The QuestionPro Blog

Every so often we (still) get some sales inquiries about from potential customers who want to install a survey tool/solution on their own servers. Back in 2003 we used to get a lot more inquiries like these. In fact back in the day, users were even developing their own survey engine from scratch. Today we get about one or two a week.

I've been in the IT/Software business for some time now. Even before starting QuestionPro, I was a technology consultant for a few startups mostly in SF and Seattle during the dot-com boom and then did some work for larger shops like Washingon Mutual during the dot-com bust here in Seattle ;) So, I do have a good grasp on what the actual costs of a in-house application development/installation/maintenance is.

For the most part (thanks to Google, Salesforce, GotoMeeting, etc.) most people really have understood the value and real cost differential between the TCO (total cost of ownership) between hosted solutions (On-Demand/ASP) and on-premise installed software. For example, see this blog post by by Peter Yared about using only hosted solutions for his new company :

Quote from the Peter's Blog:

Back in 2003, we still had to buy our own servers and hire IT people to
get some basic services. This mindset prevailed into 2007, where to
upgrade our Wiki into something much more functional, I learned that IT
had physically installed two iterations of wikis on our servers. It was
beyond me what features we would get from our own installation vs. a
hosted one, so I suggested a policy of only using hosted infrastructure
moving forwards. This led to a suggestion of having some meetings to
discuss the concept, which in my experience means "not going to
happen." :)

Starting with a clean slate at wdgtbldr, there is
definitely an "everything must be hosted" policy, and I am amazed at
how cheaply and easily all of the functions of a small business can be
set up and shared between employees. There are no servers, no VPN to
get to the servers, no software to install, configure, and maintain,
and definitely no part time IT people. Everything works as advertised,
since it is not our installation of Bugzilla/wiki/etc. that has to be
maintained, rather proven infrastructure shared by many other companies.


We also understand your concerns about going with a hosted model for your survey software solution. They typically revolve around data ownership, portability and flexibility. What you also need to consider is some of the issues that are now obvious and apparent like server OS patching (especially if you are in Windows), monitoring and redundancy.

Here are a few points to consider when making a build vs. buy decision on survey software that we've collated over the years. These apply not just to survey software, but to any SAS (Software as a Service) purchase decision:

• Core Value Add --- Support and maintenance of software cannot be a core value add nor should it be for a market research firm or a company who's core business is not collecting data. All the market leaders in the industry know this and have adopted the simple model of keeping only their core business in house.
  
  
• Staying Competitive --  If you decide to maintain the software in house, you will put yourself behind your competitors, as your company will incur an additional cost/risk associated with maintenance of software. Software is one of those things where the maintenance to capital ratio is very high. For example, if you compare this to the Auto business, you buy a car for about 30K, and you spend about 3K/Year (gas, oil changes, break pads etc.) to keep the car running. If you buy a software (on-premise install) for about 30K, it'll cost you about 10K to keep that running. 30% maintenance fees is very typical and minimum. In fact in many cases the operational costs actually surpass the capital expenditure via. costs like server installation fees, product upgrades, bandwidth provisioning etc.
  
  
• Quicker ROI -- From an initial ROI perspective, hosted solutions shorten time-to-value by eliminating software implementation and cost issues. You focus on collecting your data, refining your processes, and defining your business goals. Not worrying about how Microsoft Vista SP1 patch will affect your installation, or how the next virus threat may affect your connectivity.
  
  
• Total-cost-of-ownership. Users of hosted software solutions need not ever implement software upgrades, pay for maintenance, or add hardware. The net effect is to keep total cost of ownership in check. More along the lines of "hidden" costs. If you spend $49/Month on Salesforce or $15/Month on QuestionPro you have a clear understanding on what the total cost is. In on-premise installations, the total costs can never be nailed down. Server hard drive failure can cause outages that may involve one of your engineers to go to the data-center to replace a failed hard drive. These costs are ad-hoc and can only be estimated at best.
  
  
• Security Team -- Most SaaS vendors have infrastructure devoted entirely to staying up to date with the latest software/hardware security issues. Its our job to keep your data secure - if it wasn't we wouldn't be in business. We can do this efficiently because our upgrades/changes affect all our customers -- we are essentially distributing the costs across all our customers -- Economies of scale.
  
  
• Data Portability -- This is obviously a key issue. What if the company that you rely on for your core business stops servicing you, or goes out of business. In almost all SaaS solutions, there is usually ways of getting your data out of the system (locally) as a backup measure. Companies like Salesforce, QuestionPro, Netsuite, ConstantContact, etc. all offer up the ability to download data in a standard Excel/CSV /XML format. These output models serve as a good backup measure just in case things go south. There are however issues around system portability. For example, data from Salesforce cannot be simply taken out and put into Netsuite, or data from ConstantContact cannot be ported to VerticalResponse. This would involve setting data structure standards and everyone adhering to them -- Not realistic in the near future.
  

Now, in many cases a SaaS solution may not be right for some companies. Typically we used  to think that larger (Fortune 500) companies go with in-house/on-premise installations simply because they could afford it. With Web 2.0, what we are now seeing is that even for larger companies, it's not a question of cost, but time-to-market is becoming a bigger factor. This is the driving force behind the Enterprise 2.0 model. For example, with a hosted solution you can get whatever you want done in a few days. A few days for an internal IT team to put a solution in place is simply not possible. It takes about 2/3 months just to order a set of servers and have it installed in the data-center, configured and patched. We know about this first hand -- We have to do this too!

I know there are hard circumstances and directives ("thou shall not use hosted software") that many companies have, and most likely there are some reasons why such policies were put in place. What I would question is _when_ was this policy put in place -- In 2000? or 2008? Many times we get into conversations, especially with companies in Govt., Healthcare and Banking/Financial -- which are heavily regulated industries about compliance and issues surrounding privacy, data protection and risk mitigation etc. They are all valid issues and concerns, but lets analyze them. If the issues are not technical, then most the compliance issues are legal directives. For example HIPPA (HealthCare) certification does have anything to do with real technology. Many legal and compliance issues can be simply handled with a customized SLA (Service Level Agreement)  -- An SLA that is specific and addresses concerns surround data storage, uptime, privacy and confidentiality.

The fact is SLA's is much easier to negotiate than hosting and running your own servers and services. SLA's are a one-time cost.We've had custom SLA's and agreements with many companies in regulated industries like heathcare and banking. Custom SLA's provide an easier mechanism for enterprises to have hosting agreements that capture all the core needs of uptime, availability and regulatory compliance while maintaining the flexibility and cost savings on a hosted platform.

It is also not uncommon for companies to conduct stringent (both technical and financial) due-diligence on service providers. We've gone through these a few times now and almost expect this from large companies now. I recently had a chat with one of our clients -- Tim O'Conner who is the Senior VP Marketing & Strategic Sourcing for Unisource (a 4 billion dollar company) -- and he said in no unequivocal terms the benefits of a hosting solution -- Not only in terms of cost savings (about 5-10x cheaper) but more importantly in terms of time-to-market. With a hosted solution (especially self-service) he is in total control of the execution parameters and can get solutions out of the door as and when he wants.

Although we've been in Seattle for the past few years, we've not been really active in the startup/tech entrepreneur scene here. This is partly due to our own ignorance and partly due to the fact that we've not been funded by a VC  -- to make the courtesy intros and shake hands and rub shoulders with the local who's who.

One of my resolutions in 2008 has been to "get out" and get noticed at least locally -- The catalyst was a conversation with 4 UW B-School grads who had a project on entrepreneurship. I knew one of them personally, a good friend of mine and he thought it would be good for the class group to talk to me about entrepreneurship and starting a company.  That really got me thinking about the outreach effort that we've done to network and connect with other local entrepreneurs, VCs etc. -- Turns out NONE. We've been too busy just dealing with the day-to-day affairs of QuestionPro that we've not really even made and effort to network and reach out.

I figured that is a good time to start doing that. So I started looking around for resources and community discussion sites:

1. Seattle 2.0 Starup Blog:
   http://seattle20.sampasite.com/
   
   This blog is run by Marcelo Calbucci, who is the Founder and CTO of Sampa. Sampa is a nifty Web 2.0 site for creating your own personal blog/site. It's got elements of social networking baked in. If you need a quick website with ease of use and robust (self-service) functionality check out http://www.sampa.com
   
   We also got listed in the Seattle 2.0 blog recently. He also published a SSI (Seattle Startup Index) -- pretty innovative idea where he ranks companies according to the alexa/compete ranking. There are ~200 companies in the startup index. I would like to see companies ranked by revenue growth/profitability etc.-- but obviously that cannot be automated and I am sure Marcello has better things to do. The alexa/compete should be functionally co-related to the health of a company.
   
   I really think that the Seattle 2.0 startup blog can be the mini/local version of TechCrunch (if it is not already.)
   
   
2. NWEN - Northwest Entrepreenur Network -- As the name suggests, its an association for local entrepreneurs. They host regular luncheons and breakfasts. We are not members (yet) -- I am planning on heading to one of the breakfast meetings this Friday and see what happens.
   
   
3. Alliance of Angels:The Alliance of angels is a community of Angel Investors. If you are looking to pitch for Angel funding, and you do not have the connections to get in front of Madrona, Polaris, Ignition, Voyeger etc. you can pitch it to the Alliance of Angels -- For about 95 bucks. The site says it has about ~100 members -- So at least your pitch will get in the email box of 100 or so angel investors. Last time I checked, a grande latte in Seattle cost about $3.28, so this is a pretty good deal for about a buck you at least get in front of an angel investor's Inbox.
   
   
4. John Cooks Venture Blog -- As the name suggests, its a blog by PI Reporter (old school media ;-) -- about the local startup scene. A good feed to subscribe to, if you want to keep a pulse on what is happening in Seattle.
   

If you have other comments on what else is out there, please feel free to post it as a comment, or better still post it on the Seattle2.0 blog. That's probably the best convergence point for everything related to Seattle startups.

Update:

Found a couple of other networking sites:

• Lunch 2.0 -- bList is sponsoring the next luncheon but it's oversubscribed.
• sFive -- They are putting together another event this Wednesday.

Update:

Found another site:

• Seattle Tech Startups -- They meet usually once a month for about 2 hours. Usually a presentation followed by beers etc.
  

We are trying out an exciting new model with Sage Publishing for QuestionPro.

I've had this idea for a long time about integrating QuestionPro with academic text books. I know a lot of our users are academic either through the MBA programs, or through social science research, public health etc. That is the primary reason why we give away Free Student Licenses, University Sponsorship Licenses as well as Non-Profit Licenses.


A few months ago, I was approached by Anne Marie Knott, who's written a book on startup ventures, entrepreneurship -- Venture Design. Actually, I had talked to her almost 3 years ago about this model, and thankfully she remembered the idea and got in touch with me as she is about to release a new and updated edition of the book later this year. She and I started discussing options to enhance her book offering and after some wrangling (things get a little complicated when you have an Author, a publisher and a software provider trying to work out an agreement) -- we've come up with a plan that we all think can be interesting.

All customers who purchase the book automatically get a free customized license (With Conjoint Analysis Enabled) for QuestionPro for 6 months. This is very similar to our University Partnership License, except that this one will have Conjoint Enabled. We've traditionally offered Conjoint as an Add-On to our Enterprise License with customized research support. Here we are departing from our current model and will be offering it for free to users who purchase the book -- More on why we do not offer Conjoint along with the regular self-service licenses later.

The book is slated to be published later this year. Here are some details on the Venture Design Book:

http://search.barnesandnoble.com/booksearch/isbninquiry.asp?r=1&ean=9781412957991


Now, back to Conjoint. We've traditionally not offered Conjoint with other licenses because of the support requirements. You don't need a PhD to understand Conjoint Analysis but by the same token, you do need a level of understanding of statistics and modeling that is far beyond frequency analysis. Conjoint is a tough concept to understand and there are lots of variables and issues that need to be considered and addressed. This is the primary reason (and believe me, we've tried) we've traditionally moved away from offering Conjoint as a self-service license and offer it only as part of consulting engagements that we undertake.

Now, why are we deviating (With this book agreement?) -- Well for one, we know that that this book will give a practical demonstration of Conjoint and price-sensitivity/curve modeling. Secondarily, we believe that (in the long run) we can make conjoint more self-serve oriented. This can be a good step in the right direction.

If you are publishing material (books, articles etc.) and would like to include QuestionPro Licenses along with (as an add-on) please feel free to contact me and we can see if we can work something out.

Please use the email address below:

blog [at] surveyanalytics [dot] com