning every deal. Companies also are trying to do
customers’ business more with less when it comes to their IT investments, with extra emphasis being placed on efficiency and
problems, and innovation.
continuously Herein resides the opportunity. Cloud computing for the enterprise has emerged over the last decade as the
best way to maximize a company’s IT investment while minimizing overhead. Applications that run in the
enhance and revise cloud are delivered as a service over the Internet, freeing companies from having to buy, install, and maintain
the costly hardware and software needed to run their businesses. In comparison, cloud computing offers
your work. companies a faster, easier model for building and deploying complex enterprise applications while
eliminating the up-front capital investment required to support an on-premises deployment.
The emergence of this new model offers immense opportunity for consulting firms looking to transition to the
cloud. By consigning the IT infrastructure (and its associated headaches) elsewhere, you can help your
customers lower their up-front investment, reduce their financial risk, and concentrate on what you do best—
develop and customize solutions that drive innovation for your clients. With cloud computing for the
enterprise, you can bring your solutions into production faster, address your customers’ business problems,
and continuously enhance and revise your work without the distribution limitations of on-premises software.
According to the research firm IDC, IT executives, CIOs, and other business leaders expect IT cloud services
to grow almost threefold in the next 5 years, reaching $42 billion by 2012. 1 Few silver linings shine as
Consulting firms around the country are seizing the opportunity represented by cloud computing. Portland,
Oregon-based Centerstance, for example, earned the number 10 regional ranking in Inc. magazine’s 2008 list
of the fastest-growing private companies on the strength of its cloud-computing expertise. “Clients continue
to validate our strategy of focusing on software as a service (SaaS) to address their critical business needs,”
said the firm’s president, Arne Kainu. “That has allowed us to help optimize and extend their core business in
‘The Cloud’—instead of their software infrastructure. This is doubly important in times like these, as those
companies who put the resources in place to serve and retain their customers will be the ones who gain new
market share and ultimately emerge ahead.” Centerstance has achieved average year-over-year growth of 200
percent since 2004, with an overall growth percentage of more than 450 percent.
The Case for Cloud Computing
In the last 10 years, adoption of cloud-based applications (aka software as a service, or SaaS) like those from
salesforce.com has made significant headway. The next major shift has been to open up the underlying cloud-
computing development platforms so that companies and consulting partners can build their own cloud-based
applications. This trend is now driving a transition from on-premises development platforms like Microsoft
.NET, WebLogic, and WebSphere to cloud-computing platforms—or platform as a service (PaaS)—from
Amazon.com, Google, salesforce.com, and others. As a result, companies no longer need to buy or set up and
run networks, servers, and storage to manage a complicated software “stack.” Nor do they need to provide the
facilities to house the hardware infrastructure or the electricity to power it. Instead, they can focus on the
more strategic functions of IT that drive innovation and generate real value for their business.
It is this second shift that presents immense opportunity for consulting firms. Cloud computing represents a
multibillion-dollar business, and its biggest growth still lies ahead. Thousands of services are now available
in the cloud, from raw infrastructure like CPU and storage from Amazon.com to personal productivity apps
IDC eXchange, “IT Cloud Services Forecast – 2008, 2012: A Key Driver of New Growth,” http://blogs.idc.com/ie/?p=224,
October 8, 2009.
Consulting in the Cloud: A New Model for Partner Success 2
like Gmail, Google Calendar, and Google Docs. Those solutions are being implemented both at the division
and enterprise levels. For consulting firms surveying this altered landscape, the term “game changing” comes
Market Research Firms are Bullish on Cloud Computing
Cloud computing will account for half of all new enterprise IT, and 25 percent of all user business
processes, by year end 2015. 2
By 2012, 80 percent of Fortune 1000 enterprises will be paying for some cloud-computing services, and
30 percent will pay for cloud-computing infrastructure services. 3
By 2013, over 33 percent of all business applications will make some use of software services managed by
third parties (partners, suppliers, customers, communities, and others). 4
“As SaaS continues to gain more popularity with large enterprises, IT consulting and systems integration
firms that don’t address it will be relegated to IT body shops. Those that evolve will remain trusted
advisors to lines of business with budget, particularly in the front office, and their traditional CIO clients,
who need to understand how SaaS fits into the enterprise scheme of things.” 5
By the end of 2009, 76 percent of U.S. organizations will use at least one SaaS-delivered application for
business use. 6
The IT industry’s expansion to “the cloud” will accelerate — as the bad economy drives more users to the
cloud model’s low costs, and IT suppliers follow suit. 7
McKinsey and Company:
“We estimate that the total opportunity in SaaS platforms will grow to between roughly $5 billion and $11
billion by 2012.” 8
Cloud Computing Investments Yield Innovation, Satisfaction
As SaaS continues Some research firms estimate that in the conventional software deployment model, 8 out of every 10 dollars
spent in IT is “dead money”: keeping the lights on, but not contributing to constructive change and growth.
to gain more Cloud computing, on the other hand, frees up funding that can be invested in innovation and business
popularity with large transformation. As the competitive pressures of the current economy continue to mount, companies of all
sizes are focusing their IT investments on strategic areas that will drive real change across the organization,
enterprises, IT helping companies gain significant returns in productivity, operational efficiency, and customer retention.
consulting and Moreover, cloud computing’s subscription-based model drives high levels of customer satisfaction. Because
systems integration vendors must constantly deliver—in the form of frequent releases and continuous improvements—the
emphasis is squarely on customer success. Indeed, the subscription formula has worked for salesforce.com.
firms that don’t According to salesforce.com’s December 2008 Customer Relationship Survey conducted by independent
vendor CustomerSat, Inc. (MarketTools), 94 percent of Salesforce CRM customers surveyed plan to continue
address it will be using the solution and 92 percent would recommend it to colleagues. 9 High customer satisfaction begets
relegated to IT body company success, creating a virtual cycle: more doors opened, more business from existing customers, more
opportunities all around. And the benefits of this virtual cycle extend to the entire supporting ecosystem,
shops. including the vendors, technical resources, and advisors who define, build, and deploy a company’s cloud-
— AMR Research computing strategy.
Saugatuck Technology, “Enterprise-Ready SaaS: Blue Chip Solution in the Business Portfolio?” July 10, 2008.
Gartner Research, “Web Platforms: Doing Business in the Cloud,” Gartner Application Architecture, Development &
Integration Summit, June 9-11, 2008.
Stiffler, Dana and Rob Bois, “Consulting in the cloud: the Emerging SaaS Consulting, Product Development, and Outsourcing
Ecosystem,” AMR Research, June 2008.
IDC, “Economic Crisis Response: Worldwide Software as a Service 2008-2012 Forecast Update,” IDC #215504, November
IDC, “IDC Predictions 2009: An Economic Pressure Cooker will Accelerate IT Transformation,” IDC #215519, December
McKinsey and Company, “Emerging Platform Wars in Enterprise Software,” June 2008.
Salesforce.com relationship survey conducted in Dec. 2008, by an independent supplier CustomerSat, Inc., a MarketTools
Company. Sample size for continue to use equals 3220, recommend to others equals 3215 WW respondents, randomly
selected. Success rate reflects respondents indicating “Definitely will” or “Probably will” continue to use salesforce.com.
“Would recommend to a Colleague” reflects respondents indicating “Definitely will” or “Probably will.”
Consulting in the Cloud: A New Model for Partner Success 3
Going Forward in a Changed Landscape
Consulting partners looking to retain their trusted adviser status face a two-fold challenge: separating the
facts from the fictions of cloud computing and then moving to take advantage of cloud computing’s hidden
opportunities. The first step involves understanding what the changed landscape actually means to your
practice. The second step is to act on that understanding by identifying business models that work and
learning from companies that are successfully making the move to the cloud.
Fact versus Fiction
The success of cloud computing has happened so quickly that misconceptions are inevitable. Among the key
Cloud computing 1. Cloud computing solutions are only for small to medium-size companies.
has broad 2. Cloud computing is limited to departmental initiatives.
implications for how 3. Cloud computing squeezes out consultants.
consultants do Let’s look at each of these misconceptions in more detail.
business, affecting Enterprise customers abound
There’s no need to look any further than salesforce.com’s customer base to understand how far cloud
their revenue model, computing has come. Aon Corporation, Ashland, Harrah’s Entertainment, Kaiser Permanente, Motorola,
sales organization, Siemens PLM Software, Sprint Nextel, and The Häagen-Dazs Shoppe Company have all built applications on
the Force.com platform. Many of these solutions have been deployed nationally or globally, integrate with
and self-definition. data from legacy applications, and support hundreds or sometimes thousands of users across the enterprise.
Companies like Dell and Vetrazzo have standardized their businesses on salesforce.com. At other companies
like Cisco and Japan Post Network, tens of thousands of employees are using applications built on Force.com
every day around the globe.
Success in cloud computing spans across the enterprise
Ten years ago, salesforce.com pioneered the cloud-computing model with CRM. Over the past decade, cloud
computing has expanded to manage all functions across the enterprise. And with the emergence of PaaS,
companies not only can license packaged applications from SaaS vendors, but also build applications that
support everything from supply chain management to billing, compliance tracking, HR, and more. And now
companies are taking cloud computing where on-premises applications once reigned supreme.
Salesforce.com Customer Application
Ashland Shipping and distribution
Bronx Lab School Student performance and counseling
Dell Change control and support
Dolby Laboratories Cinema asset management
Japan Post Network Retail compliance
Papa Murphy’s Take ‘N’ Bake Pizza Franchise management
The Schumacher Group Custom billing application
Vetrazzo Custom ERP system
Cloud computing: business not-as-usual
The final fiction surrounding cloud computing is that it squeezes consultants from the mix. The truth is more
complex: Cloud computing has broad implications for how consultants do business, affecting their revenue
model, sales organization, and self-definition. Consultants who take a business-as-usual approach do so at the
risk of losing their trusted advisor status and becoming, as AMR Research puts it, “IT body shops.” 10 If that’s
the risk, however, cloud computing is also filled with immense opportunity for those consultants primed to
embrace it. These revenue opportunities primarily fall into three areas:
1. Traditional, non-technical services, including organizational effectiveness, business process
engineering, sales effectiveness, and other best practices. All these services are in demand at least
as much in the cloud as they are with on-premises software. In CRM deployments, for example, the
greatest implementation challenges center on business process strategy and alignment, integration,
change management, and training. None of these issues goes away in the SaaS deployment model.
And because cloud-based technology is faster and easier to deploy, cloud-computing solutions
focus more on improving the way your customers run their businesses than traditional software
Stiffler, Dana and Rob Bois, “Consulting in the cloud: the Emerging SaaS Consulting, Product Development, and Outsourcing
Ecosystem,” AMR Research, June 2008.
Consulting in the Cloud: A New Model for Partner Success 4
The products bring deployments. As such, cloud computing allows for the introduction of improved—not just
automated—business processes. These services are typically more margin rich compared to those
in recurring required in the installation of hardware and software.
revenues—that’s the Moreover, the SaaS model lets vendors roll out more new features more often because their
engineering teams can focus on end-user functionality rather than regression testing and supporting
dream of any services multiple platforms. And more frequent, feature-rich releases ultimately translate to increased
firm. Our 3-year goal opportunity for consulting firms as they help their customers consume the new functionality.
is to grow the product 2. Application implementation services, including configuration, customization, and integration.
Configuring software to support business requirements remains an ongoing concern when
side so that it deploying a cloud-computing solution. Gartner warns its clients, “Do not dismiss SaaS as a delivery
represents one-third alternative because your deployment may have configurability or customization requirements.
Many SaaS applications offer sophisticated tools for tailoring the application to business needs.” 11
of the business. Integration work plays a significant role as companies make cloud computing an extension of their
— Adam Caplan
IT strategy, requiring that new applications work with existing legacy systems and other SaaS-
Founder & CEO based solutions. Gartner advises its clients not to “dismiss SaaS as a delivery alternative because
Model Metrics you have sophisticated integration requirements with on-premises data sources and applications.
SaaS applications and third-party support tools are available for real-time and batch integration.” 12
3. Custom application development work, which may include extending packaged applications or
building completely new ones. Cloud computing unlocks a new level of opportunity for consulting
firms to build custom applications that meet clients’ specific business needs while also being
upgrade-protected and supported by the vendor. By removing the pain, cost, and risk of managing
infrastructure, cloud-computing platforms such as Force.com let consultants focus on delivering
transformative innovation to their customers, not just build infrastructure to support the existing
Two Consulting Firms Reap the Rewards of Cloud Computing
Among the firms that have found cloud computing’s silver lining are Chicago-based Model Metrics and
Silicon Valley–based Appirio. Both have built businesses that include custom application development—
and are now using that work to develop product portfolios.
At Model Metrics, traditional CRM services like customization and training still account for much of the
company’s business. But the firm’s growth is in building custom applications on top of the Force.com
platform. For the final quarter of 2008, platform-related development surpassed 50 percent of the firm’s
total business. This strategy’s success also can be seen in the rising value of Model Metrics’ proposals.
The average statement of work has risen more than 600 percent in the last few years, with some SOWs
exceeding $500,000. Many of these custom apps go far beyond traditional sales force automation:
:: For the confectionery company Wrigley, Model Metrics developed a system for managing new
product launches, an organizational task formerly tracked on an emailed spreadsheet.
:: For SFX Baseball, a Chicago-based major league management agency, the firm developed a
system to coordinate its clients’ complex lives: from family matters to sponsorships to contracts.
:: For the Chicago Housing Authority, the firm built a system to track information on housing
candidates, from where they live, to employment, to family issues—helping improve their
chances for placement when housing opportunities arise.
Model Metrics has also begun building a portfolio of mobile applications, including its “2Go for iPhone”
product suite that synchronizes with Salesforce CRM data. The apps are distributed via the Force.com
AppExchange and Apple’s iTunes. Although services still represent the majority of the consulting firm’s
business, its product portfolio has become a reliable, growing source of income. “The products bring in
recurring revenues—that’s the dream of any services firm,” says founder and CEO Adam Caplan. “One of
our goals is to be a global leader in building business applications for the iPhone, and we’re leveraging
Salesforce CRM, with its data aggregation, to get there. Our 3-year goal is to grow the product side so that
it represents one-third of the business.”
Gartner Inc., “Fact Checking: The Five Most-Common SaaS Assumptions,” January 16, 2009.
Consulting in the Cloud: A New Model for Partner Success 5
Appirio also is seeing extensive growth in its product and service offerings. The company, which focuses
on helping medium to large enterprises move to the cloud, saw revenue grow by more than 430 percent
over the last 2 years. An increasing portion of that revenue comes from SaaS strategy engagements,
custom development on Force.com, and recurring revenue from a growing portfolio of products.
With approximately 120 enterprise clients and about 2,000 product customers, Appirio recently expanded
from the U.S. into Japan. According to the company, the ability to spend time in the trenches with
customers gives it much greater insight into current market demand for new products and functionality.
Those projects have led to products, which in turn, have created more demand for its customization
services. Chris Barbin, CEO and co-founder of Appirio, says that the proverbial roadside is littered “with
the failures of services firms trying to build products out of the reusable assets from one or two customer
engagements that can’t be used across a wide range of customers.” Cloud computing changes the equation,
however. “The ability to build a product very quickly, iterate on that product in real time, then deploy
without versioning issues—that’s a significant difference from the traditional model,” Barbin adds.
Since the company’s inception, Appirio has been using its knowledge of cloud platforms to build its own
products—which range from a Professional Services Automation application built on the Force.com
platform to a Referral Management Solution that connects Salesforce CRM and Facebook to encourage,
manage, and measure word-of-mouth referrals. The company has also made a name for itself by using
these platforms to build innovative, high-value business applications for its customers:
:: For Harrah’s Entertainment, Appirio built a custom app that lets VIP customers log into a
Personal Concierge’s microsite and reserve accommodations, a golf tee time, or an evening out.
:: For Starbucks, Appirio developed a custom site and Facebook application in less than 3 weeks
to help the company manage and spread the word about its “I’m In” campaign, which attracted
millions of people across the U.S. to pledge community service hours.
:: For Author Solutions, Appirio developed a complete ERP system for self-publishing in less than
6 months that automated the entire publishing workflow, from editorial services and layout to
marketing and distribution.
From Custom Apps to Products: a Logical Transition
The ability to build In addition to the three service areas noted above, cloud computing’s revenue model introduces a fourth
viable option for consulting firms: leveraging repeatable assets as products. Product offerings become an
a product very additional profit center for the business as well as key differentiators, distinguishing a company from its
quickly, iterate on competitors and establishing the firm’s expertise in specific industries, technologies, or functional areas.
that product in real As the cloud-computing market has matured, a growing number of consulting firms have created new
“products” with great success. The opportunity often arises when a firm customizes similar types of
time, then deploy applications for multiple customers, such as a commission reporting module for a cloud-based sales force
without versioning automation system. Rather than reinvent the wheel each time, the consultant takes a more efficient approach:
build the module once as a plug-in component into an SFA system.
With the conventional on-premises model, the resources required to build and support these modules can
significant difference prove taxing to a services-based business. With cloud computing, however, the investment is easier to pay
from the traditional off—quickly creating a packaged application from your intellectual property without the cost and hassle
associated with designing and maintaining the underlying platform infrastructure.
Moving to a Subscription-Based Model
— Chris Barbin
CEO & Co-Founder Long term, the cloud-computing model suggests a different revenue model based on subscriptions rather
Appirio than the traditional time and materials. The subscription model, typically charged on a monthly basis for a
per-user fee, offers advantages to customers, giving them flexibility and a sense of control—both of which
lend themselves well to these challenging economic times. The model also provides a consistent,
predictable revenue stream for the consulting organization and reduces the uncertainty of monthly and
Consider a $250,000 software solution that accommodates 230 users. Ordinarily, about half this amount is
directly related to labor costs for the consultants who are building and deploying the solutions. So imagine
charging $125,000 to recover the labor costs, plus an additional $15 per month per user—for 3 years. The
timeframe is comparable to that of the on-premises model, where hardware, software, and consulting
expenditures typically are amortized over the same period. Hence, services in the cloud can offer the same
3-year, pay-as-you-go model: a comfortably familiar one for the customer, a newly beneficial one for the
Consulting in the Cloud: A New Model for Partner Success 6
Join the World’s Largest Ecosystem of Leaders in the Cloud
To discover more about cloud computing’s silver lining, we invite you to become a Salesforce.com
Consulting Partner. Salesforce.com brings together the largest community of innovators in the cloud,
including the world’s leading consulting firms, implementation partners, independent software vendors
(ISVs), and training partners. Together, this ecosystem is defining a new IT landscape based on the vast
potential of cloud computing. In 2008, CRM magazine gave salesforce.com CRM Market Awards for
Midmarket Suite CRM and Sales Force Automation as well as leadership recognition in several other
To learn how you can become part of our community, please visit: http://www.salesforce.com/partners
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