Anthony Day & Peter Grant are two of the founders of CloudApps, a sustainability software company that allows companies to make efficiency savings and meet sustainability targets by integrating sustainability goals throughout the organisation. CloudApps aims to connect efforts by staff to be more eco-friendly with sustainability targets from the management.
Q: Can you give us some information on your early background?
Peter: When I came out of the military I went into a publishing house, but quickly realised I didn’t like corporate environments and wanted to work for a smaller organisation – I wanted to be my own boss.
At 24 I had my own company, which I started from scratch, and I branched out into other businesses. But I wasn’t making any money, and I had a young family, so I got into the technology sector and joined a company called Siebel as one of their early employees. The company was eventually acquired by Oracle. At the beginning I was managing director of my own territory, with a good brand behind me, but then the company got bigger, new processes were developed, and it was no longer an environment that I excel in.
I then joined salesforce.com as managing director of the UK business. I was the 10th employee, and impressed by the branding, marketing and disruptive business model. That company also became large, and I realised I still wanted to do something on my own. That’s when I became CEO of a training company, which was like doing a paid MBA – I learnt a lot.
After that I reconnected with some old colleagues, the timing was right and we decided to start up CloudApps.
Anthony: I learnt my craft in big business at Oracle, then decided some time ago – 20 years ago – that I wanted to start my own business. I started researching the possibility of finding US business software, bringing it to the UK, and becoming an official distributor. I then found out about salesforce.com and Siebel, joined Siebel six months after it launched and abandoned my hopes of being an entrepreneur. I helped build Siebel into a large organisation and learnt a huge amount about start-ups in the process.
Following Oracle’s acquisition of Siebel I joined Oracle in the acquisitions team but wasn’t happy, so went back to the idea of building a company – I met up with old colleagues, who had all gained valuable experience in the technology sector, and we all said ‘well, let’s do it for ourselves now’ and CloudApps was born.
Q: The infrastructure you provide to clients is totally hosted in the cloud. What benefits does this bring?
Peter: The cost advantage is obvious – it means that any money raised can be used for customer acquisition, hiring the best talent etc. It doesn’t need to be used to buy IT infrastructure, now or in the future, because cloud computing scales with the company as it grows. Our main competitors – who are far larger than us – have raised around US$50m in venture capitalist funding. We are funded by high net worth individuals, but we can compete with these companies in the marketplace because of the advantages the salesforce.com platform gives us.
It’s a very new model, using a cloud computing platform to drive your business. To give a comparison, take ARM, who don’t actually manufacture chips – that’s a common misconception. They design them, outsource the manufacture to China, then take royalties on every chip that’s used. Apple takes US$80 for each iPhone produced, while the manufacturer takes US$5.
Our model is not too dissimilar. Anthony saw the problem companies were facing with sustainability and instead of us building a solution, we outsource it to salesforce.com, and then we repackage it and remarket it back to our client base.
One of the biggest advantages of the cloud is the agility provided by the platform. Anthony: One of the biggest advantages is the agility provided by the cloud computing platform. We are less than two years old and we’ve already done five product releases, and are about to do a sixth. In a very short space of time we’ve been able to deliver a huge amount of functionality, meaning we can compete with larger companies. We’ve never had to focus on infrastructure, and so have been able to put all our investment in individuals and building a great product.
Peter: Another advantage is authority. Getting that first customer is hard as they are scared you won’t be around in six months’ time. We’ve got a strong brand behind us, a company that has sunk hundreds of millions of pounds into their data centres, have industry-leading security credentials etc. That gives OUR customers the comfort that comes from being backed by such a large brand.
Q: How does a cloud computing platform help SMEs solve some of the common challenges of starting a business?
Anthony: Being able to get the product to a point where it’s capable enough is tough. Normally you’d need to start the company, and your first release wouldn’t be particularly capable, but that is fully addressed using a cloud computing platform – it allows you to get products to market early, which is traditionally extremely hard.
The second benefit is cost savings, and obviously money is tight when first starting a business. Not having to invest in infrastructure can help immensely as the money that has been raised can be poured into more important areas.
Thirdly, gaining credibility is a headache for all companies. You’ve got no track record. But using a platform that has a very impressive track record can mitigate some of the concerns customers have when dealing with a new company.
Peter: The commercial challenge is people, market, product – in that order. You have to find the best people because any weak link in a small company with four or five people is a huge problem.
With regard to market, it must be moving with you. In our case, the sustainability market is worth US$30bn, with US$380m spent on applications. By 2015 the sustainability market is expected to reach US$30bn, and by 2017 US$4.5bn will be spent on applications. Companies must be ahead of the market, and the scalability of cloud computing platforms can help businesses do this.
The product is very important – it must match your vision and what the market is doing and must take into account cash raised, the burn rate, etc. Managing all that is a challenge for any business. The company must be very flexible, and sell what customers want to buy, not what they think the customer wants to buy. Customers don’t want big deals during tough times because they are risk-adverse, they may want bite-size products and services – cloud computing allows products to be more efficiently targeted.
Q: Is the inherent scalability of cloud computing platforms attractive when trying to raise finance from investors?
Peter: We found it relatively straightforward to raise capital, and I think this comes back to our focus on people/market/product. Venture capitalists always look at the people running the business. As the saying goes, there are lots of good jockeys, and lots of good horses, but not enough good jockeys on good horses. The right people have to come together with the right business idea.
A growing market is very important to investors. Our market – sustainability – is very diverse. Look at what Tesco and Sainsburys do with their vouchers for schools. There’s investment in local communities, environmental compliance, Government legislation that requires businesses to report on carbon output, and then follow up with a reduction programme. Investors see a growing market.
With regard to the technology market, cloud computing is very attractive to investors because it helps protect against one of the biggest disadvantages in the market – late delivery. Investors are scared of late delivery. Cloud computing platforms allow companies to deliver products far more quickly.
Anthony: Salesforce.com has a drumbeat of releases that allows us to work quickly – you have to be agile and quick to change and to stay ahead, and these regular updates allow us to focus on our product rather than our infrastructure.
Q: It’s interesting you chose the sustainability market. We read an article recently that said consumers in the future will choose companies based on their environmental credentials rather than their product and price.
Peter: Absolutely, and companies are starting to realise this. You can’t manage what you can’t measure, which is why most of UK PLC and global businesses are working out their environmental impact – which is a momentous task.
There has definitely been a shift whereby environmental credentials are becoming more important. In the 1970s a company’s valuation was taken predominantly from profitability and revenue, which made up 90 percent of its value.
90 percent of a company’s value is today based on its brand strength.
This has now flipped, and 90 percent of a company’s value is today based on its brand strength. Just consider the BP oil spill, which wiped billions off the company’s stock price. It’s about protection of brand and differentiation nowadays. People want to do the right thing, and they – particularly the younger generation – care about where their money is going and the types of businesses they deal with.
Companies have in the past been accused of making wild environmental claims in annual reports, and CSR reports, but now they are being held to account, and are being forced to measure their carbon output and take action to reduce their footprint.
Anthony: Agreed. Wild claims must be backed up and – this is new – companies are expected to make progress on these claims, to take action on carbon. There is a gap between what companies say they will do and what they are actually doing. If companies want to take successful action, they must embed it in company culture.
Peter: It’s like the old customer relationship management (CRM) market in the early 1990s. It wasn’t a global system, everything was on spreadsheets – you had a rolodex which you flipped open, and called a prospect. If they weren’t interested, you’d move onto the next one. Now it’s all automated with a 360 degree view of the customer.
The carbon market has been historically disjointed, but Cloudapps is bring it all together so you get this 360 degree view of the marketplace.
Q: Are sustainability and ‘green’ different things? When we think of sustainability we think of not only carbon reduction but business travel, reducing paper usage and an emphasis on ‘not just for profit’ practices.
Peter: When we talk about sustainability we mean a company’s environmental, social and economic impact. The environmental impact is its carbon output, greenhouse gases, reduction programmes, etc. The social impact is any charitable work, volunteer hours, gender equality, where the products are made. Economic impact refers to opportunities around sustainability i.e. using green fuels, stocking organic and Fairtrade ranges, and the diversification of the existing business to be more sustainable.
Q: So do companies see sustainability as an avenue for new opportunities?
Forward-thinking don’t only become more sustainable because they are forced to but because they see opportunities around the brand. Anthony:
Forward-thinking companies certainly do – they don’t only become more sustainable because they are forced to but because they see opportunities around the brand.
Peter: There are many opportunities but one that really resonates is the reduction in business travel. Our definition of sustainability is ‘profit for today, protecting future generations.’ So by reducing expenditure on air travel, this can be achieved. For example, a flight from England to New York creates around a tonne of carbon. If you are making this trip 12 times a year, why not do 10 trips a year and two video conferences, saving two tonnes of carbon and around £1500?
Alternatively, if you are taking five taxi rides in London, why not take one taxi ride and four tube journeys? Not only is this three times as carbon efficient but it’s ten times cheaper in London.
And instead of using the company car, you can use video conferencing or other modern technologies.
Q: So there’s a direct link between sustainability and saving money?
Anthony: Definitely. If you reduce energy consumption you’re reducing emissions but also cost, so there’s a double benefit. The way energy prices are going, if you don’t do anything it’s not like things will stay still – your cost base will get worse.
Q: Some companies feel they need to do everything or nothing when it comes to sustainability. Does this stop them taking action?
Peter: We use personas to show our customers that small changes make all the different. Think of a normal bell curve – on the left is Sue Sustainable, she cycles to work, recycles, doesn’t print much, turns her computer off at night. On the right, diametrically opposed to Sue, is Dan Dirty. He’s five times more expensive to run than Sue, he’s not into new technologies, doesn’t recycle and flies everywhere. Yet crucially there is no difference between the amount of revenue they generate. Now, we are not saying that everyone should be Sue Sustainable, we’re saying that Dan can change his behaviour a small amount, and that’s where a small amount of change from a lot people can really make a difference.
Q: It seems that there are so many reasons to be sustainable, other than just helping the environmental. Is part of your work telling customers what these reasons are?
Peter: We don’t like to bang the green drum, we prefer to tell people that being sustainable is the right thing to do. We subscribe to the Government’s ‘nudge, nudge, wink, wink’ policy which is about making people aware of their actions and giving them alternatives, appealing to the ego, providing incentives etc.
There are not just fiscal benefits to sustainability. People definitely want to be seen to be doing the right thing. We are starting to use ‘Gameification’ with our customers, which asks how games influence behaviour in the workplace. This uses things like psychology of recognition, points levels, badges and trophies for solving certain challenges, etc. We’ve had some great feedback so far.
Anthony: Building motivation into software is key, so that employees truly want to become more sustainable. If you tell someone they MUST do something, there’s a natural human reaction to push back. This is not sustainable in the long term; they may do it once or twice but they will eventually stop, because there’s no motivation.
By building it into software, you are fostering the right actions and encouraging people to change their behaviour. Social networking and collaboration comes into play, bringing people together around issues and sharing experiences. You can see that it’s achievable because someone else has done it, and you can see what the benefits are, etc. Being able to level up and set challenges is a huge motivating force.
Q: It seems like the best type of change is at the systemic level – changing organisations from within to build sustainability into their business models.
Peter: Absolutely – the people we’ve deployed software with, they tell us that people THINK their behaviour is green, but really they are not that eco-friendly. People often change their beliefs before their behaviour, which is why it works for organisations to tell them what the baseline is. Then the employees are likely to self-motivate – the ego comes in – and then once they start to do it they get into a habit.
On a personal note, we’ve transformed our business and it’s about managing expectations with the customer. People expect you to use telepresence, video conference, Skype etc – and we do this. Companies don’t want you arriving in a car after a flight.
And as a side benefit, this also controls the burn by significantly reducing costs. It’s a win-win situation.
Q: Does the sustainability industry work differently from other sectors?
Peter: One thing I realised very quickly is that, with regard to sustainability, people share their ideas and best practices. Now this is not at all the case in customer relationship management (CRM) or enterprise resourcing planning (ERP) because they are so competitive. Yet every year, sustainability managers meet and share ideas about how to do things more efficiently.
The reason? It’s the right thing to do – companies must be seen in a good light, they must be seen to be protecting their brands, and that’s why they collaborate. It was a huge surprise to us first of all.
With regard to CloudApps, we thought: let’s capitalise on the salesforce.com ideas exchange platform and create a global platform for sustainability so people can come together and share their ideas – that’s launching soon.
Q: What tips would you give to SMEs who are unsure about using a cloud platform?
Anthony: The main objection is normally over security. SMEs tend to be protective of their data, and aren’t keen to trust outsiders. But in my experience that’s not something to worry about. We hear scare stories about hacking; you just need to make sure you pick the right cloud companies that feature top notch security.
One of the first enterprise deals salesforce.com did was with ADP
, who outsource the biggest amount of payroll information in the world. In fact, payroll is the first thing that companies tend to outsource, and it’s more confidential than financial information. This is a great testimony to the power and security of the cloud. Merrill Lynch
put data into the cloud – and they work in an extraordinarily sensitive industry.
Peter: Another objection SMEs sometimes have is the cost, but to be honest the cloud is far more cost-effective than traditional infrastructure. It makes perfect financial sense. You’d much rather spend your money on acquiring clients and building your product than IT infrastructure.
Anthony: For start-ups, the cloud really is ideal. For the first nine months we were in operation, we had no offices and were all working remotely. Cloud infrastructure allowed us to do this effectively, and when we did decide to move into offices, our platform scaled with us – there was no requirement to spend vast sums of money on traditional infrastructure.