Appirio Guarantees Cloud Savings - InformationWeek

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4/23/2010
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Appirio Guarantees Cloud Savings

A cloud startup promises to save companies $1 million on IT -- or it will make up the difference.

Appirio wants to help small and medium sized companies move to the cloud, and it is guaranteeing that they will save $1 million off their IT budget if they do so. (Certain conditions apply.)

If they don't save that much, then Appirio's head of strategy Ryan Nichols says his company will make up the difference.

To be eligible, as company must currently be spending at least $5 million a year on IT, move its whole infrastructure from on-premises to in the cloud, and have more than 500 employees.

In effect, Appirio is saying it can save small- and medium-sized companies about 20% of their IT budgets, if they decide to go cloud. Both business and IT leadership of a company must sign off on an Appirio-authored "Cloud Roadmap" or plan on how they will do so.

"We're putting our money where our mouth is," Nichols said in announcing the initiative April 22. "We think this guarantee will encourage companies to take their cloud adoption to the next level. Running your business 100% in the cloud is different than piecemeal adoption." Certain categories of IT spending can be drastically reduced or eliminated in the cloud, starting with server purchases.

Appirio has built up expertise in the operation of several public clouds and offers consulting services on cloud adoption. It produces cross cloud applications, such as Professional Services Connect, a service that moves data from Salesforce.com applications into Google's Gmail. "Every product we build is built on someone's cloud platform," said Nichols as PS Connect was announced April 9.

Appirio has helped 180 companies build cloud applications that used Google, Amazon Web Services, or Salesforce.com services or move part of their operations into Google App Engine, Amazon EC2, or Saleforce.com's environment. Customers include the City of Los Angeles, IMS Health, Motorola, Qualcomm, Rehab Care, Diversey, Avago and the Japan Post Network.

The amount of IT spending relies on a Gartner definition of IT that includes both operational and capital spending, but not depreciation or amortization. Appirio will do the total cost of ownership calculations once a firm's infrastructure has moved into the cloud and compare the before and after effect.

A project may take two years to complete and the comparison is made based on a third year of full operation in the cloud.

Appirio itself is a 200-employee company in Mountain View, Calif., that's been built without constructing an on-site data center. "Our experience operating as a serverless enterprise gives us confidence that a million dollars in savings is just the tip of the iceberg," said Nichols.

If a company falls short of the projected savings, actual payment from Appirio might come in the form of services rather than cash.

Appirio has garnered its share of recognition since being founded in 2006. It was named one of the U.S.' Most Promising Startups by BusinessWeek and an On-Demand Company of the Year by the AlwaysOn online technology network. It was also selected to present March 16 at the Cloud Connect show in Santa Clara, Calif., and again at Under the Radar's Cloud startup competition April 16 in Mountain View, an annual contest sponsored by DealMaker Media.

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