| | | | | | |This paper serves as a business plan prepared for Qualitynet for the introduction of Google | |Enterprise services in the State of Kuwait. | | | | |April 21, 2010 | | | TABLE OF CONTENTS EXECUTIVE SUMMARY…………………………3 ORGANIZATION BACKGROUND AND VISION…………………………4 CLOUD COMPUTING AND BENEFITS…………………………4 What’s in the Cloud for the Customers…………………………5 What’s in the Cloud for Us? …………………………5 THE SERVICES AND PRODUCTS…………………………6
OUR COMPETITIVE ADVANTAGES…………………………7 SALES AND MARKETING STRATEGIES…………………………8 Marketing Strategy…………………………8 Sales Strategy…………………………10 FINANCIAL STRATEGY…………………………11 Sources of Income…………………………11 Revenues and Costs…………………………11 Income Statement – 2Yr Quarterly Plan…………………………13 Financial Forecast – 5Yr Plan…………………………14 OPERATIONS STRATEGY…………………………15 GAARP…………………………15 APPENDIX “A”…………………………17 APPENDIX “B”…………………………18 APPENDIX “C”…………………………19 BIBLIOGRAPHY…………………………20 EXECUTIVE SUMMARY
Qualitynet, the largest Internet Service Provider and a leading total solutions provider in the State-of-Kuwait, “was established in 1998 in response to a public offering by the Ministry of Communications, as part of their strategy to privatize Internet and data communication services within the State of Kuwait” (Qualitynet, 2010). Qualitynet launched their date communications infrastructure and an Internet Gateway in September 1998, to provide Internet services and private data communications services to the Kuwaiti public and corporate sector.
Based on Qualitynet’s experience in the market, broadband services have become somewhat of a commodity in the Kuwaiti market where it is getting difficult by the day to differentiate one Internet Service Provider’s (ISP) offerings from the other than from a price point of view. Churn is high; however, the bottom-line stays stagnant. Qualitynet’s vision is to become the leading total solutions provider and, while maintaining the broadband services as it’s bread-and-butter, reduce its dependency on revenue generated from providing internet services.
With the diversification vision in focus, Qualitynet seeks to establish an exclusive partnership with Google Inc. and engage in the Google Apps Authorized Reseller Program (GAARP) in order to resell Google’s Enterprise services in Kuwait. Aligning the Google brand name with Qualitynet will help solidify Qualitynet’s position in the market as an innovative organization and divorce its sole recognition as an ISP. Google Enterprise products are designed to provide the same level of simplicity, efficiency, and security to corporate users that consumers are obliged with by Google’s search and collaboration services.
By hosting its services in the Internet Cloud, Google aims to reduce the total cost of ownership of products that typically call for significant Capital Expenditure. As stated on Google’s reseller portal, in excess of One Million businesses use Google Apps, the suite of software-as-a-service for business email, information sharing and security. Over 3,000 new businesses sign up every day, spanning small companies to large corporations such as Genentech and Hamilton Beach. Google Apps is available globally, offered in 46 countries and in 27 languages (Google Apps Reseller Program, 2010).
Kuwait, the seventh richest country in the world per capita (Nominal GDP $114. 878 Billion) (CIA World Factbook, 2009), is now becoming cost sensitive given the recent global economical crunch. Every organization is looking to reduce Capital Expenditure and invest only in predictable and stable Operations Expenses. Google Enterprise products will serve the market immensely during this time of penny-pinching, allowing the organizations more flexibility and the sense of financial relief.
The Google Enterprise services, and more so Qualitynet’s association with Google, should be marketed heavily to indicate Qualitynet as the first-to-the-market with Cloud Computing and the first and only organization to bring Google into Kuwait. ORGANIZATIONAL BACKGROUND AND VISION We started off in 1998 as an Internet Service and Data Communications Provider for the State of Kuwait. As a pioneer to the market, we have seen the hay days with revenues exceeding the business plan every year. Since then, four competing entities have entered the market and claimed their share of the market.
Our vision, lately, has been to decrease our sole dependence on Internet Services and integrate value added and solution services that either compliment and strengthen our core competency (internet and data communication services) or are, at least, in-line with our strategy to provide Information Technology solutions to the market. CLOUD COMPUTING AND BENEFITS Before we divulge into product descriptions, it would be feasible for us to first take a look at Cloud Computing, what it stands to deliver, what’s in it for the customer, and what’s in it for us.
Cloud computing is, “the latest technology trend that involves Internet-based computing, whereby shared resources, software applications, and other types of pieces of information are provided to users to be accessed through desktops, laptops, smart phones, and other devices on-demand, like a public utility” (Rittinghouse, 2010). Figure 1. 1 illustrates how cloud computing works: [pic] Figure 1. 1 – Cloud Computing (Computer Applications and Data stored at the internet level to be accessed)
In 2008, Gartner saw an opportunity for cloud computing “to shape the relationship among consumers of IT services, those who use IT services and those who sell them”, and observed that “organizations are switching from company-owned hardware and software assets to per-use service-based models” so that the “projected shift to cloud computing … will result in dramatic growth in IT products in some areas and significant reductions in other areas” (Gartner, 2008). What’s in the Cloud for the Customers? 1. Makes the user agile in the sense that the re-provisioning of nfrastructure resources can be done rapidly and inexpensively 2. Significant cost reduction 3. Converts CAPEX into predictable OPEX 4. Mobility – information can be accessed on the fly from almost all internet capable devices 5. Secure resource sharing for numerous users 6. Increased security due to the centralization of Data and the warranting of data-chopping 7. Maintenance costs are reduced since applications need to be maintained once at the Cloud level instead of every single machine What’s in the Cloud for us? 1.
Dynamic, secure, reliable, and agile service offered to the market 2. Significantly low cost offering – With a price sensitive market, the low cost will attract many 3. No CAPEX required 4. Minimal OPEX 5. The state-of-the-art SLA and Uptime (99. 99%) encourage minimal support and maintenance expenses (Google Apps SLA, 2010) 6. The Cloud is very trendy and non-existent in Kuwait. We will be the first to the market. 7. Aligning our brand name with that of Google will speak highly of our capabilities as an innovative business development entity 8.
Offering Google services will help reposition our perception in the market as a total solutions provider instead of just an ISP 9. Google has a great reputation and considerable references which alleviate pressure from the sales executives in offering a new service to the market 10. Recurring revenue model THE SERVICES AND PRODUCTS Since we now have established a brief understanding of what exactly Cloud Computing is and what its benefits are, we can divulge into understanding the Google products and services Google Enterprise offers the following products: 1. Google Apps . Postini Services 3. Earth & Maps 4. Enterprise Search | | |[pic] | |[pic] |[pic] |[pic] |[pic] | |Google Apps |Postini Services |Earth & Maps |Enterprise Search | Figure 1. – Google Enterprise Services Google Apps Google Apps is a service from Google for using custom domain names with several Google mailing and collaboration products. It features several Web based applications with functionalities similar to traditional office suites (such as Microsoft’s Word, Excel, etc. ), including: Gmail, Google Calendar, Talk, Docs and Sites. Since this is a web based service, the need to purchase hardware (computer servers), storage (hard disk drives to store data), software, and software licenses is eliminated with a very feasible and predictable monthly user fee.
Google Postini Services Google acquired Postini (an email security solution provider) in 2007 as a strategic move to enhance its email offerings by adding state-of-the art email security that provides security to the client at the gateway instead of their local servers. Postini email security provides web based services such as anti-spam, antivirus, and anti-malware. Google Earth & Maps
Google Earth and Maps provides location based services where an organization can incorporate its data into Google Maps (Google’s mapping service) and Google Earth (a virtual globe, map, and geographical information program) to be shared quickly and easily with employees, social groups, and clients (e. g. Pizza Hut may integrate all of its location addresses and contact information into Google maps for the ease of its customers). Since Kuwait is limited geographically with a total area of 6,880 square miles and a population density of only 433. square miles, most of the population already knows where most places of interest are located and scarcely use online location information services. Hence, the Google Earth and Maps service will be kept on the back burner until a few years till the trend sets in. Google Enterprise Search The Google Search Appliance (GSA) is designed to provide the same search simplicity and efficiency within an organizations intranet that Google provides with its search engine. GSA brings swift and pertinent search to the organization’s website or intranet, whether thousands, millions, or even billions of documents have been indexed.
OUR COMETITIVE ADVANTAGES We have been the largest ISP almost since our inception. Being a part of large groups such as The Batelco Group and Ali AlGhanim Group of Companies gives us the financial freedom and market status that many organizations lack. The AlGhanim family is widely known in the market as one of the strongest in a country run by families. Their strong ties within the Government sector and the large enterprises will give us a way in. Furthermore, over the last 12 years, we have gained a firm hold in the market and have established an extensive customer database with which we have very strong relationships.
This group will be our first sales target and this group will promote us (word-of-mouth). It is because of all these reasons that Google has agreed to allow us to represent them in this region. SALES AND MARKETING STRATEGIES Marketing Strategy Target Market: The prominent aspect about Google Apps and Google Postini is that the business model works on almost any level. Our customer can be a 2-man shop or a 1000+ users enterprise and from any industry, Google Apps will deliver a significant reduction in TCO. GSA, however, in aimed for large enterprises with a 500+ user base.
The table below elaborates further on the target markets: |GOOGLE ENTERPRISE SERVICES – TARGET MARKETS AND THEIR SIZES | |SERVICE |TARGET MARKET |SIZE | |GOOGLE APPS |SOHO – SMB – ENTR |1 USER – 4000 USERS | |GOOGLE POSTINI |SOHO – SMB – ENTR |1 USER – 4000 USERS | |GSA |ENTR |500+ USERS |
TABLE 1. 1 – GOOGLE ENTERPRISE SERVICES MARKET INFORMATION We have seen that Kuwait has, to a certain degree, been affected by the global economic crunch. In 2009 the economy contracted 2 pct. However, the economy is still at a $28. 81 Billion surplus as compared to 2008 with a $40 Billion surplus (Maktoob Business, 2010). So while the spending is still there, it is being watched and scrutinized. Coming up with a service that strives on reducing Total Cost of Ownership (TCO), one that will eliminate CAPEX and allow for nominal OPEX, will play a vital role in capturing the market.
Furthermore, Google has amazing brand recognition as one of the leading IT companies in the world. Aligning the our brand name with that of Google will help us accomplishing our vision of reposition us as a leading total solutions provider and an ISP instead of being just an ISP. After the test pilot with NBK, we will conduct a press release with the primary focus on making the market aware that a) we have Google b) we are the first ones to the market with Cloud computing, and c) we have the customer in mind since we are bringing an extremely affordable solution to a very cost sensitive and almost recession struck market.
We will utilize the Google Solutions Marketplace, a free of charge service from Google to its partners that “links customers to vendors whose solutions integrate and extend Google’s communication, collaboration, and enterprise search products. It’s a free service and a great way to get [our] product in front of Google Apps customers that are looking for custom development services and complementary products” (Google Apps Reseller Program, 2010). This activity is to be done in parallel with the press release.
On our corporate website, we will make the necessary artwork and amendments to the Content Management System (CMS) to include the introduction of Google Enterprise services on the main page in the flash banner. Last but certainly not least, Google provides marketing tools such as collateral design, branding, and cost savings calculators to support its partners’ marketing campaigns. They also offer region specific ideas on how to promote the services effectively. These are to become the Marketing team’s bible to promote the new services (Go To Market – Google Apps, 2010). We will also send mailers (email and print) to targeted customers. 00 mailers will go out every month of the first quarter and then the frequency will be reduced by 20%. To take it to the next level, and really spread the word of mouth, we will participate in a conjoint and co-funded seminar with Google inviting our existing top 50 customers and 20 new customers to come see a senior manager from Google face to face who will be able to address their questions and concerns. The Google story and business case will carry more weight coming directly from the horse’s mouth. For all the marketing expenses, we will dedicate 5% of the total revenue. Sales Strategy
The philosophy behind selling Google Enterprise services is to make the investment for the customer a no-brainer. How we do that is present a TCO model for the customer and shows them the power of Google Enterprise services and how, at the end of the day, they benefit financially and more importantly, how they can realign their focus to their core competencies instead of over indulging in mail server administration, application installation and maintenance, and other mail and collaboration related tasks. Figure 1. 3 below presents a sample TCO model that Google encourages to use: [pic][pic] Figure 1. 3 – Google Apps TCO Calculator
FINANCIAL STRATEGY Sources of Income Revenue will be generated from the following Google Enterprise services: 1. Google Apps 2. Google Search Appliance 3. Google Postini As per our agreement with the execs, Google offers a 10% margin (the least of all the services) on Google Apps; however, given its wide popularity among various communities and sectors, it serves as a gateway to other sales opportunities. The opportunity is greatest with the Government and Education sectors since Google Apps is offered for free to them directly from Google. The selling price of Google Apps will be $60 (Kuwait Dinar – KWD17. 250) per user per year.
GSA offers a significant margin of 45%. It is bought for $1,100 and sold for $1,595. Google Postini services offer a remarkable margin of 55%. It will be sold based on a per user per month scheme for a price of $1. Revenues and Costs Google Apps (GA) Revenue Model: Recurring ? Selling Price: US$50. 00 per user per year ? Cost: US$45. 00 per user per year ? Projection:2000 new accounts in year 1, 2200 new accounts in year 2 (10% growth from year 1), and 2750 new accounts in year 3 (a 25% growth from year 2), 3,438 new accounts in year 4 and 4,297 new accounts in year 5 (25% increase in Year 3 and Year 4 from their predecessors).
At the end of 5 years we will have a total of 10,388 Accounts. ? CAPEX: None ? OPEX: Training costs (Sales, provisioning, and support staff has already been utilized in other projects. As per the value added nature of this service, staff utilization will be very low and hence not accounted for in the financial plan). Google Search Appliance (GSA) ? Selling Price: US$1,595. 00 ? Setup Fee: US$1,000. 00 ? Maintenance Agreement: $500 per Year starting from Year 2 Onwards ? Cost: US$1,100. 00 ? Projection: 2 Appliances in Year 1, 3 in Year 2, 4 in Year 3, 4 in Year 4, and 5 in Year 5 CAPEX: Since GSAs are bought on a back-to-back ordering system, no CAPEX is needed. ? OPEX: Installation and Maintenance crew will be required. The device is plug-and-play with almost no support required. However, Network Operation Center (NOC) staff will be trained in a single session to handle support calls. Google Positini (GP) ? Selling Price: US$1 per user per month ? Cost: US$0. 45 ? Projection: 600 users in Year 1, 720 in Year 2, 960 in Year 3, 1200 in Year 4, and 1440 in Year 5 ? CAPEX: None. The email is routed to Google servers for filtering hence no CAPEX required OPEX: Provisioning staff is required with very minimal utilization. Hence, existing staff can be accommodated Marketing and Advertising budget will be set at 5% of the Total Revenue. Sales and provisioning training will cost $2000. Support training will cost $1500. Please refer to the 2-Year Quarterly Plan and a 5Yr Financial outlook on the next two pages to get a better understanding of where we are headed with this service in terms of revenue, expenses, net profit, and cash flow. Income Statement – 2Yr Quarterly Forecast [pic] | | | | | | | |Figure 1. 4 – Income Statement (2-Yr Plan) | | | | | | | FINANCIAL FORECAST – 5 YEAR PLAN [pic] Figure 1. 5 – Financial Forecast (5-Yr Plan) [pic] Figure 1. 6 – Profits OPERATIONS STRATEGY We are delighted to having been allowed to introduce Google services to the Kuwaiti market.
We have conducted various meetings with Google executives, based out of London, to help us with their sales and marketing experience and at the same time guide us through, and make it easy on us, the most convenient operations strategy. First and foremost, we will be signing up with the Google Apps Authorized Reseller Program (GAARP). The GAARP is in place to help a Google partner, “take Google Apps to its new and existing customers in such a way that it gains valuable product and service revenue to strengthen its business. Meanwhile the customers get a great experience and get the most out of their Google Apps deployment. Benefits of GAARP What is in it for us to sign up for GAARP? According to the guidelines provided by Google, the following benefits are offered to all GAARP subscribers: Technical training and support ? Sales tools and training ? Marketing programs, collateral, and tools ? Reseller discount off the annual list price for Google Apps ? Reseller logo branding ? Solution provider community forums ? Customized console to create and manage customer accounts ? Opportunities for other performance-based benefits Our roles under GAARP can be found in Appendix “A”.
We will conduct a pilot test with National Bank of Kuwait (NBK), our sister organization, free-of-charge setting up accounts for 20 NBK employees. After the successful pilot we will soft launch the service. Basically, and as agreed with Google, our role in providing Google services will be limited to the following services: ? Sales ? Provisioning of Services ? Lower Level Support ? Bare minimum maintenance (equipments requires minimum to none maintenance) The sales and provisioning, and support and maintenance processes have been finalized in coordination with the authorized and responsible Google teams.
Appendix “B” and Appendix “C” illustrate the simple process that need be followed to deliver Google services from start to scratch to the end user. Training the provisioning team will take place from the get go. The support team’s training will follow the press release. APPENDIX “A” – GOOGLE APPS AUTHORIZED RESELLER PROGRAM ROLES & RESPONSIBILITIES [pic] (Google Apps Reseller Program, 2010) APPENDIX “B” – GOOGLE APPS SALES & PROVISIONING PROCESS [pic] APPENDIX “C” – GOOGLE APPS SUPPORT & MAINTENANCE PROCESS [pic] BIBLIOGRAPHY – Harvard Reference System
CIA – The World Factbook—Country Comparison :: GDP – per capita (PPP) Available: https://www. cia. gov/library/publications/the-world-factbook/rankorder/2004rank. html Last Accessed: 21st April, 2010 Gartner Says Worldwide IT Spending on Pace to Surpass $3. 4 Trillion in 2008 Available: http://www. gartner. com/it/page. jsp? id=742913 Last Accessed: 21st April, 2010 Go To Market (Google Apps Solution Provider Site) Available: http://apps. gepportal. com/products-getting-started/isv-go-to-market Last Accessed: 21st April, 2010
Google Apps Reseller Program Available:http://www. google. com/apps/intl/en/business/resellers/index. html Last accessed: 21st April, 2010 Google Apps SLA Available: http://www. google. com/apps/intl/en/terms/sla. html Last Accessed: 21st April, 2010 Maktoob Business – Kuwait’s budget surplus widens to $28. 8 Billion Available: http://business. maktoob. com/20090000453046/Kuwait_s_budget_surplus_widens_to_28_8_bln/Article. htm Last Accessed: 21st April, 2010 Rittinghouse, J. , (2010). ‘Cloud Computing: implementation, management, and security’. , (eds. ) Boca Raton: CRC Press