Bringing Confidence to the Public Cloud

April 22, 2010 Appirio

By Chris Barbin

Earlier this week, we were honored to be named the overall winner of the AlwaysOn OnDemand Top 100. Our award is a tribute our great partners (and previous AlwaysOn award winners) Google and salesforce.com, our fantastic team, and most of all, the 180+ pioneering enterprises that we’ve worked with since 2006. It was with great humility that I addressed a roomful of CEOs from some of the top on-demand companies – each a thought leader – on the state of the cloud movement and what we collectively needed to do to separate (cloud) hype from reality. Today, with our $1M Cloudsourcing Guarantee, we take another step towards building more confidence in a cloud-centric world.

When we began three and a half years ago, we projected savings from the cloud. We projected more flexible systems, better alignment with the business, the expansion from SaaS apps to platforms, etc. Now, we have seen each of those elements proven in the field with dozens of enterprise customers. Yet for each customer beginning their journey to the public cloud we repeat a cycle of initial disbelief because the claims of value are so much greater than past experiences.

Enterprises today are accustomed to a very different world. The vast majority of IT spending, over 70%, is spent on keeping the lights on. CIOs have been burdened with brittle, capital-intensive IT infrastructures that make it hard for them to support the needs of their businesses. That is why every CIO survey ever done highlights “business-IT alignment” as a key priority (here’s a survey from this week). With cloud applications and platforms, CIOs finally have the opportunity to not only reduce costs but really anticipate and support the needs of the business. But the question remains, how do you move fast with the cloud before you have experienced first-hand the sharp contrast between it and prior paradigms?

Among our customers, we’ve seen cloud applications and platforms move from the edges to increasingly become a core part of the IT architecture. Enterprises are now pursuing a much more thoughtful, architecture based, business case-driven approach to migrating to the cloud. As a result, they are moving from adopting point applications to building complete business solutions that bring together multiple cloud applications and cloud platforms. This emerging trend is called “cloudsourcing” – sourcing complete solutions to run your business on the cloud, through a combination of cloud applications, cloud platforms and cloud infrastructure.

This transition is not going to happen overnight. CIOs must take this journey in steps and to do so develop their CAP – Cloud Adoption Plan. In fact, we strongly believe that if you are not moving 10% of your spend – people, projects, apps, ops – to the PUBLIC cloud each year, you will overspend, lag your competition and be out-innovated. This is why we are building roadmaps with some our leading enterprise customers to move at least an additional 10% of their IT (people, software, hardware) towards the cloud every year.

The Path to Cloudsourcing
We think the final destination in this journey is running a business 100% in the cloud. That’s the eventual goal of cloudsourcing– and it matters, because being 100% in the cloud is a lot better than being even 50% in the cloud. As a serverless enterprise, we have enjoyed dramatic benefits – We’ve grown our business 400% over the past 2 years, spent about 3% of our revenue on IT (half of what benchmarks say a company our size should spend), and have no capital tied up in IT infrastructure.

Launching Our $1M Cloudsourcing Guarantee Program
It is because of the contrast between these two worlds that we are launching our $1M Cloudsourcing Guarantee program. For companies that cloudsource 100% of their IT to Appirio and the public cloud, we are guaranteeing that they’ll save at least $1M in steady-state TCO. If they don’t, we’ll make up the difference. You simply couldn’t do this with private cloud technology. Our work with 180+ customers over the past 4 years, indicates that this guarantee is actually quite modest. We’ve found that even companies that adopt a handful of cloud applications can see 30-40% TCO savings. By drawing a clear ($1M dollar) line in the sand, we hope to set a benchmark of minimum expectations C-level executives can have for their future state IT – a world of lower cost and increased flexibility. While traditional vendors try to preserve the status quo and persuade you to spend more on IT, we’re excited to help you spend a lot less, while getting lot more.

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