Barrier to cloud services is people

Moheb with his furry mate

Moheb Moses enjoys a good lick as much as the next bloke

Moheb Moses is a business consutant to the technology industry. Writing in his blog this week he identifies some of the key differences between cloud solutions and other technologies. Of course, he is writing about the way that cloud services are sold, but it is very instructive for those of us using them because he has identified the reasons why many of us feel uncomfortable with buying cloud solutions and the problems we are having with our suppliers.

I have included edited extracts of his blog here. The full piece can be found on his site.

It’s impossible to pick up a technology paper today without reading about the growth of Cloud and the fact that everyone will only buy technology “as a Service” in the future. Despite the fact that I disagree with that statement (I think there will always be people who will want to buy products outright) there is no doubt that this is the fastest growing segment of the market and will certainly make up a much larger piece of the pie in the next 2-5 years.

But what I want to talk about today has nothing to do with technology or vendors or customers.

A different type of sales person

When I first entered this industry many years ago, services were bundled with the product. You bought a server or storage for example, and services like installation and support were included in the price (at very high margins of course).

But as the high volume/low margin players entered the market and products became more commoditised, it became obvious that resellers couldn’t operate on a 30% margin when their competitor was selling the same product (without services included) at 10% margin. So we separated the product from the services.

And something else became obvious.

Product sales people were different to Services sales people

They didn’t understand the heterogeneity of selling services vs the homogeneity of selling products. They struggled with the intangibility of services compared to the tangible nature of products. They felt uncomfortable charging for something that was being delivered by people who were already on staff (and were perceived to be effectively “free”).

So we hired consultants who knew how to sell services. We productised our service offerings. We reduced our price on products and increased it on the services. We educated customers that services weren’t free. And slowly, we changed the industry so that a sales person today wouldn’t think twice about creating a quote for services.

But now as we move to a Cloud world, we’re about to discover another reality.

Product sales people are different to Cloud sales people

The skills are different. The customer conversations are different. The people that make the purchasing decisions are different.

Selling business solutions rather than technology

The difference between buying a product, and buying that same product as a Service, is not a technology decision – it’s a business decision. The people making that aren’t IT – they’re the Finance folks.

And that means your sales people need to feel a lot more comfortable having a business conversation rather than a technology conversation. They need to be able to interpret what the Finance Director is saying and whether the money is going to come from Opex or Capex. They have to have a feel for whether a transaction is going to impact the P&L, the Balance Sheet or both.

Pricing will be based on usage rather than implementation

The other area that will come as a surprise to many sales people as Cloud matures even further is who they sell to and how they sell to. As Cloud evolves towards “Utility Computing” – ie. where users only pay for what they use, like other utilities such as electricity – we are faced with another challenge. IT won’t drive usage.

Many industry analysts are predicting that non-IT Departments (Marketing, HR, etc) will be the big drivers for technology adoption over the next 12-24 months. IT may recommend technology, but the people who use it (and therefore drive our “utility” revenue) will be the users.

 

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