In a provocative, if not holier-than-thou stance, RightNow, a
supplier of Web customer experience management software, has issued
what it calls its "Cloud Challenge" to Salesforce.com, Oracle, SAP,
and others.
The cloud offers new economies of scale and a fairer pricing
mechanism than the packaged software model that went before it.
With the cloud, vendors only need charge customers for what they
use, unlike those wolves of the packaged software industry,
RightNow CEO Greg Gianforte seemed to be saying in an event staged
in San Francisco March 4.
"We are challenging the industry to finally deliver on the full
promise of the cloud. I challenge our peers to step up and engage
with clients like true cloud vendors, not on-premise vendors in
cloud clothing," said Gianforte at the Fairmount Hotel Thursday
morning.
RightNow's chief marketing officer, Jason Mittelstaedt, was quick
to pick up the beat. "This applies to all cloud vendors, but to
software-as-a-service vendors the most," he noted. There were many
ways for the packaged industry to charge customers for software,
even when they ended up not using it.
Mainly the upfront license combined with annual maintenance fees
sometimes bears little connection to actual use. Likewise, online
software-as-a-service vendors sometimes seem all too eager to do
likewise, Mittelstaedt said in an interview.
Software-as-a-service customers are being saddled with "shelfware,"
just like packaged software buyers, he claimed. By that, he means
they have to pay upfront for more software than they may actually
use.
Some on-demand contracts require the customer to pay for the
maximum number of users he expects to engage at some future time,
not the number who are actually using the application. They are
also enticed to sign long term contracts that lock them into such
rates for three or five year periods, at favorable rates that are
still higher than actual usage would require them to pay,
Mittlestaedt charged in an interview.
The Cloud Challenge urges:
1. No shelfware; pay for what you use with long term
price certainty.
2. Transparent pricing; customers should get five-year
fixed pricing.
3. No lock-in; customers should have the right to walk
away from the contract if service levels or application functions
don't meet expectations.
4. Flex up or down; customers should be able to adjust
the number of seats they are paying for, capacity of servers
rented, or nature of application modules they're renting with
prolonged negotiation with the vendor over the contract. Again,
with charges based on actual usage.
5. Cash for failed service requirements; on-demand
vendors offer apologies when service disappears, but seldom cash.
If a contracted service goes down or SLA isn't meant, there should
monetary reimbursement to the customer, not just words
acknowledging the outage.
"I challenge clients to stand up, demand their rights and break
free from the shackles of traditional enterprise software
engagements," stated Gianforte at the event.
Ken Harris, CIO of Shaklee, is a RightNow customer. He said in an
interview that RightNow is taking to the soapbox because it can
live up to its own challenge. "I'm not demeaning any of the other
SaaS vendors, but the RightNow gang just gets it that on-demand is
a totally different model than on-premises," he said.
Harris was particularly adamant that financial reimbursement should
follow a software-as-a-service outage. "That's been a critical
issue in every contract that we've negotiated," he said. He called
reaching an agreement with the nine SaaS vendors Shaklee deals with
other than RightNow "a drawn out education process" that was hard
to conclude.