Appirio Bets On The Cloud ... And Wins

Appirio gets it.

The company steps into the ring, gloves laced and ready for battle. When the bell rings, it strikes with speed, agility and precision.

In the world of cloud computing solution providers, consider Appirio the Manny Pacquiao: pound for pound one of the best in the biz.

In less than four years, San Mateo, Calif.-based Appirio has grown from its four founding fathers to more than 200 strong and has done so with a jarring one-two cloud partner punch with Salesforce.com and Google. Add other key vendors such as Workday and Amazon, and Appirio is a leader in offering myriad products and professional services in the cloud.

But to hear Ryan Nichols, Appirio's head of cloud sourcing and cloud strategy, tell it, the cloud sort of formed around Appirio.

"When Appirio was founded three years ago, even we didn't call it the cloud," said Nichols.

Appirio first signed on with Salesforce.com when it launched in 2006. Shortly thereafter it built a Google practice around Google Apps. With those two powerful partners in its corner, Appirio made the move from Software-as-a-Service to what are now known as cloud platforms. Appirio marries consulting and product development with cloud technologies to help customers forge a new business path.

Today, the biggest part of Appirio's business is building custom applications on top of those cloud platforms, Nichols said. Appirio is credited with building a good number of the best-selling applications in Salesforce.com's AppExchange and for devising applications that tie together Salesforce and Google Apps and Salesforce and Facebook.

"We can package what we learn into SaaS products built onto platforms," said Nichols. "We have 5,000 customers that use products that connect and extend Google, Salesforce, Amazon and Facebook."

Appirio's strategy works. It has amassed roughly 5,000 customers since its launch and has moved more than 300,000 enterprise end users into the cloud. Its customers include major players such as Avon, Starbucks, Japan Post and Genentech.

Appirio has also grown into a financial powerhouse. It has raised $16 million in funding in the past two years. Its revenue saw a 400 percent increase from 2007 to 2008; from 2008 to 2009 revenue climbed another 200 percent.

Nichols said that as cloud platforms took hold, Appirio made it a mission to have an answer for customers who ask: "What else can I do with this platform that is now a part of my enterprise architecture?"

NEXT: 'Cloud sourcing' and the demise of physical IT assets

Now another turning point is coming. The marketplace is shifting into what Nichols calls "cloud sourcing" -- moving all IT to the cloud or, more simply, outsourcing using the cloud. While that transition isn't for everyone, Nichols said Appirio has already eaten its own dog food, running all of its IT in the cloud with Salesforce, Google and Workday.

Appirio is applying the same forward thinking that made it a cloud tour de force as the era of cloud sourcing looms. Like with past successes, Appirio is on the crest of a new wave before its competition.

And a recent Gartner study confirms that Appirio is on the right track. According to Gartner, 20 percent of businesses will have no IT assets in two years. That means one in five companies will utilize cloud-enabled services and solutions. The forecast signals a massive shift and opens the door for VARs and solution providers to find increasing success with cloud computing solutions and cloud sourcing offerings.

"IT today is saddled with an architecture that forces it to say no to a lot of what the business wants to do," he said.

Nichols said Appirio sees customers getting more aggressive about the cloud, and Appirio is there to help make the leap. That's opened the door for deeper relationships with customers as more applications are being moved into cloud platforms. Now Appirio can manage cloud platforms and get longer-term commitments from customers. Appirio also shares the same risk and reward in the cloud that its customers do, making the company a trusted partner and adviser, Nichols said.

Appirio's success, coupled with customer uncertainty, prompted Appirio to launch a Cloud Strategy practice late last year. The practice is designed to help CIOs build a case for moving to the cloud and a strategy to do so.

"CIOs are starting to understand they need to have a cloud strategy," Nichols said. "Companies have to focus on how they can use IT and not how to manufacture it."

That means VARs and solution providers must change too.

When Appirio got into the cloud game it didn't have a legacy hardware business. Other solution providers, however, face the challenge of letting go of their hardware pasts and adjusting to the new era of recurring revenue vs. an up-front capital expenditure.

"It causes everybody to step up their game one level," Nichols said. "There are a lot of new roles for partners."

The easily demonstrable TCO that SaaS and the cloud offer -- a 30 percent to 50 percent run rate savings is common -- helps sell the cloud computing vision, driving revenue, Nichols said. In addition, Nichols said Appirio has flagged business agility as the No. 1 reason for moving to the cloud. That focus requires both clients and solution providers to understand that it's no longer all about the technology -- it's about business processes as well.

"The fact is it's cheaper, there's a faster time to value and it's scalable," Nichols said. "You don't have to write huge checks to get started. But it's not just cheaper and faster, it's a better platform on which to build your business."