Model Metrics Shapes Successful Business in the Cloud With Force.com
A few years ago, Adam Caplan spotted a new business opportunity: a need for consulting and development firms that really understand cloud computing. Today the founder and CEO of Model Metrics has built a highly successful business around the burgeoning demand for software-as-a-service (SaaS). Combining traditional consulting services with custom development and an expanding application library, Model Metrics’ growth reflects that of salesforce.com itself. With 70 employees, the Chicago-based company’s business model was built on Salesforce CRM and the Force.com platform – innovations that drive its growth and that of its customers.
The Changing Computing Landscape
Model Metrics was originally focused on optimizing its customers’ implementations of Salesforce CRM. “The early deals were small,” says Caplan. “But we felt that salesforce.com would eventually conquer the enterprise – and expand beyond CRM – and when that happened, we’d be well positioned to reap the rewards.” Today the firm provides full lifecycle services from requirements studies and business process reviews, to application customization, to data migration and training for a wide variety of companies.
The firm’s sweet spot is building custom applications using Force.com, salesforce.com’s development platform. Most of these applications go beyond traditional CRM, and many are built for enterprise customers, with seat counts exceeding a thousand. “We believe in the software-as-a-service model and its ability to provide significant benefits and efficiencies at a lower cost,” says John Barnes, Model Metrics’ CTO. “Our customers realize there are new ways to develop custom apps and they can no longer rely on Java and .NET, with on-premise hardware and large teams of developers if they want to operate efficiently. That’s why they turn to us.”
According to Caplan, the maturation of cloud computing as exemplified by Force.com also represents a substantial opportunity for consultants. “In the early days there wasn’t much we could do other than configuration and data migration; and once that was done, we had few reasons to go back and add more value,” he says. “That all changed with the release of Force.com code and the Force.com pages framework. Now, once we’ve established a working partnership with a company, we can build anything for them: whether utilizing the platform to develop Web sites and portals or writing custom mobile applications on the iPhone.”
Speed, Freedom, Cost-Efficiency: The Force.com Selling Points
The first thing that impresses Model Metrics’ customers is typically the speed with which the company works – development times with Force.com are significantly shorter than with other platforms. According to Barnes, “By taking advantage of Force.com, we can create applications in weeks that would have taken months with the traditional development cycle.”
Model Metrics clients also experience a unique sense of freedom in the early stages of a Force.com deployment. Where in the past they may have encountered implementations that stalled or failed due to technological barriers, deployments on Force.com are focused on the business and quickly transforming ideas into reality. “Force.com is a game changer,” adds Barnes. “With the platform, everything is taken care of: Web logic, security, and infrastructure. Our customers can directly address their core business without worrying about anything else, and that is the quickest route to success—theirs and ours.”
Some clients are concerned with the cost, until they see that the Force.com platform is ultimately a cost-saving solution. “They may think there is no cost involved in staying with their existing system,” says Caplan. “We help them understand that there is a cost: loss of efficiency, productivity blocks, lack of data consistency, cost of maintenance—and then they see the light.”
The Growth Center: Custom Apps
Traditional CRM services like customization and training still account for much of Model Metrics’ business, but the growth is in building custom applications with Force.com. Some of these custom apps go far beyond traditional sales force automation, including one that helps manage new product launches for confectionery company Wrigley, and a candidate tracking system for the Chicago Housing Authority.
According to David Dahlberg, Model Metrics’ CMO, “We are seeing platform integration between Force.com and other cloud computing technologies, like Amazon Web Services, which we leverage in our application called Lasso2GO, among others. Technologies from Google, Amazon, Adobe, and Apple are taking salesforce.com solutions far beyond standard sales and marketing.”
“We refer to these types of deals internally as ‘platform deals’—meaning they leverage the Force.com platform, and they are the fastest growing part of our business,” adds Barnes. “This has also affected our hiring. We are now writing a lot of Force.com code, which means we keep expanding our technical staff.” The success of the company’s pursuit of platform deals can also be seen in the rising value of Model Metrics’ proposals. The average statement of work has risen from less than $10,000 a few years ago to about $80,000 today, with some SOWs exceeding $1,000,000.
Growing a Product Portfolio
Model Metrics has built a portfolio of applications, including its “2GO for iPhone” product suite, which synchronizes with salesforce.com data, and is sold through the iPhone App Store. According to Caplan, “One of our goals is to be a global leader in building business applications for the iPhone, and we’re leveraging salesforce.com, with its data aggregation, to get there.”
Meanwhile, the products are paying immediate dividends. They create recurring revenue, a “must-have” for any services firm. And as a secondary benefit, the products are also helping drive services. “The synergy between products and services works both ways,” says Dahlberg. “We get some of our best product ideas from customer demand. But conversely, a potential customer will see our mobile competency on the iPhone, see that we understand, say, expense management, and seek us out for custom work that combines the two.”
So far, Model Metrics has not dedicated anyone to product sales. “Instead, we rely on the salesforce.com distribution model,” says Caplan. “The AppExchange is a fantastic way to reach salesforce.com customers.” Model Metrics has a handful of popular solutions available in the online marketplace. One is Cloud Converter, which automates the process of migrating applications from traditional on premise platforms such as Lotus Notes, Access and Excel to Force.com.”
No Limits in the Cloud
Custom applications have changed the revenue model for consulting firms. “In the past, we paid a lot of attention to the licensing fees resulting from seat count,” says Caplan. “But with all the things you can do with the Force.com platform, the balance is shifting away from seat count toward value-add services.”
Even so, as cloud computing becomes mainstream, seat counts are rising. Model Metrics recently inked a deal for about 1,500 users that spanned an entire company. “It’s significant that the decision was made not by the VP of sales: we went right in at the top of the organization and they made it an enterprise purchase,” says Caplan. “In the old days, our ‘logo slide’ looked pretty impressive, but the truth is—we only had a division. And if the division liked us, they would refer us to another division and we’d grow from there—which is, in fact, how salesforce.com itself grew. Now that salesforce.com is conquering enterprise and cloud computing is being embraced, we’re seeing more of these top-down deals.”
Banking its business on Salesforce has proved to be a smart move for Model Metrics. Its history of providing consulting services related to traditional CRM implementations created a foundation on which it built its business. Today Model Metrics is shifting its focus to more Force.com deals: For the final quarter of 2008, platform-related development accounted for more than 50 percent of the company’s total business. According to Caplan, “We’re finding that there is a great need out there to apply software-as-a-service to myriad businesses we wouldn’t have thought of working with in the past. With Force.com our growth has no limits.”
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