Cloud vendor launches new client-focused agreements

As the UK government prepares to shift to Cloud Computing to cut costs and get better value for money for ICT programmes, a leading Cloud vendor has warned that the presumed value of the delivery model isn't being offered by most of the leading firms. 

 

The UK is set to move government services into the Cloud - where they can be accessed using a browser from remotely-hosted data centres - in a bid to cut costs and improve efficiencies. Cloud Computing is claimed to offer a quicker, easier, more scalable model of computing.

 

Critically, it's one in which the customer pays 'by the drink' for the services received, only paying for as much functionality as is needed and not getting locked into long term software licensing deals that mean they end up paying too much. 

 

But in reality, while customers might think they automatically have flexibility and price elasticity with Cloud applications deals, in reality many are no better than the lock-in contracts of the enterprise software old guard. 

 

That was the rallying cry of Greg Gianforte, CEO of Cloud CRM firm RightNow as he launched the firm's Cloud Services Agreement (CSA). RightNow is a major provider to the US federal government with some 25% of its customers coming from the public sector in America. 

 

 

Gianforte called it a reinvention of service agreements with clients, and urged rivals in the Cloud Computing game to rise to the "Cloud Challenge" and be out and proud as a true Cloud vendor. “Step up and engage with clients like true Cloud vendors, not on-premise vendors in Cloud clothing," he said.

 

The CSA, claimed Gianforte, would help the industry to “finally deliver on the full promise of the Cloud”. At an event in San Francisco and beamed via transatlantic video link to London, Gianforte dared other Cloud firms to follow suit by reducing the amount of so-called “shelf-ware”, implementing a minimum five year pricing certainty, and no long-term contract lock-ins.

 

Seven points make up the CSA, including the ability for clients to change their usage up or down on an annual basis; a commitment from RightNow to provide clients with “transparent and fixed pricing for six years”; cash service level credits akin to roll over minutes with mobile phone contracts; and flexible capacity that allows clients to accommodate seasonality and fluctuations without having to purchase for peak usage for the whole year.

 

“I sincerely hope the SaaS vendors adopt this model, because it’s better for the industry as a whole," he said. "If the SaaS industry adopts the model, then it will hasten the demise of the traditional software vendors.”

 

He may be waiting some time. Most of the major firms chose not to comment on the RightNow move although one of those dismissed it as a "PR stunt" while another suggested that they wouldn't be responding as they had "bigger fish to fry".

 

Gianforte didn’t hesitate to point the finger at other vendors, dismissing Oracle as “the poster-child for bad customer service,” but also extending this label to its "off-spring" SalesForce.com.

 

In fact, the Cloud CRM market leader came in for as much stick from Gianforte as the on premise old guard. Two marketing videos from RightNow to accompany the new campaign show a client of Salesforce.com standing alongside clients of SAP and Oracle. All three are bound down by a ball and chain with SalesForce.com's customers said to be suffering from “Bi-polar Vendor Disorder”, reinforcing RightNow’s assertion that the ‘No Software’ company is nothing more than an on-premise vendor in Cloud clothing.

 

 

While RightNow is the first Cloud vendor to make such an open marketing push in this way, the basic terms of what Gianforte is offering can essentially be mapped onto a report published by Altimeter Group, entitled Customer Bill of Rights” for SAAS,  which contains 39 best practices to improve the SAAS client-vendor relationship. “Anyone who has an annual service agreement will think, 'Don’t I already have these clauses in my contract?'” said Altimeter partner Ray Wang at the event in San Francisco.  “[Some rivals] let clients buy month to month, but you end up signing a three-year agreement; but if your usage drops you can only flex up and not down."

 

The RightNow announcement is "absolutely the right step and right direction from the point of view of SaaS and SaaS vendors," said Ken Harris , CIO of natural nutrition products company Shaklee, a RightNow veteran customer for more than five years. “Many vendors will put on their websites and in talks that they commit to x% of availability and y response time. If you ask them how they guarantee that commitment, they do so by putting the words on a website. That’s it. If you have to rely on that once you have the relationship with them, then you’re in big trouble because there’s nothing that stands behind [those words].”

 

Ironically for such an enthusiast, Harris will have to wait to take advantage of the new RightNow offer as it only applies to new customers or to existing customers when they come to the end of their existing contract.