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P3DS - A Cloud-based Platform for Professional Services Firms

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P3DS - A Cloud-based Platform for Professional Services Firms

  1. 1. A Cloud-based Platform for Professional Services Firms Professional services firms should embrace a cloud-based platform to deliver software-as-a-service (“SaaS”) applications to help elevate their technology-enabled professional services for the small to medium-sized business (“SMB”) market above the crowd. Herein, we explore opportunities for professional services firms to offer cloud-based SaaS enabled professional services to their base of SMB customers. In addition to discussing the growth of the multi-billion market for cloud services, we specifically detail how SMBs are among the most eager adopters of cloud-based SaaS applications, and why using a cloud-based platform to deliver these SaaS applications to SMBs is a natural fit for the professional services firms. With a SaaS applications marketplace, professional services firms can realize new revenue streams and reduce customer churn, among other benefits. While the cloud opportunity is attractive, professional services firms also face many obstacles to reselling cloud-based SaaS applications. We identify these challenges, including the costs associated with launching a cloud-based platform, such as developing a complex software aggregation platform and infrastructure deployment, as well as customer support, sales, and marketing considerations. Further, we evaluate why turning to a third-party platform provider can enable professional services firms to seize the SMB market opportunity effectively. Therefore, allowing technology-enabled professional services firms to go to market quickly while significantly lowering costs. The SaaS applications revenue prize is large, but the obstacles to winning it are just as big. Besides the fact that business processes and billing / delivery systems used by professional services firms are not geared to handle cloud-based SaaS applications, the SaaS applications involves a very different set of economics for third-party resellers. Finally, we expose typical challenges professional services firms face gearing up to target this space, as well as how working with a third-party platform provider can be a vastly superior strategy to the traditional do-it-yourself approach. The Growing Cloud-based Services Industry When it comes to IT resources, small businesses are notoriously understaffed. Cloud-based SaaS applications mitigate this resource issue to some extent. To understand why, it helps to think about how a cloud-based SaaS application works. SaaS applications delivered via the cloud are always up to date, so all new and existing employees have the same version of the software. Computer hardware and operating systems are also irrelevant, since the SaaS applications all run through standard Internet browsers. This means that off-site employees can access information anywhere, on any browser-equipped device, without the company needing IT staff to set up virtual private network (VPN) connections.
  2. 2. 2January 20, 2016 In addition, all data is stored in secure data centers in the cloud rather than on user desktops–an important feature considering many small businesses do not regularly backup their data to remote locations or have sufficient firewall safeguards. Expense reduction is also seen as a key benefit because SaaS applications are purchased on a per user basis and billed monthly, simplifying cash flow management and expense forecasting. Given these advantages, it should come as no surprise that SMBs are aggressively adopting technology-enabled professional services along with SaaS applications. An estimated 61 percent of SMBs use cloud-based software today4, and small business spending on cloud solutions will grow by almost 20 percent over the next five years.1 In fact, the cloud is now the preferred way for SMBs to acquire SaaS applications, with 43 percent selecting cloud-based solutions, as opposed to 23 percent that prefer to buy on premise solutions.2 On the surface, these trends can be seen in the SaaS applications that SMBs already turn to on an everyday basis. As an example, Google estimates that five million businesses use its Google Apps suite, which includes email, calendaring, and other office tools.3 Also, Microsoft announced that the cloud-based SaaS version of its flagship productivity suite, Office 365, reached one million subscribers in 100 days, faster than Dropbox and Facebook. Microsoft’s numbers translate to an average of more than one Office 365 subscription sold every second over three and a half months.4 All of these numbers are great news for professional services firms willing to embrace a cloud-based platform to deliver SaaS applications to help elevate their technology-enabled professional services for the SMB market above the crowd. The SaaS Opportunity SaaS offers professional services firms’ a new revenue stream. There is a large and growing volume of SaaS applications already available in the marketplace today. However, SMBs often have difficulty finding them, or need to turn to multiple providers for multiple solutions (which, of course, can create multiple invoices and accounting headaches). To complicate matters, the SaaS applications market is very fragmented across a large spectrum of SaaS solutions. This is true across type—such as customer relationship management (CRM), accounting, or project management—as well as target industry, including financial services, healthcare, legal, non-profits, etc. This is where professional services firms come in. They are well positioned to identify the right SaaS applications and serve as a one-stop shop for cloud-based SaaS solutions which provide greater collaboration and efficiency for their existing professional services, a convenience many SMBs are actively seeking out. In fact, 69 percent of SMBs prefer to purchase their SaaS applications from a single trusted vendor.5 Professional services firms already have the customer trust and awareness to become the cloud-based SaaS application provider of choice for their SMB customer bases. A cloud-based platform embraced by technology-enabled professional services firms will further differentiate the trusted business advisor from the crowd in the SMB market during the coming decades.
  3. 3. 3January 20, 2016 Components of a Cloud-based Platform Building a successful cloud-based platform involves much more than a great looking website and shopping cart functionality. If all a cloud-based platform does is enable SaaS application purchases, then it has missed the true opportunity that the cloud offers. Here are the key components that a robust cloud-based platform should include:  Directory / Search / Compare  Syndication Process  Reseller Website Login  Identity Management (Single Sign-On)  Subscription Management  SaaS Application Management  Data Integration  User / Role Management  Billing / Settlement Engine  Client / User Support Directory / Search / Compare Ultimately, the goal of any cloud-based platform is a rich catalog of relevant SaaS applications for business users. However, SMBs will still need help selecting which SaaS applications are right for their companies. Consequently, robust directory services, such as ratings and feedback, are critical tools to help small business customers navigate through these SaaS solutions, some of which may be unfamiliar to them. Guidance from professional services firms is immeasurable as well. Syndication Process In terms of cloud-based platforms, syndication is the process of identifying, certifying, contracting, and integrating SaaS applications into the cloud-based platform. Given the importance of a building a robust catalog of SaaS applications, establishing this process is paramount. Unless the cloud- based platform includes a built-in syndication process, responsibility for selecting and productizing potentially hundreds of apps falls squarely on the cloud-based platform operator. Software and infrastructure need to be validated and user support levels verified, both of which are complex processes. Then, agreeing on margin and other contract terms can also be a lengthy process, one that must occur before integration into the cloud-based platform can even begin. Professional services firms that try to handle these components on their own require significant product management and legal resources. Reseller Website Login Professional services firms already have familiar websites through which their customers access various information from time to time. A cloud-based platform should provide an embedded portal login for the professional services firms’ website to provide continuity for their customers. Identity Management (Single Sign-On) One advantage of subscribing to SaaS applications through an application aggregator, such as a cloud-based platform provider, is the ability for customers to log in once to access all of their applications. Not having to remember multiple IDs or passwords is a tremendous value to end users. Typically, this type of seamless experience is not possible with individual SaaS application purchases.
  4. 4. 4January 20, 2016 Subscription Management Administrators require the ability to manage subscriptions. Many SaaS solutions offer a 30-day free trial to encourage adoption. Therefore, the ability to cancel application subscriptions before a free trial expires is important. In addition, administrators need to be able to upgrade or downgrade application editions depending on the features required by their organization. Finally, the ability to review invoice and payment history is a standard requirement. SaaS Application Management For SMBs using a cloud-based platform, SaaS application management is critical. For example, when a new employee has just been hired, the administrator needs the ability to quickly identify the SaaS applications the new employee needs. In some cases, a new SaaS application will be available directly from an independent software developer prior to it becoming available on a cloud- based platform. Therefore, the ability to “import” subscriptions that were purchased prior to cloud- based platform availability is critical. This way, administrators can manage them like any other SaaS application or subscription purchased via the cloud-based platform. Data Integration Ultimately, SMBs want to use SaaS applications that can work together. In the simplest terms, this means the output from one SaaS application (e.g., an accounting application) can become the input for another (e.g., a CRM application). This level of data integration may prove the most challenging for cloud-based platform operators because it requires significant support from independent software vendors. Thankfully, independent software developers have already identified this as a critical component of SaaS application adoption. Many are creating APIs (application programming interfaces) that enable applications to share data seamlessly. The cloud-based platform operator can play a key role in this process by acting as an integration evangelist and promoting integration as a priority with its independent software developer partners. Operators that can demonstrate strong SaaS adoption and high user volume will be in the strongest position to establish standards for independent software developers. User / Role Management Most SaaS applications targeted to the SMB market do not require IT involvement. However, organizations that purchase SaaS applications through a cloud-based platform may still want to appoint an administrator. This individual—or group of individuals depending on the size of business—will be responsible for managing users / roles, SaaS applications, and subscriptions. Administrators need one view across all users and roles, which should be easy to search and sort. They need to be able to quickly drill down to individual users and get detailed user, role, and SaaS application assignment information to facilitate quick administrative action. Moreover, they should be able to automatically import users from a variety of directories and SaaS applications in order to accelerate deployment. In addition, administrators must be able to easily select users along with one or more SaaS applications and then automatically provision the necessary accounts and access to the targeted users. This process should be available to roles so that the SaaS application assignments happen automatically when users are added to a role. Because of the security and business impact on the customer, administrators need the ability to revoke SaaS application access when necessary. This includes centralized de-provisioning to automate the end-to-end process and workflow, including a complete audit trail.
  5. 5. 5January 20, 2016 Billing / Settlement Engine Cloud-based platforms need to be able to manage credit card and other electronic billing / purchasing formats. For the best customer experience, professional services firms should connect cloud-based platform billing to their current legacy billing systems. A single bill that includes multiple SaaS applications plus traditional professional services, gives customers one view of their technology purchases and makes handling invoices easier. Client / User Support Developing a cloud-based platform is not just about technology; a complete cloud-based platform also addresses user support. While independent software vendors typically provide some level of support for their individual software (although in many cases this is limited to FAQs and email), the cloud-based platform itself—particularly the administrator functionality—require cloud-based platform operators to provide user support as well. Best practice cloud-based platforms make it clear where users can obtain support for individual SaaS applications, as well as the cloud-based platform itself. In addition, support staff must have the necessary training and resources to be able to answer basic questions and quickly redirect customers to an independent software vendor’s support resources if the independent software vendor is better equipped to handle the issue. Challenges for Cloud-based Platform Providers As the central hub for SaaS application aggregation and management, cloud-based platform providers face unique challenges when it comes to launching and operating SaaS application marketplaces. The most important of these are detailed below. Margin and Return Reselling cloud-based SaaS applications involves a very different set of economics than on premise- based independent software vendors are used to. The current market has embraced a model where SaaS application developers are retaining approximately 60 to 70 percent of the available SaaS revenue while sharing 40 to 30 percent with cloud-based sales channel. The economics are different in a cloud-based platform model. In this model, delivery costs and marketing expenses replace high-transaction costs associated with traditional on premise software deployment models. Clearly, these expenses are ongoing investments. Cloud-based platform providers incur all of the delivery costs and most of the marketing expenses for SaaS applications. Hence, the sales channel revenue share previously noted is typically shared equally between the cloud-based platform provider and the reseller professional services firms. Fragmentation and Material Demand The SaaS market is growing rapidly, but it is also very fragmented across different categories of SaaS applications. Beyond accounting, payroll, and office suite applications, business software needs are varied and diverse. To overcome this fragmentation and capture material revenue, cloud- based platform providers need to offer a meaningful catalog of SaaS applications across necessary business functions. As such, it is extremely difficult for cloud-based platform operators to sign up independent software vendors one by one. In fact, it could take cloud-based platform providers several years to build up sufficient SaaS software inventory to become a worthwhile destination for professional services firms.
  6. 6. 6January 20, 2016 Customer Support Customer support training costs for cloud-based platform services can be high, because all support staff need to be trained, or a special, small queue must be established, an approach that offers poor economies of scale. In either case, retraining is usually required due to low call volume levels during initial introduction and ramp up. The P3 Data Systems Platform: A Console-as-a-Service (“CaaS”) Solution for SaaS Application Deployment P3 Data Systems, a leading cloud-based platform company, has developed a streamlined approach for professional services firms looking to launch a cloud-based multi-tenant console targeting SMBs. With its advanced platform, P3 Data Systems has taken every aspect of a SaaS multi-tenant console operation—including identity management, billing, SaaS application integration and syndication, customer support, and more—and transformed them into a CaaS solution. This is good news for professional services firms, since it means they can launch a sophisticated, user-friendly multi-tenant console marketplace and begin to enjoy the full benefits of cloud-based client collaboration almost immediately. No Capex Investment Required From the professional services firms’ standpoint, one of the most appealing aspects of the P3 Data Systems CaaS model is its payment structure. Like other cloud computing services, the P3 Data Systems platform has a monthly licensing fee schedule. There are no upfront capex costs because there is no development work on the part of the professional services firms. Even better, the costs to operate the CaaS are variable based on tenant and user volume. In addition, because syndication is handled by P3 Data Systems, a minimal number of marketing staff is required. High-End Customer Portal Experience The P3 Data Systems platform-powered consoles feature state-of-the-art functionality for the best customer, independent software developer, and administrator experience possible. During the integration process, P3 Data Systems requires the use of standard templates across every independent software vendor to help ensure that application descriptions, pricing, free trials, fact sheets, videos, comparisons, and other materials are all consistent. In addition, each SaaS console comes equipped with a feedback engine that allows users to rate and comment on SaaS applications they have purchased within guidelines defined by the professional services firm. Ninety Days to a Robust, Fully Branded Console The P3 Data Systems platform allows professional services firms to go to market quickly with a high- end CaaS marketplace that can be customized to suit the unique needs of each customer. The P3 Data Systems cloud-based platform also encompasses the syndication process, which means professional services firms can launch with a large selection of relevant SaaS applications—which specifically support the traditional professional services offerings of the firm—on day one, instead of spending 12 to 24 months building an inventory of SaaS applications on their own.
  7. 7. 7January 20, 2016 No Staffing or Training Headaches With P3 Data Systems, spending money on expensive customer support training is no longer an issue. Customer support operations are available as part of the professional services firm’s monthly fee schedule. This ensures a fully trained and cost-effective staffing solution since costs are amortized over multiple P3 Data Systems CaaS partners. It can also offer peace of mind, since professional services firms can be confident that there is sufficient support staff to handle unpredictable spikes in volume that can come with the launch of a new service. In short, P3 Data Systems enables professional services firms to focus on generating traffic and sales, rather than corralling independent software developers, customer support staff, legal resources, and marketing teams. Conclusion Professional services firms are searching for ways to augment their revenue stream by embracing value-added services in support of cloud-based SaaS applications. In particular, these professional services firms are looking to take advantage of the opportunity to launch cloud-based marketplaces to resell relevant SaaS applications. With a P3 Data Systems CaaS approach, professional services firms can avoid obstacles and enter the space quickly with as little risk as possible. P3 Data Systems is in a great position to offer professional services firms an immediate CaaS opportunity without the developmental and operational challenges normally associated with new product launches. This enables professional services firms to focus on what’s more important— generating revenue and becoming leaders in the cloud industry; and yes, to elevate their technology- enabled professional services above the crowd. . 1 Cloud Computing in the Midmarket: Assessing the Options in 2013, IDC, 2013 2 SMEs: Equipped to Compete: How SMEs can grow in a changing global marketplace, Oxford Economics, June 2013 3 http://www.google.com/intx/en/enterprise/apps/business/ 4 techradar.com, "Microsoft's Office 365 Home Premium races past one million users," by Kane Fulton, May 31st, 2013 5 Small and Medium Business Cloud Application Trends Survey, Techaisle/Dell, 2012

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