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Think Again About Cloud-Based Apps!

We’re smart business owners, right?

So we’re sharp when it comes to selecting the best resources to help us run our business… Aren’t we?

I’ve been thinking a lot at the moment about the breakneck pace of business and marketing. Every week there are new technologies, channels, and techniques that (we’re told) we need to be looking at. And if we don’t keep up, we’re leaving money on the table.

You know who’s telling us that stuff? Marketers, whose job it is to instil three things into us. These three things are proven to help separate honest people from their money. These three horsemen of the profit apocalypse are, of course… fear, uncertainty, and doubt.

Want to know what I think? I don’t think that everything we’re told is the latest and greatest actually IS. I like to dig a little deeper.

in-love-hippoLet’s take the current darling of software, “the cloud.”

Cloud… Woo!

We’re all supposed to go glassy-eyed whenever “the cloud” is mentioned. But hold on a minute.

Of course, there are lots of great advantages of this new model, where you access your application through the web browser, over the Internet.

  • You don’t have to install anything new on your computers. This saves you time and grief.
  • The cost of distribution is practically zero, because the app is delivered in real time over the Net.
  • Updates can be rolled out to all customers instantaneously.
  • You can access your app from multiple locations.
  • And everything is backed up in a central location.

Sounds great, right? Well, it depends.

There is usually a flip side to every benefit. In the case of cloud-based apps, there are two that stand out, but which people tend to avoid mentioning: the browser environment, and data security.

The Browser Issue

No doubt about it, browser-based apps have come a long way in the past 20 years. JavaScript libraries, AJAX, and the rest of the tech stack are streets ahead to what developers had to work with even five years ago. (The best app developers in the world that I know use only Meteor, Angular & MongoDB, whatever the heck they are.)

But… as an application environment, the browser is still constrained compared to native client-server apps.

We don’t need to go into details, but it is simply more difficult to show the data and the input controls on screen within a web browser. You don’t have the range of options, and you don’t have the control. And more difficult equates to more costly.

That means developers have to compromise between functionality and cost. The end result is that web-based apps are either simple (and often cheaper), or complex and powerful (but eye-wateringly expensive). We’ll see some examples later.

Data Security

On one hand, it’s great that we don’t have to worry about backing up our data. We can rely on our application service provider to do that.

On the other hand, do you really want to hand over your sensitive data, including your customers’ contact information, and even your financial records, to a third party?

Remember, being able to access your app from any location means that anyone can try to access it from any location.

If it seems that every week there’s another high-profile hack, where customer details are compromised, it’s because there is. Just check out Bloomberg’s rolling summary of the most serious data breaches.

Screen Shot 2015-10-29 at 18.20.40

Also, Internet-based apps require an Internet connection! So if your Internet connection goes down, your data is unavailable for a period of time.

Additionally, we should bear in mind that most web-based apps are NEW. Yes, new is cool, but new also means unproven, and often untested. In the race to beat competitors to market with the latest functionality, who knows what back doors may be left unlocked?

So, before we rush to embrace everything cloudy, we need to be really pragmatic and ask serious questions.

How Is Your Software Really Going To Be Used?

Cloud apps are perfect for situations where you want to connect a lot of people and share data or functionality…

  • Dating sites
  • Online auctions
  • Uber, AirBnB etc. etc.

As a business owner, you need to ask yourself,

How often am I likely to need to access this from anywhere other than my office?

What about business apps that are only ever going to be used in one location? Should we go cloud? Will the cloud deliver the functionality, security, and value-for-money that we need?

Let me share one example with you. (First, and for reasons of transparency, I’ll give you the background. This is a client project that I’m working on right now.)

Case Study: Small Business CRM

CRM-badge-v1Recently, I took on a client, RedHorse, who develops CRM (Customer Relationship Management) software, which they sell to small and medium-sized businesses, mainly in the United States, through a network of resellers.

First, Assess the Market

From a marketing strategy perspective, this is a tough gig. Why? Because the CRM space is super-crowded, and RedHorse is a small player.

Check out the cost-per-click suggestions for phrases related to “CRM for small business” provided by the AdWords Keyword tool. (£15 is about US$23.) There are players who can afford to pay serious money for clicks in this space. Paying double figures for clicks means they’re making thousands in profit.

CRM for small business CPC

What about organic search? Are there opportunities to rank for similar terms? Forget it! Here’s the chart of domain authority and page authority from Moz’s keyword difficulty report.

CRM for small business keyword research

No doubt about it, this is a very competitive sector. There’s no way of winning this game by pitching RedHorse toe-to-toe against the big, well-funded players in the market (Salesforce, Infusionsoft, NetSuite, Zoho etc.)

Flipping Positives

Whenever I come across a situation like this, I always look to see what potential perceived negatives I can flip into positives. And, in this case, the results were quite remarkable.

You see, RedHorse is not a cloud-based CRM solution. It’s a Windows-based client-server deal, which companies install on a server, usually at their premises, and access via installed clients on PCs. (Doesn’t that sound almost quaint and old-fashioned?)

black-and-white-coffee-cup-mugBut the deal is, RedHorse’s clients are small and medium businesses. They’re manufacturing firms, financial advisers, realtors… (You know, the businesses that really power the economy.)

They aren’t hipster types sipping flat whites in Starbucks while doing business over wifi on a MacBook.

They’re a team of people in an office, usually alongside a workshop or a warehouse.

In marketing, we should always do real research to understand the people who will use what we’re selling, and how they use it.

What I realized after talking to RedHorse’s boss and resellers is, these guys don’t need the cloud!

(In fact, they positively don’t want the cloud! One of their customers told how one day their Internet was down and they couldn’t access their CRM system. They were so furious they ditched it and bought RedHorse! Other customers have rightly voiced concerns about data security.)

Let that sink in. We may be fluent Facebook users, with our smartphones and wireless laptops running the latest browsers. But we are not our customers.

Our customers may fear the things that we’re attracted to. And they may be right.

What About Price?

(Here’s where I got the biggest surprise.)

One of the biggest advantages of cloud computing is the near-zero distribution cost, which delivers massive savings, which are surely passed on to customers. That’s the idea anyway.

I used to run design agencies. And in that time, I used three online CRM systems: Zoho, NetSuite, and Infusionsoft. Here’s a potted history.

  • I used the free version of Zoho CRM, about 7 years ago, and found it incredibly restrictive. It just couldn’t offer the flexibility I needed to run my business the way I wanted to, so it was no good, and I ditched it.
  • So we upgraded to NetSuite. That was extremely powerful, and unbelievably complicated to use. Plus (get this), we were paying around $1500 per month for it! That was for a team of 5 people, all working in the same office!
  • Later, when I was more concerned with marketing automation than CRM, I took on InfusionSoft. That was quite a bit nicer than NetSuite (what isn’t?), but still carried a $2000 setup fee, and was costing me about $379 per month in license fees.

When you compare these prices to RedHorse, something doesn’t add up.

Pricing Pages for Comparison

(Links open in new tabs)

Here’s just one thing that none of these systems can do at any price (to my knowledge), because they’re constrained in the browser sandbox.

twain-scanner-integration-crm

Talking to external devices is one of the ways that browser-based apps can be severely limited (https://redhorsesystems.com/pricing/)

The Windows-based RedHorse will let you scan a document and store it on the database against a client record, with one click. That may not sound glamorous, but for businesses who get a lot of printed mail and documents that need to be recorded, something like that could save an employee hours per week. (Just above that, you’ll also see that RedHorse will integrate with a digital phone system, letting team members call contacts with one click.)

RedHorse’s CRM platform, which offers a breathtaking range of functionality, costs only $29 per user per month!

And their “Business Manager” suite, which includes most business modules a small or medium firm might ever need, is only $44 per user per month. (That’s comparable to Zoho, which, being a browser-limited system, only has a fraction of the functionality.)

You have to ask what justifies the additional costs of the cloud-based CRMs!

  • Maybe it goes into their advertising and marketing budgets (someone’s paying $23 per click after all)?
  • Maybe the costs of testing for different browsers are far higher than they are for developing a .Net app?
  • Maybe it’s shareholder profits?

Conclusions

From experience, and from listening to hours of interviews with RedHorse’s customers, I know one thing. There is NO cloud-based CRM system or business management suite that comes close to its flexibility, or certainly value-for money. (Here’s their pricing page for comparison.)

Of course, if you need to access your business-sensitive information from an Internet café in Mogadishu, maybe you need to be on the cloud.

But, for the majority of small businesses, access-anywhere is not a huge benefit. In fact, it’s an added risk. They value flexibility, stability, and the knowledge that they’re in control.

So don’t expect traditional client-server apps to disappear overnight. And, if you’re buying for your own business, don’t get swayed by the hype, and really look at the facts before making up your mind.

Footnote (Disclosure)

I’ve shared this article with you for a few reasons:

  1. I want to encourage you, in everything you do, to look at the facts, not just follow the fashion. Success in anything comes from making the right decisions for your context.
  2. To share the strategic principle of flipping potential perceived negatives into positives. In the case of RedHorse, as I explored what it means NOT to be a cloud-based system, I discovered it delivers some compelling benefits for the right kind of customer. That gave me the key to the marketing strategy with this project. Instead of competing head-on with the cloud-based competitors, I needed to find a way to change the rules of the game. So I’m going directly for the anti-cloud approach.
  3. In order to sell RedHorse on that ticket, it is first necessary to reframe the problem. I need to derail the prospect’s “cloud is best” thinking before I can set RedHorse up as a preferable solution.
  4. That strategy directs the marketing activity. RedHorse’s website and marketing copy could be written around the anti-cloud angle, but I also need to reach out beyond the people who have already heard about the product. So this article itself is actually an initial PR piece in which I have worked out the argument.
  5. If this article has achieved what I set out to do, and if you’re a CRM user, I hope I’ve reframed your thinking. You may even be considering looking into RedHorse as a viable solution for your business.
About the author

Ben Hunt

Ben has over 20 years' experience in web design and marketing, and is one of the most influential figures on the subject of effective web design. He has written a bunch of books and spoken at multiple conferences internationally. In 2015, Ben created Open-Source Marketing, which promises to turn the practice of marketing upside down.. Find out more at http://opensourcemarketingproject.org

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