How is cloud changing the way technology is sold?

/ Technical
March 9th, 2012

Cloud - How cloud has changed the way technology is sold

The most significant change in how the customer can now purchase IT services and infrastructure has occurred with the uprise of the cloud. Before, customers would have needed to purchase hardware and software licenses. Then pay the integration and migration costs, and train internal IT staff on new technologies and platforms.

With the cloud, however, vendors are able to offer significant reductions in CapEx and OpEx expenditure, along with a ‘freedom from technology’ promise that makes it possible to combine many different types of software and hardware. This approach is everywhere at the moment.

Most software vendors are now moving their products into the cloud as well. This brings with it some pluses (such as CapEx reduction/removal), but it also raises some potential concerns. For example, many software vendors are throwing their services into the cloud, even though they may have limited infrastructure experience. As a result, problems may arise with performance, security, support, integration, and so on.

The arrival of the cloud also means that companies that offer relatively high-value services are now marketing those services in the same way that low-value services used to be sold. For example, email marketing campaigns, cold-calling and so on. With this approach, vendors are hoping to remove the fear, and hide the perceived complexity, from the customer.

Many companies are also marketing and selling different messages to the senior decision-makers by more or less suggesting that “IT doesn’t need to be involved”. As a result, many people now are buying relatively high-value services over the phone and online without ever meeting a salesperson. This is obviously allowing the vendors to operate on a global stage.

How is the cloud changing and shaping provider offerings?

In recent years, there has certainly been a shift to a monthly, or “per resource, per hour” pricing structure across the industry. This is partly due to the rise of the cloud but has also been fuelled by the current downturn. The coffers are empty in many businesses and they can only afford to refresh/build with finance agreements in place, or with monthly recurring pricing models.

There have also been some significant pricing wars going on across the industry. By its very nature, ‘the cloud’ allows suppliers to operate on a worldwide basis, and customers are now more willing to engage with overseas providers than they were in the past. This is largely due to the rise of the internet, globalisation, online commerce and other factors.

Is the arrival of cloud computing influencing the way in which suppliers are packaging, marketing, selling, and supporting their offerings?

You would not believe the number of emails that I get with ‘cloud’ in the subject line. Everyone is now packaging their product as a ‘cloud solution’. Most marketing/sales messages are about how simple the cloud is, and basically, make the claim that you just pay your money and you never worry about your IT application/service ever again. They also regularly use the ‘risk-free’ message by promoting an outsourced risk theme. However, regardless of how attractive this may sound, businesses should never outsource the accountability of their business risks to a third party.

Is cloud influencing user procurement processes?

Again, the vast amount of cloud marketing lulls the buyer into a state of false sense of security. You often see a senior decision-maker purchase a service on the word of a salesperson alone, with no real understanding of any risks.

On the other hand, the cloud is certainly making business leaders think about IT in a positive light again, albeit nervously. In the past, they may have been burnt through failed ICT projects, such as CRM, VOIP, and so on. They may have also found IT in general quite daunting, as they have little to no knowledge of it. The rise of the cloud, however, is helping to bring IT back to the masses again, but without the huge CapEx and financial risks.

Are there any hidden dangers of these changes for end-user businesses?

It’s not uncommon for companies to misjudge the complexity of cloud migration, and mistakes in this area can be costly.

Businesses often overlook the correct levels of security and resilience when choosing a vendor or solution. It’s very important to keep these areas in clear focus. It will be simpler and usually cheaper to address these issues at the beginning, rather than at a later date. A business should never think that choosing a cloud service means it will be able to outsource its risk or risk management.

Also, it’s worth noting that a service or relationship sometimes doesn’t work out. A business should always understand what its exit costs are going to be. Not just your contractual costs, but also in terms of pulling off data and systems and migrating them to another vendor or back in-house.

It’s also common to see organisations massively over-specify cloud solutions as if they were buying a server that will need to last for the next three years. People often forget that the cloud allows you to flex your operations and only to pay for what you are using.

Vendor selection is critical in this regard, as there are many providers flooding the market and simply chasing the cash. Customers should always undertake a rigorous selection process and should be sure that the cloud is the right option. After all, the cloud isn’t the only choice out there. Traditional in-house server options can be just as suitable in many cases. Alternatively, if it’s a ‘price per month’ you’re looking for there are always financing options available.

How can businesses protect themselves and minimise their risk/exposure when it comes to cloud computing?

For starters, if the cloud solution doesn’t interface with other vendors and solutions then businesses should definitely think twice before going ahead. Likewise, you should always know your exit strategy from your cloud service provider before you go in.

Cloud services are still a whole new entity for many service providers, so make sure that your provider is proven and that its infrastructure and security is solid. Also, if buying from an international provider, you should check whether support is available and adequate during UK business hours.

Look for a solution that can be tailored to meet your needs: don’t change your operations without good reason. Also, just because cloud computing is an online service, don’t feel like you need to purchase it online. If you want to see someone, then make sure you do.

You should always check what the service provider’s business continuity plans are, as well. What happens if its data centre suffers an extreme disaster? What will the impact be on your company, systems and data? On the other hand, don’t expect your internet connection to work 100% of the time; it’s not unheard of to lose connectivity for a day or two. Therefore, it’s important that you have contingency plans in place.

Last but not least, it’s important to realise that the cloud isn’t always the right solution for every business. Make sure that you are clear on all of the options and consider in-house and your own private cloud, as well.

NEXT >>> Is it possible to have a 100% cloud environment?