Call it a sign of the economic times: According to a TurboTax infographic, states are now instituting affiliate taxes. Although it’s been a long time coming for online retailers like Amazon, cloud services resellers have typically been immune. But that could change. READ MORE
Funambol, an open source cloud-sync company, has completed a $3 million round of funding from HIG Ventures, Pacven Walden Ventures, and Nexit Infocom. The company’s service helps users synchronize portable devices like laptops and tablet computers with networks and stationary systems over the Internet. Among the company’s clients are Alcatel-Lucent, Sprint, and cloud server provider Rackspace. READ MORE
Hosting giant GoDaddy announced its own cloud computing service called Data Center On Demand, but don’t expect another Amazon Web Services or Rackspace clone. Unlike many other user-friendly cloud services, GigaOM reports GoDaddy’s offering “requires technical expertise,” so GoDaddy suggests customers have a professional IT staff already in place. READ MORE
Abaca Technology Corp., which launched in 2005, offers physical and virtual anti-spam appliances. The company uses Amazon’s EC2 cloud computing service to host the software that works with its appliances. Without EC2, it would have been much harder — and much more expensive — to launch Abaca, according to Bill Kasje, vice president of Business Development. “As a small company, we were able to get our servers up and running quickly,” he says. “We didn’t have to invest in a big infrastructure environment, or have backup power and redundancy, all the things our customers expect from us because email is a mission-critical application.” Though Abaca does deploy in-house servers, it would need at least four more, in a cluster configuration, if it were hosting its software in-house, he says. This way, Abaca’s IT team could focus on the company’s core competency: filtering spam. For many small companies, the smorgasbord of newly available off-site or “cloud” computing offerings means they can reduce the number of servers they purchase and maintain in-house. In fact, according to James Staten, principal analyst as Forrester Research, they may no longer need servers at all. “There are now options available over the Internet that didn’t exist before,” he explains. For instance, companies used to use servers for file sharing, but there are many Internet-based options such as Microsoft Windows Live, Dropbox, and so on, that provide the same options over the Web. “Backups can be done over the Web too,” Staten adds, “and it looks almost exactly the same as when you back up to a server. A lot of people have print servers, but that’s not really necessary any more either, with today’s network-based printers, or wireless-enabled printers with built-in print servers.” In fact, Staten believes, many small companies no longer need any in-house servers at all. Better without servers Why reduce or eliminate servers? “The number one advantage is it gets you out of the IT business,” Staten says. “You don’t have to worry about high availability.” [A high availability configuration ensures continued function by connecting two or more servers in a cluster so that one can “fail over” to the other in case of a problem.] You no longer need to worry about off-site backups, emergency power supplies, or how your company would preserver its data in a widespread disaster like a hurricane, since all these protections are now provided by an off-site by a service provider, and defined in your contract. You can also get by with fewer IT staff, Kasje says. “We would have to have IT staff monitoring systems around the clock. All we have to deal with are the software issues, so that’s much easier. There is a whole class of problems we don’t have to address.” Not having servers on site means much lower upfront costs, though it also means ongoing costs to pay for a service or server space. “You’re trading capital expense for operating expense that you can adjust up or down, depending on your needs,” Staten says. And while the day-to-day costs may be similar, or perhaps lower for owned equipment amortized over several years, off-site servers can provide lower cost if you take risk into account. “There are so many more things to account for,” he says. Three off-site options For companies that want to cut their server count and turn to Web-hosted options instead, there are three different basic options to choose from: Software-as-a-Service (SaaS) In this approach, an application is provided by a SaaS provider and runs on its servers. Your employees (or customers) use the Internet to log into the software. Well-known examples include Salesforce and Google Documents. Hosted servers In this approach, you contract for server space — or even an entire (real or virtual) server at your provider. In many ways, you can treat this off-site server as if it were a regular server, loading applications and data onto it as you see fit. However, the hosting provider maintains the server, usually providing backups, security protections and such. Rackspace and Hostway are two examples of this approach. Raw cloud space “Cloud” is a relatively new term that is often used to describe any Web-hosted offering. Strictly speaking, it simply refers to the architecture by which software and/or data reside in a network or “cloud” of servers connected by the Internet, rather than on a single machine. You can lease raw space in the cloud, for instance, from Amazon’s EC2 service. In this setup, you are still responsible for managing your own server space. If your provider had an outage, in the case of SaaS, the application would be up and running as before once the outage was over. In a hosted server setting, the provider would restore data on the servers, providing the configuration you had before the outage. In a cloud computing outage, once the outage was over, your IT staff would need to reconfigure and reload your online server with the applications and data that were there before. You would be responsible for ensuring backups, and also the security of your data. Because of these added tasks, Staten doesn’t recommend pure cloud computing for small companies unless they also have solid in-house IT expertise. On the other hand, he says, “If you’re really tech savvy, these are great new options to avoid ever having a server within your walls.” Whichever option you choose, Abaca’s Kasje recommends giving off-site computing a try. “You can step into this very easily,” he says. “And you should be able to figure out very quickly whether it’s something that can benefit your business.”
The customer enters McGrath Acura of Westmont, Ill. Within seconds, the salesperson pounces. “Hello. My name is Grace. How can I help you?” “Just looking,” the visitor replies. “Let me help you with that,” Grace continues. “Are you looking for new or preowned?” It’s a conversation you’d expect to hear at any auto dealership. Except that this didn’t happen in the show room. The exchange took place online, at acurabymcgrath.com. Last year, general manager Ken Girard added a new feature to the dealership’s website: live chat. Now, instead of waiting for a visitor to click on a button and ask for help, a service agent detects the visitor’s presence on the website and initiates a real-time conversation. “It really sets our site apart,” Girard says. For most of its brief history, online shopping has been a largely anonymous process, with Web-based merchants content to wait for browsers to initiate an interaction. But now, more businesses are adding technology that allows them to step up and make the first move and offer a virtual “May I help you?” The idea is to introduce a human factor into virtual shopping. “People like to buy from people,” says Farrakh Azhar, CEO of Live Admins, a Chicago-based company that helped Acura of Westmont create its live-chat experience. “It’s the same as walking into a store and having a staff person greet you. It makes a connection, a one-on-one conversation.” Even now, years into the Internet revolution, e-shopping remains a dicey business. Research shows that 98% of visitors leave without making a purchase. Indeed, about half of all Web shoppers who put an item into a virtual shopping cart leave without buying it, according to the E-Tailing Group. “As an industry, we need to look at why 98% of the people who visit us leave without making a transaction,” says Robert LoCascio, CEO of New York City-based LivePerson, a provider of inbound and outbound chat technology. “Especially since the rate of impulse buying is much higher in the offline world. Why are we still at 2%?” He and others insist that the answer lies in making virtual salesmanship more proactive. Web shoppers should not have to sacrifice service for the privilege of shopping in their bunny slippers at 2 a.m., LoCascio says: “We can do more.” Mark Denham, CEO of 247 Workspace, is onboard. The company, a seller of office furniture based in Los Gatos, Calif., added chat to its website in early 2005. The goal was to provide more qualified leads to the company’s sales reps. Because most customers are other business owners looking for things such as conference tables and cubicles, the sales process is often long and complex, involving a great deal of back-and-forth between the sales rep and the buyers. “There are a lot of choices and particulars in our sales process,” Denham says. “We were finding that having an individual try to sort through 600 pages on our website was overwhelming.” The outbound chat aims to simplify things. It looks a lot like Instant Messenger, though customers don’t have to download software for it to work. Not every visitor to the site gets a greeting. But if you hang around for a few minutes or get seven or eight pages deep into the content, a live agent will say hello and offer to help. In most cases, the agents simply help visitors find the information they’re looking for. “Individuals who have engaged in text chats have a much higher sales probability than a standard lead,” Denham says. “Once we engage in a conversation, we find the probability of a sale goes up dramatically.” Other companies use the tactic with a bit more restraint. Jesse Kelsey, marketing project manager of eRug.com, says he loves to shop online precisely because he knows he won’t have to fight off a lot of pushy salespeople. So his company, based in Redwood City, Calif., is designing a live-chat system that will give shoppers an unmolested five minutes. After that, a text box will appear, saying, “If there’s anything we can do to help, our design consultants are here for you.” The company’s four design consultants will do the chatting, and Kelsey promises that it will be a soft sell. “We offer to help, but we don’t scare the customer away. We don’t want to turn anybody off,” he says. That’s a wise mindset, says Martha Rogers, founding partner of Peppers and Rogers, a management consulting firm in Norwalk, Conn. Approaching Web shoppers, according to Rogers, is a dangerous game. “One reason people shop online is because they don’t want to be harassed by the sales help,” she says. “If they want live help, they know where to get it. The idea that salespeople can now follow you around online is not very appealing.” Maybe not to all shoppers, but anecdotal evidence suggests live-chat technology works. The Internet service provider Earthlink boasts that 15% of its initiated chats result in a customer signing up. E-Trade Mortgage, based in Arlington, Va., added an “invite to chat” program in early 2004. In the first six months, the program improved customer satisfaction ratings and the company found chatters were more likely than nonchatters to become customers. And it also works for smaller outfits–which can get the service for as little as $99 a month. Rackspace, a Web services provider in San Antonio, gets about 80% of new sales via an initiated chat session, according to founder Patrick Condon. And LoCascio found 25% of visitors to his site who were engaged in a chat ended up buying something. “Humanizing the experience helps make the sale,” he says. Resources Tech website TopTenReviews has a live-chat buyer’s guide. For more advice, read “How to Screw Up Live Customer Chat (and How to Fix It).”
