From downloads to dollars

How exactly does Sun make money with open source?

Sun CEO Jonathan Schwartz wrote a four-part blog posting a few weeks ago describing Sun's overall business model and how it makes money from open source. The basic idea is to go from adoption to innovation and then commercialization. It's a pretty high-level description, and some readers might have been left wondering exactly how those steps are linked.

That's what I've been working on for the last several months as I took on a new role inside of Sun to run a group called Lifecycle Marketing. The name Lifecycle Marketing is uncommon, but it refers to accelerating each stage of the customer purchase process. In other words, take the notion of going from software downloads toward commercialization with actions and automation that make each step more efficient.

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My goal is to take best practices from MySQL, Sun, and elsewhere in the industry and fill the sales pipeline for all of Sun's products. There's a large class of products that can benefit from the high-volume/low-touch lead generation, nurturing, and scoring approach that we built at MySQL. One of the goals I set for the team was to increase the "top of funnel" inquiry or raw lead volume for sales. While Sun has lots of Web traffic and tens of thousands of downloads per day, we aren't necessarily giving prospects the opportunity to put up their hand and say "I'm interested, tell me more." This is an important linkage between adoption and commercialization. Our open source users represent a hidden installed base to whom we can offer software subscriptions, servers, storage, training, or consulting. The key is in identifying people's interests through marketing and analytics. We don't expect to monetize every user, but that's OK.  In many cases, we're receiving tremendous value through their contributions, ideas, bug fixes, or word-of-mouth promotion.

A few weeks into January, I set a goal to raise the volume run rate of raw leads by 10 times by the end of the quarter while raising the quality. Halfway through the quarter, we'd seen some increase, but not enough to reach the goal. Fortunately, there are some very bright folks on the team, and we looked more closely at the data; we were able to tune our efforts and enlist the help of a couple of product teams to really drive the volume.

Part of my role in the company is to be an agent of change, so that means we are always trying out new things, measuring the results and seeing what works. We don't own the whole process and it only works if the product groups, Web team, and sales organizations are on board. And frankly, sometimes we push hard -- not intentionally, but in a big company, you sometimes need to create a sense of urgency. We found a good number of teams were eager to work with us based on the positive results of MySQL. And we were able to get some quick wins with the Glassfish and Open Storage teams. We worked with them to create some compelling whitepapers and Web seminars as well as well-planned campaigns to drive inquiry volume. Those successes led to more positive results, new ideas, and more data to learn from.

In particular, Sun's Cloud team had written an extremely popular whitepaper. Cloud computing is a hot topic, so we decided to heavily promote their work, and it became the most requested whitepaper, generating tens of thousands of inquiries in a single week.  In order to get the whitepaper, you need to provide some basic contact information, including name, e-mail, company, country, title, and optionally, phone number. More than 50 percent of the registrations for the Cloud whitepaper provide a phone number.  We've seen significant interest from CIOs and IT directors in Fortune 1000 companies, many of whom are new prospects for Sun.

Here's a graph that shows the ramp up in raw lead volume through the last quarter.  By the end of the quarter, we beat the 10X goal and posted more than a 13-fold increase in raw lead volume run rate.

From Motivators

The Lifecycle Marketing team is generating more than a million dollars per day in pipeline for the company, including both systems and software. While you can't necessarily extrapolate from raw lead volume or pipeline to closed deals and revenue, I have no doubt that we're moving in the right direction. And along the way we're having more contact and dialogs with our prospects and customers, which is always a good thing.

Copyright © 2009 IDG Communications, Inc.

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