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Perhaps you’ve heard the tale of a professor who was lecturing about astronomy and the nature of the universe. While describing how the Earth is a sphere that revolves around the sun, a student interjected, “That’s ridiculous. Everyone knows the earth is a flat plate that sits on the back of a tortoise.” The lecturer asked, “Oh, really? And what is that tortoise standing on?” The student smiled and replied, “It’s turtles all the way down!” (See also: xkcd 1416, “Pixels.”)
Now, look at the technology that supports how we develop and consume nearly every sort of information today. It’s the cloud. The app on your phone? Chances are the bulk of the code and data that supports it live in the cloud, not on your device. The systems your company uses to share information and manage business processes? Probably in the cloud. This very blog post? Yes, it was written using one cloud service and published using another.
So it’s clear why service providers are the backbone of today’s cloud economy. You might even say that it’s services all the way down.
It’s Services All the Way Down
Perhaps that sounds glib, but I mean it quite literally—building a service or app that itself leverages other cloud services is what distinguishes the fastest growing businesses from operations that happen to run their systems in a data center somewhere. Building a true cloud business means leveraging the flexibility, performance, and efficiency that cloud infrastructure provides.
Consider our own business, SparkPost, as an example. We’re a cloud service for email delivery and analytics. In turn, we’ve built our technology on the shoulders of many other pieces of cloud infrastructure, notably Amazon Web Services (AWS), but many other infrastructure and business services as well. That strategic decision has given us a tremendous leg up in terms of scalability, reliability, and costs that allow us to do things our competitors who rely on older data center architectures simply cannot.
Email Is Important to Service Providers. But In-House Email Infrastructure Isn’t
These same economics apply to service providers who build value for their customers on top of core infrastructure like email. Shifting email delivery from in-house infrastructure to the cloud offers compelling benefits to ESPs and other service providers.
To be sure, email is integral to the value service providers deliver. It’s what drives customer engagement and growth, and it’s key to functional capabilities like notifications and workflow. But retaining internal responsibility for email infrastructure and delivery offers service providers little strategic advantage. Instead, operating end-to-end email delivery remains a resource-intensive function, with demanding human and infrastructural costs.
In fact, research from email marketing industry analysts The Relevancy Group shows sending email from on-premises infrastructure costs service providers 25% more than cloud email delivery. In absolute terms, they find that cloud email delivery will save a service provider $100,000 annually for every 1 billion messages sent. That’s meaningful savings. But even better, their research shows that service providers and their customers together realize $3 million in upside annually for every billion messages moved to the cloud, thanks to improved deliverability and performance.
SparkPost Is a Service Provider’s Best Friend
Helping service providers realize benefits like these is why we built SparkPost for Service Providers, a solution specifically designed to meet the demanding requirements of this market. Leading service providers already are achieving growth and strategic benefit from the cloud and SparkPost’s email delivery service. And they’re delivering more for their customers.
We’re pretty proud of our technology, but there’s another reason we’re really excited by the work we do with our service provider customers. Email delivery is what we do. We’re pretty nerdy about it, but happy to say that loud and proud. And we have zero interest in trying to build half-baked marketing applications in the hope of competing with our friends.
I’m impressed by the ways our service provider customers have built on email to do some pretty amazing things for their own customers. They do things for marketers and other professionals that demonstrate precisely why the cloud economy is growing so quickly and with such agility. I can’t wait to see what other service providers will do as well.
Are you a new (or evolving) service provider? I’d love to hear how you think about cloud infrastructure and the role of email in your business. Send me a note or leave a comment below!
P.S. Want to learn more about why moving email delivery to the cloud is such a big win for service providers? You can download a copy of the Relevancy Group’s research, “The Value of Cloud Email Delivery for Service Providers” for free. And if you’re a cloud service provider who relies on email, you definitely should learn more about our SparkPost for Service Providers solution.
The ROI of Cloud Migration Is Real, and It’s Spectacular
In some circles, there’s still a tendency to talk about the cloud as an “emerging” design pattern and market for technology adoption. Well, don’t look now, but that “emerging” label expired some time ago. The cloud is already here in a major way. It’s time we collectively stop talking about cloud migration as an novel idea. Along with social, mobile, and analytics, the cloud is now a dominant presence in businesses’ technology adoption.
Just a couple numbers: In 2014, 69% of enterprises had either infrastructure or applications running in the cloud. In 2015, a quarter of all IT budget allocation went to sustaining and expanding cloud solutions. And today, the adoption of cloud-based infrastructure has approached or surpassed the 50% mark. Stats like those show that cloud migration has moved well beyond the early adopters and has hit the mainstream of business technology use.
Do figures like these apply to email delivery? (Spoiler: yes!) The cloud migration pattern is just as true for email delivery as it is for martech, CRM, and other markets known for early moves to the cloud.
Wondering why? When we spoke with customers who decided to move off of an internal messaging stack for the cloud, we repeatedly heard what anyone who deals with marketing and transactional email already knows. Sending email at scale isn’t easy, and shifting it to the cloud improves flexibility while also relieving businesses of significant overhead and opportunity costs. Here are three themes we heard:
Cloud migration means “We can focus on building our business applications and services—not becoming messaging experts.”
When a company has achieved scale, the difficulty of maintaining a complex messaging stack goes up dramatically. Failure in that stack, especially for companies whose revenue is highly seasonal, could be catastrophic. (For example, see the crisis faced by formerly soaring e-retailer Zulily when their email delivery infrastructure collapsed in the midst of the peak-shopping season.) When maintaining in-house infrastructure, any disruption—from minor changes to major outages—is likely to cause friction in the IT system by pulling engineers, sysadmins, and other technical personnel to address the problem. Most companies would rather focus their technical efforts on developing their own technology and supporting applications and infrastructure that deliver unique competitive advantage, not on operational issues like managing email in transit.
“Scaling and growing email is extremely expensive and disruptive to ongoing normal operations.”
A company experiencing tremendous growth will realize far greater benefits by focusing and managing their continuing business growth rather than investing enough money to scale their email provide redundancy for email-at-scale, deal with increased bandwidth costs, assigning more technical resources to the project, procuring servers, and ensuring stability. These functions can all be outsourced far more cost-effectively to a provider who knows serious email inside and out. The cloud’s elasticity allows companies not only to scale and keep pace with growth, but also to have on-demand burst capacity available whenever it’s needed and guaranteed through SLAs. The only way to achieve this in the past was to overbuy hardware, bandwidth, software licenses, and development time—and then to have it sit idle just in case it was needed. That underutilization is a very inefficient use of resources.
“Email deliverability is a highly specialized and expensive skill set in short supply on the open market.”
Ensuring the ongoing success of marketing email programs and critical transactional message streams alike requires the constant attention and operational expertise of email deliverability personnel. Deliverability staff monitor, configure, consult on best practices, triage in times of crisis, and remediate deliverability failures that are bound to arise during the normal course of messaging operations. These highly skilled professionals help companies navigate a complex landscape of varied privacy laws, bounce codes, blacklists, and other highly email-centric nuances that can prevent revenue loss and improve customer engagement by ensuring the timely delivery of email to the inbox.
Ultimately, the cloud has created new financial incentives that are improving its adoption, and pay-as-you-go models have encouraged rapid evolution, adoption, experimentation, creativity and testing. Freemium pricing (like SparkPost’s 100,000 free emails per month plan) encourage businesses to innovate and to take platforms in ways we’ve never dreamed.
Cost savings and innovation? Yes please. ROI like this makes it clear why cloud migration has become such a key part of the plan for all sorts of businesses.
P.S. Want to learn more about the bottom-line benefit of cloud migration? Check out “Why the Cloud Wins,” our real-world analysis of why a business that sends 750 million emails a year can save up to 40% by migrating their email infrastructure the cloud.
Last Wednesday was an exciting time for the world of email marketing – The Relevancy Group officially released results of a survey of more than 400 email marketing professionals on the effectiveness of email marketing solutions they deploy.
We’ve been waiting with bated breath for this event. The statistics that were revealed are key to understanding how companies could leverage their email marketing campaigns for greater deliverability and effectiveness.
And it all boiled down to a single technological decision. Outsourced or on-premise? Which provided the most value to these seasoned, hardened, battle weary marketing pros?
But wait, let’s rewind for a bit, not everyone is a tech junkie here.
I’m sure everyone is pretty familiar with outsourced email marketing solutions, but what does on-premise mean?
To steal a quote from everyone’s favourite site, Wikipedia:
“On-premises software (often abbreviated as on-prem software, and also called “on-premise” software) is installed and run on computers on the premises (in the building) of the person or organisation using the software, rather than at a remote facility, such as at a server farm or cloud somewhere on the internet.”
On-premise solutions are especially useful to companies that require great control and security over the data they possess. There are pros and cons to both on-premise and outsourced email marketing technologies, but let’s just look at cold hard statistics to settle the debate. Does outsourced or on-premise provide more value and ROI to email marketing campaigns?
The answer lies in these three email marketing metrics below:
1. Lifetime Customer Value
With lifetime customer value, marketers are essentially tacking a monetary value to, and gauging the worth of acquiring each customer. The Relevancy Group’s research showed that use of on-premise solutions allowed companies to gain a median lifetime value of $1500 more from each customer.
2. Corporate Revenue Contribution
The bottom line of all email marketing campaigns is after all… the bottom line. On-premise email marketing technology drives a higher median contribution to corporate revenue than outsourced at 8.3% versus 7.7%.
3. Average Monthly Revenue and Deliverability
This is perhaps the most significant finding of the survey:
On average, on-premise marketers drive 30% more monthly revenue than marketers relying on out-sourced solutions.
That’s about $100 more in revenue on-premise marketers are gaining monthly. In terms of deliverability, on-premise email marketing technologies performed 17% better across a range of metrics such as:
- Delivery rate
- Open rate
- Click rate
- Conversion rate
- Average Order Value
Another key point to note is that on-premise email marketers were able to derive more value from their email marketing campaigns, even if they had a smaller database.
What do you think of the findings? Will it affect your decision to use either outsourced or on-premise email marketing technologies? We’d love to hear your thoughts.SparkPost © 2017 All Rights Reserved