While the growth of cloud computing (See Cloud computing: You may ask yourself - well, how did I get here?) offers considerable opportunities, it’s also rife with uncertainty. For many technology providers, setting the right cloud strategy is anything but straightforward.
Given this uncertainty, it’s common to tend toward the extremes. The potential leap away from a traditional, on-premises approach has businesses either clinging to their comfort zone, or so eager to embrace new technology that they don’t think hard enough about the implications of a cloud transition.
You need to change both your channel management and your partner programs. As you develop your cloud strategy, there are five guidelines to consider when planning this important transition:
1. Don’t move too far from your center too fast
Many companies take one of two approaches: they either ignore the cloud, preferring to stick to what has worked in the past, or they leap headfirst into the cloud, seeking to be on the cutting edge. The problem is that the first type of company will likely be left behind, and the second type risks failure if it doesn’t set an interim strategy for maintaining current business during the transition.
The smart thing to do is to carefully evaluate your business before making a decision, and take a measured approach to the transition. Understand your strengths and natural tendencies. To use a baseball analogy, are you asking your pitchers to switch from being right-handed to left-handed? Or are you asking them to learn to throw a curveball when they’re used to throwing fastballs? The latter might be a natural and revitalizing change. The former, however, could be frustrating and counter-productive.
Know where you sit in your industry, and start from what you know as you move to the cloud. Consider partnering with businesses that focus on areas where you may be weaker. For example, many value-added resellers (VARs) tend to focus primarily either on value-added services or on reselling, not an equal balance of the two. A VAR that’s predominantly a reseller might partner with a services company to leverage their existing business model and transition to the cloud at the same time.
2. If your business is going to deliver cloud offerings, your approach needs to change
To successfully build a cloud business, you may need to target customer segments that haven’t previously been a priority. Traditionally, many businesses have focused on making money through a few large projects or enterprise customers. Staying with this approach as we move to a cloud-based world could be fatal. Smaller and medium-sized customers are a growing market for cloud services—and in some cases, these segments offer greater opportunities than the enterprise segment. For more on achieving the right customer balance, see Ross Brown’s article: “Sand, rocks, and boulders: Is your focus on the enterprise hindering your revenue growth?”
In addition to evaluating your target customers, it is critical to set an approach for building cloud-based offerings into your services portfolio. For example, subscription-based cloud services may be a natural extension to a current service offering. Other important areas where an approach change may be required include your go-to-market strategy, sales strategy, and staffing model.
3. As your business changes, your incentive model also requires adjustments
As you reevaluate the types of revenue your business generates, beware of hanging on to the same sales and incentive model you’ve always used. Traditional incentives models were typically designed around perpetual-license sales with large, one-time payments. Instead, revise your incentives model and sales strategy to favor a subscription model with small, sequential payments and to reward maintaining existing customers as well as attracting new ones. Determine the behaviors your want to incent in your partners and customers, and use that ideal behavior to inform your sales and incentive model.
4. Understand that the cloud is not just a new delivery model
Don’t assume that your business will simply deliver the same products through a new channel when it comes to the cloud. Think about what other changes you are making to your business that will be different in the cloud, and what additional services you might be able to offer. Evaluate how you can integrate cloud into your product roadmaps and overall strategies.
For example, online retail was a new delivery model. People started ordering items online to be shipped to their houses, rather than going to a store, but received the same end product. In contrast to a simple change in delivery system, the cloud can be compared to the evolution of music technology: from records, to tapes, to CDs, to MP3 files, to streaming, you’re still listening to music; the mechanisms, however, are entirely different, as is the sound quality and the opportunities for music-based services.
Focus on the value your business can add as it transitions to the cloud, not just how it can continue to deliver the same products. How can you improve the services you already provide?
5. Don’t mistake cloud for managed services – it’s more than a managed services opportunity
When people hear about cloud computing, many assume that its focus is managed services. The truth is that many types of business models are successful in the cloud. Managed services are part of that, but so are infrastructure, custom application development, systems integration, training, and business consulting.
Don’t narrow your cloud business focus to managed services alone. Instead, think about where you are as a business, what strengths you want to retain, how you’re going to align your team to take advantage of the cloud, and how you can revise your delivery model to make that happen.
Moving to the cloud doesn’t have to be an all-or-nothing decision. With forethought and careful planning, your cloud-based business could be more successful than ever.