But you’re also a decent business person and you realize the market is changing. The customers in your market like subscription pricing. It’s attractive to them for a number of reasons. I refer to this as a paradigm shift. To you, it’s a change in your business model. You’re being pressured to change from licensing your software for perpetuity and being paid for that all up front, to licensing on a monthly basis; month after month, after month. It’s a big change.

There are a number of issues with the change. One of the biggest is pricing. How do you properly price your software to make it attractive in the market and also make it worthwhile to continue developing and supporting your product.

This approach to pricing is based primarily on the fact that you’re changing from a perpetual license, to a monthly license, and based on my observations of what’s happening in the Dynamics community.

I have observed some minimum pricing and maximum pricing practices. Let’s take a look at an example:

Assumptions:

The ISV product used to be sold with a perpetual license for $5,000, plus an annual enhancement fee of 20%. And this pricing represented a fair price for your product.

The minimum pricing I see in this scenario is based on a three year payback:

The maximum pricing I see in this scenario is based on a payback of 18 months:

In this case, if you’re asking less than $222/month, I think you’re underpricing your product. If you’re asking more than $361/month, I think you’re overpricing your product.

Pricing in any situation is a difficult business exercise, requiring many considerations about your costs, your competition, your product, and your company’s market position.

If you are not already offering subscription pricing, you probably will be in the near future.

If you are already offering subscription pricing, don’t be afraid to change your pricing. It’s a new business model for you, and you can change your mind.

A “point in time” restore is a restoration of your data to a specific historical date in time – seems simple but most providers backup in mass and cannot distinguish your data specifically from everyone else’s, so if you happen to have a major catastrophe in your accounting department and need to restore from a few days ago, this might not be possible unless your provider allows for “point in time” restore.

While these scenarios seem unlikely to you, the three large providers I mentioned above cannot provide you with the backups you would need in either of these cases.  And neither do many other hosting providers!!  So what should a customer know and compare with hosting providers to make sure they are getting what they need in terms of backups?

• Have your provider specifically give you the terms of your backup retention periods.  Most only provide for 90 days.  Here is what we recommend:
  • Daily, weekly, monthly and annual – Point in time backups and restore capability
  • Seven years of data retention – this is recommended for both private and public companies
• Be sure to ask for the additional costs of those backups – so this doesn’t come as a shock later
• Be sure you understand how much storage backup you will receive as part of your fixed monthly costs – another hidden cost that providers don’t share on their quotes
• Make sure you understand exactly what is being backed up; data, custom code, Excel and Word documents you happen to store, scanned documents that are attached to your data, etc.
• Ask for their written policy for “test” restores.  And if you are required to be audited, ask that a test restore be performed and documented at least twice a year.

Never make the assumption that because you are in the cloud, that everything is backed up forever.  And always compare backup policies carefully amongst providers!

In Part II we will uncover the hidden costs of backups. So, stayed tuned.

RoseASP has been a Microsoft Dynamics hosting provider of ERP and CRM solutions since 2000.  We give every customer daily, weekly, monthly, and seven years of annual backups as part of their monthly hosting fees at no additional charge. To learn more, visit us at www.roseasp.com.

Back up data and system software/configurations: You’re going to want both the data and the software that makes the data useful to you; should you experience a catastrophic system event.

Daily backups: Yes, do it every day; unless you can afford to lose several days of work.

Monitor and review backup activities: Set up alerts to indicate when your backup process has failed to any degree. And regularly review backup logs. Things can easily happen in your system that will cause the backup process to fail. Changed passwords, system configuration changes, unknown events, etc. can cause your perfect backup process to fail. So keep on top of it.

Periodic off-site storage of backup data sets: Storing your system and data backups in close proximity to your productions systems makes no sense. Doing this makes both your systems and related backup media vulnerable to single non-system events such as theft, fire, flood, earthquake, alien invasion, etc.

Periodic test restores: Most people don’t do this, and that’s a big mistake. They focus on the backup process, not the restore process. Having a perfectly designed and executed backup plan is worthless if the system and data cannot be restored.

We’ve been hosting Dynamics ERP systems in the cloud since 2000. It wasn’t even fashionable back then. But our customers wanted it, so we did it.

So you can imagine that in 12 years we’ve picked up a lot of knowledge and experience. We recently contributed to a white paper that focuses on the things to consider, from a CFO’s standpoint, when moving your ERP system to the cloud.

The white paper is titled, “35 Questions Every CFO Needs to Ask About ERP Software in the Cloud.” It includes informative graphs and cost comparisons, and covers topics such as these:

• Cloud Definitions
• Potential Benefits of Cloud ERP
• Common Concerns of Cloud ERP
• Compliance Considerations for Cloud ERP
• Licensing Questions for Cloud ERP

You can download it by requesting it here. A link to the white paper will be immediately sent to you.

It’s clearly written and easy to understand. If you’re considering moving your ERP system to the cloud, you will want to take a look at the white paper.

The current month hosting offer is good for 12 months, after which monthly hosting fees are $195 per user/month.