It’s hard to ignore the appeal of cloud and SaaS solutions in the business world—given the plethora of options available, the low cost of entry, on-demand scaling and the notion that your IT department will be duty-free when it comes to any software maintenance and management tasks.
While there is truth to these benefits, there are also caveats; a company’s decision will depend upon a variety of factors, including size and complexity of their data, as well as use cases and the nature of your existing systems. For instance, large enterprises with scores of legacy systems don’t always benefit from replacing those applications with ones in the cloud, particularly if they require heavy customization.
Marketers have unique needs and requirements, since they may or may not require real-time data, they may or may not want the ability to spin up new campaigns on the fly, and they may or may not have strict requirements around customer data privacy and management (although most do). Many companies start (and end) by analyzing cost. Here, unlike some other areas of cloud software, such as infrastructure or big data processing, the decision is not black and white between cloud or not.
A general rule of thumb is this: if the source data you use for marketing campaigns lives in the cloud, use a cloud-based application. If the data lives behind your firewall, it doesn’t make much sense to move the data to the cloud to use it.
Choices for B2B companies and SMBs
Cloud-based marketing systems are generally an excellent fit for B2B companies and most SMBs. One of the main reasons is that their prospect and customer bases are rarely larger than 1 million records. Therefore, using cloud-based systems is the most efficient and manageable option for small IT departments or in those companies where there is no IT department at all.
Once you have made the decision to use a cloud-based CRM, it’s likely that any other core applications you need, such as email marketing, will be included in the platform. It makes little sense to connect that marketing suite with other internal or SaaS systems, if you can help it. For most small companies, cloud marketing (and cloud everything for that matter) is the best option from a cost, management and risk perspective.
Choices for the large enterprise
Now, if your company is a large B2C brand with millions of customer profiles, the cloud becomes less desirable for marketing execution. Quite simply, in talking to our enterprise B2C customers and understanding marketers’ needs for broad data access and flexibility, SaaS is almost always more expensive and less flexible. Let’s consider a few reasons for this seemingly counter-intuitive reality:
- Syncing sucks: Your IT department will need to replicate and export customer data from multiple internal systems into the cloud vendor’s system. This is a complicated, time-consuming and expensive effort of transforming the data for the vendor’s platform, and then shipping the data, and managing the syncing process regularly between the cloud system and your internal systems. Someone will need to ensure this all actually happens with accuracy. For mid-market and smaller enterprise customers, the cost-benefit of this effort might be worthwhile. For the larger enterprises, it is invariably not. Large companies tell us that it can take 50% more IT resources to run marketing software in the cloud than to run it behind their own firewall.
- Real-time what? In almost all cases, large companies using cloud-based marketing systems are not going to get rid of their massive internal databases. Therefore, the company’s only going to upload a subset of customer data to the cloud—it’s just too expensive and time-consuming to replicate everything. Therefore, when a marketer wants to do something new, he may or may not have the data available in the cloud.
Let’s say the marketer wants to access customer data on returns of an unpopular product to run a new promotion that will appease those unhappy customers. He asks the IT department to help him add the data field into his cloud-based marketing system, pronto, so he can send the message. For a large company with millions of records, achieving this feat in any measure of immediacy is impossible, due to the process outlined above. The marketer must wait days or even weeks before he can initiate the campaign—after which time the customer has either moved on or no longer cares. With all the data and systems living in the same place, these delays rarely occur. Real-time triggers become difficult to set up in the best case or impossible to set up in the worst case, due to cloud-based systems needing access to customer data behind the client’s firewall to trigger a communication event, like an email.
- Feeling insecure: Beyond the cost of storing and managing duplicative customer data sets, internally and in the cloud, there are security risks. This is not due to the cloud vendor having poor security necessarily, but the fact that duplicate data sets with differing security standards and policies is a risk. In some sectors, such as financial services, healthcare and luxury brands catering to high net worth individuals, CEOs won’t even consider housing customer personally identifiable information (PII) data in the cloud because of these risks and the lack of control. Auditing requirements may also be difficult to conduct when working with SaaS companies.
These decisions get cloudier for a midsize company. There is an inflection point that all midsize companies hit as they grow in which it will become more expensive and inflexible to use cloud-based marketing systems, as outlined above. But if you’ve grown with cloud software, it may also be hard to move data and systems back in-house, too.
For all companies, evaluating the cloud platform’s features and capabilities is not something to take lightly. A SaaS system must work well for all clients, regardless of size, vertical or other special needs. This is the “lowest-common denomination” problem that we’ve heard about before. You can’t customize the system much without great expense and the features may not be as sophisticated or rich as you might like. You are giving up those benefits to have low-cost, low maintenance software that is frequently updated.
In fact, CMOs are beginning to take a more cautious view of the large marketing cloud suites from legacy vendors such as IBM and Oracle. Marketers like the idea of having best-of-breed environments that allow them to optimize every single function according to their unique needs. Doing so can give a competitive advantage.
Mapping the software to your current and future business needs is critical to determine how much flexibility you actually need. If you want zero limitations, keep all the data and systems internal. That means the system also has immediate access to your data, allowing marketers to be as creative and proactive as they wish.
There’s also some movement toward a hybrid approach for marketing software. The cloud is excellent for taking on tasks such as tracking campaigns and sending emails. There are solutions available today that allow you to take advantage of the efficiencies of cloud for those compute-intensive tasks, while still keeping your customer databases in-house.
Figuring all this out is not easy and there is no right answer. Yet one thing that most marketing executives can agree upon is sticking to the end goal—creating and nurturing a “single source of truth” on customers. This requires a very slick integration strategy, which can connect all the data silos inside and outside of the company, and create a single (or close to it) profile of customers to support personalized engagement across the channels your business supports. Choose the cloud, hybrid or on-premise approach that delivers upon that promise as best as possible, within your budget, and you are on your way.
Roger Barnette is CEO of MessageGears.