ARN: What is the company background?
DOUG TUTUS (DT): We started off hosting Web sites, hosting Microsoft Exchange and we were an early adopter for Sharepoint as well. Through that I got to know the Microsoft team, with regards to the Services Provider Licensing Agreement (SPLA) program. At the time I got a good understanding of the SPLA licensing program because it was integral to our costs in delivering a hosted service. So if you understood the licensing program to a great degree, you could minimise your costs by deploying minimal infrastructure with minimal license costs, and then have the ability to scale up based on this particular licensing program. My business partner and I got a very good in-depth understanding of the licensing model and then deployed based on that licensing model. We then got to know internal Microsoft people and as our business started to grow, I think the whole SPLA licensing model for Microsoft started to grow and they were looking for a distributor. We put in a business plan and lo and behold we were given a distributorship – and that was five years ago.
ARN: What has been your journey into the cloud?
DT: We got our knowledge within the cloud space in the early ASP days. I was consulting to a business which was an early adopter in deploying a hosted desktop. The client had this vision where he built his own little datacentre and he was on the traditional licensing program. We then investigated and rejigged his licensing program, and then he went to market with a full hosted desktop on a Citrix platform. After working with him for about six months we quickly recognised that the market wasn’t ready for what he was doing, and the product offering was too costly when you were comparing it against on-premise; so you had a very limited market. The market that you actually had was the market that had absolutely no IT sense and didn’t want to have any sort of infrastructure within their office, so it was a 10-15 seat market, which was difficult to sell to. It was your traditional SME – hard to find, hard to sell to. The other impediment was broadband was just in its infancy so the added cost of getting a decent bandwidth connection made the whole proposition unviable. So from that experience with the client I then asked him: ‘Why wouldn’t you look at a one to many type hosting solution, a commodity based hosting solution, where you are just delivering email, which was not what he wanted to do. And that’s when I branched out and decided there might be a market for this.
ARN: What is your key differentiator?
DT: The only competitor we had in those days with respect to the hosting world was WebCentral. It was direct to market and we thought our point of differentiation would be we’d white label. So we did become a bit of a thorn in the side for WebCentral in those days because anybody who wanted to white label would come and buy through us. Through that we then got to understand the hosting market, which today you would call the cloud. And their wants and needs. But as that whole hosting arena grew, we had other competitors who were competing with us on a white label type arrangement, and they began to become a little insecure with respect to us selling them the licenses and hosting. So we decided to mitigate that insecurity: we would just dispose of the hosting business. We sold that and focused purely on delivering subscription software. So that’s our point of differentiation from the traditional distributors. We don’t sell boxes; we don’t have any warehouses. We basically sell subscription software, which becomes a real simple business model going forward, but it was also an emerging market. The exciting thing today is the quantum shift in companies like Microsoft, VMware to some degree, IBM talking about cloud services. So when you look at those top global software companies talking about cloud and cloud services, it becomes very exciting for a business like ours because you can only grow to a much bigger, better, more diverse business going forward.