I recently joined Clarus Financial Technology after 15 years of working for one of the premier enterprise software companies in capital markets. My first month has been an eye-opening experience in the stark difference in how cloud vendors operate and what this means for employees and customers.
Below is a short summary of what I have learned so far.
Common Data and Software Version
Enterprise software vendors claiming to provide cloud products are nothing more than a “lift and shift” of an in-house installation to a hosted solution. While there is some hardware infrastructure cost saving in this, the project implementation and operating costs are much the same; as each hosted solution is begun from scratch for each client with their own project implementation team, their own database and version of the software.
Cloud Services have to offer much faster implementation and lower operating costs. They do so by employing common reference data, using a single software version for all clients and other best practices.
Demonstrations
Enterprise software is complex to demonstrate. The amount of time that pre-sales and product managers spent in installing , configuring and upgrading their demo environments was a significant part of their working day. One hears periodically of efforts to use common setups and configuration, but they usually fail, its just not in the DNA of enterprise vendors.
It is in the DNA of Cloud Services.
I was able to demonstrate Clarus products within the first week of my joining. This was possible as the setup time is minimal (you just need a browser). All the reference and market data is already present. I just needed to use sample portfolios or create my own trades to start using the functionality. When I asked Gary as to what is required to install the software, he just laughed. Now I know why!
This simplicity is not just a benefit for employees, it leads directly to better usability for customers.
Workshops
After demos, prospective customers ask to be shown a system with real trades and ideally one that they can use themselves. This was always a significant resource and logistics challenge at enterprise software vendors and one that took a lot of time and effort to organise.
For a cloud service, it is in the DNA of the offering, that a prospective customer will expect to try the service with their own real-world data and Clarus offers this within a matter of days.
Implementation
Projects to implement enterprise software generally ranged from 6 months to 18 months, with a professional services team and third-party consultants.
So I was completely blown away, when I visited a new Clarus customer, who in their first week were using portfolio risk analytics for their actual portfolio and not just a few test trades.
Enhancements
For enterprise software, the lag between when a feature is developed and the time it’s actually put into production is years. I cannot count the number of times that clients told me not to show the features from my version of the software as they would not get that for years. For clients, either it works in their version or it does not exist. This forces clients to develop their own custom solutions.
For a cloud-based company, the situation is very different, a feature is released and immediately made available to customers.
Upgrades
Enterprise software vendor generally only support their last couple of software releases. This forces mandatory upgrades on customers every 3 years. The cost of these technical like for like upgrades can range from $500,000 to $2 million. Only then can new functionality be implemented, often with further spending on professional services consultancy to configure and get working.
For a cloud-based solution, upgrades are the responsibility of the vendor.
Monitoring
Enterprise software vendors lack information on which features and functions are used by their customers and which are not. Product decisions are often made on gut feel and without actual data. It is not unusual for an employee to visit a customer site and be asked if they even know how the system was used in production? Once I was at a client after they had upgraded, and they were furious that the most heavily used feature had been deprecated.
A cloud service can monitor actual usage and optimise its offering based on usage patterns.
Stickiness
This is a benefit of an Enterprise software vendor. Clients may not be happy, but they do not have any choice as they have invested so much in implementing the product, that they feel they have to continue. Often this feels like throwing good-money after bad-money and results in an antagonistic relationship between the customer and vendor.
For a cloud-based vendor, the stickiness comes from satisfied customers.
I know which I would much rather work with.
Thats It
I hope to share more thoughts in future.
This article was authored by Shailendra Methi.