Cloud Business and Cost Models

I used this slide deck for the Microsoft "Road to the Cloud" event on 12th February 2015 at Microsoft Vienna. Parts of it are the standardized "Road to the Cloud" slide deck. However, I added a few of my own slides, too.

Transcript

3. Remaining competitive Staying focused Reducing costs Managing datacenters Security, privacy & continuity Embracing globalization Improving free cash flow Boosting capital value Top of Mind Issues for ISVs
6. Revenue Stream Classical Model Licensing-based Maintenance fee How does SaaS influence the revenue stream? Time
7. Revenue Stream Classical Model Licensing-based Maintenance fee How does SaaS influence the revenue stream? Time V1 Licensing & Maintenance Revenue
8. Revenue Stream SaaS Model Subscription fee or usage fee Revenue stream can be different month by month Entirely new billing process is needed Micro- or mini-payments Handle defaulting customers Existing market places and services might help How does SaaS influence the revenue stream? Time
9. Revenue Stream SaaS Model Subscription fee or usage fee How does SaaS influence the revenue stream? Time V1
10. Bessemer Venture Partners: 10 Rules Of Cloud Computing And SaaS
11. Source: David Skok, Matrix Partners Assumptions • 5-year model • $10k bookings in month 1 • $2k monthly growth 5-year impact • At 2.5% churn, $(64,000) • At 5% churn, $(90,000)
12. Source: David Skok, Matrix Partners Assumptions • 5-year model • $10k bookings in month 1 • $2k monthly growth • Expansion revenue of 2.5% to current customer base
13. Increase stickiness Track and react to customer engagement Contact your customers Put top sales talent on cancellations Consider longer-term contracts Track and react to churn
15. Traditional Sales Process: Sales Led, Sales Driven Steps in Sales Process How is this Done? Steps in Sales Process How is this Done? Cloud Sales Process: Customer Led, Support Driven
18. Cost Structure Costs Fluctuating load Costs of data center resources TCO for customer Dynamic resource allocation Compute Storage Bandwidth … How does SaaS influence the cost structure? Time IT Capacity Resources Drives Revenue/Value Drives Costs (HW+SW)
19. “We design the price tag first” Source: http://www.flickr.com/photos/kalebdf/221051106 Under Creative Commons License
20. Cost Structure Design to Costs Strategic decision, not a technical decision Windows Azure Calculator How does SaaS influence the cost structure? Many small customers Few large customers Development Costs [€] Operational Costs/RGU [€] Simple Implementation Highly optimized solution
21. Business Value For ISVs
23. Pay as You Go Enterprise Agreement Open Licensing Resell Azure and maintain direct customer relationships
25. Estimating Costs Statistics Statistics can be dangerous! How to estimate costs for SaaS? Operational Costs/RGU [€] Natural minimum Endless potential for e.g. fraud, EDoS
26. Using Azure IaaS to support easy trial of existing ‘click-wrap’ software Dynamics CRM as a unified customer and app instrumentation platform Azure as a low cost data distribution & storage platform Augmenting existing apps with cloud based instrumentation and analytics