Monetization Strategy for Cloudbees

Cloudbees Mission

Cloudbees develops CI/CD software for enterprise and developer communities, which helps companies to focus on the actual task that matters. It provides companies with innovative solutions to accelerate the software development lifecycle and creates a faster path to market. Its solution ranges from on-premise to cloud-native, from self-managed to self-service, and from guided best practice to flexible choice.

The mission of Cloudbees is to give the best tools to the developer community, empower them to harness their creativity more efficiently, and quickly and safely realize value from their ideas. The primary personas for Cloudbees are the developers’ community and DevOps. Here are some of their pain points:

1. Developers — they plan to build new functionality and fix things as they fail. Developers look for open source tools for faster delivery and cross-team collaboration
2. DevOps — they manage upgrade, scale infrastructure, and maintain deployments in a multi-platform ecosystem which is a painful process

Monetization Strategy

The continuous integration tools market size was USD 402.8 million in 2017 and is expected to reach USD 1.13 billion by 2023. It has a Compound Annual Growth Rate (CAGR) of 18.7% during this period[1]. Cloudbees’ focus so far has been towards the developer community by offering features for open source and premium features for the enterprise community. In order to gain market share, Cloudbees should implement a new monetization strategy and consider the following opportunities.

There are four opportunities for Cloudbees’ current offering:

1. SaaS focused — self-service model to deploy, upgrade, maintain, and scale in a multi-tenant environment
2. Expansion of the ecosystem in Hybrid cloud — AWS, Azure, GCP, on-prem
3. Expansion in premium support
4. Freemium and multi-tier pricing model

The following monetization strategy addresses the above opportunities[2]:

Pricing

Value, competitive analysis, and cost-based analysis should be considered in pricing. The most important among these are value and competition. Cloudbees has an advantage over competitors as it is the most popular OSS CI/CD ecosystem; it provides enterprise customers with unique security, scalability, and manageability needs. It also has 1500+ plugins available for on-prem products. (For competitive based pricing, please see the appendix.)

There are many pricing models in the market namely subscription, freemium, ad-supported, multi-tiered, etc. Based on competitive analysis, Cloudbees should go with a freemium and multi-tiered approach. Cloudbees has always been developer-focused with the goal of maximizing user adoption of the platform by giving them access to all features. Cloudbees should charge only when the use case is to use a platform for scalability, multi-cloud, ease of deployment, support, multi-team collaboration, and upgrades.

Why should Cloudbees be SaaS and Hybrid aware?

The market is moving towards multi-cloud, hybrid cloud, and purely SaaS models. In addition to current product lines, Cloudbees should develop services in these areas. Cloudbees currently has on-prem deployment. However, the challenge is that DevOps has to maintain their infrastructure, upgrade problems, address scalability issues, etc. Another problem is when one plugin gets updated, other plugins stop working due to incompatibility issues. Solving these challenges would allow Coudbees to become a market leader in the SaaS market. For current customers who have infrastructure stickiness, hybrid infrastructure works better. (For more information refer to the appendix.)

Recommendation

From the above analysis, the following should be the execution strategy:

1. Focus on freemium & multi-tier models for hybrid deployments — some features as OSS and some as premium services
2. The main differentiation should be charged on support, multi-team, multi-platform support, number of users, and multi-tenancy
3. Cloudbees should focus on a freemium model for Software as a Service
4. Primary reasons — ease of deployment, scalability, security, upgrade, and multi-tenancy
5. Free tier vs. premium features
6. Limit on users (free for 10 users and then $100 per user per month), platform, and features

Cloudbees roadmap for two years

Key Success Metrics/Criteria

• Percentage of new paying users coming to the platform
• Percentage of non-paying users converting to paying users
• Percentage of SaaS users vs. Hybrid users
• The churn rate of the paying users

Reference

[1] Market research

[2] https://www.cloudbees.com/blog/cloudbees-and-jenkins-update

Why SaaS and Hybrid Cloudbees?

From the above, SaaS is always a winner along with the Hybrid solution. Hybrid will support existing customers and SaaS will motivate new customers to move to the cloud.

Competitive Analysis