Appirio making $1 million cloud savings promise

If customers who use its services to migrate don't save at least $1 million annually, it will make up the difference

Appirio launched a new offer Thursday, pledging that if customers who use its "cloudsourcing" services to migrate entirely to public cloud applications and technologies don't save at least US$1 million per year, it will make up the difference.

There are some ground rules. To be eligible, companies must be currently spending at least $5 million per year and have 500 or more employees, said Ryan Nichols, vice president of cloudsourcing and cloud strategy. Appirio expects most interested businesses will fall in the 500 to 5,000 employee range, he added.

In addition, Appirio is not promising instant results. Customers would work on a phased road map plan with Appirio's consultants, and the process of switching over to cloud applications and infrastructure could take two or three years.

Once that is complete, savings will be measured over the following year, Nichols said.

Repeating oft-cited arguments in favor of cloud computing, Nichols said that when customers make the switch, "entire categories of spend drop away," such as the costs of maintaining servers. He also noted a recent Gartner prediction that 20 percent of companies won't own any IT assets by 2012.

Customers who consider Appirio's offer have to be sure there is enough parity between on-premises and SaaS (software as a service) applications, said Ray Wang, partner with Altimeter Group. "If you're functionally close, say within 80 percent, the short answer is probably yes, it's cheaper to run."

However, many SaaS offerings are less than five years old and aren't as functionally mature as many on-premises apps, Wang said.

Many customers don't require all the functionality an application desires, but others may have a wide range of complex business processes that would make a move to SaaS harder.

Nichols acknowledged the point.

There's "a very real need for on-premises software" among enterprises with intricate supply chains or warehousing operations, he said. "This isn’t going to be a fit for every company."

The offer is valid for the next six months, according to Appirio.

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