Actually, what the title should ask is “why did the cloud cross the chasm?” But then, that wouldn’t really grab your attention as much as the old ‘chicken crossing the road’ joke, would it? We’d like the say that the answer is as simple as “to get to the other side”, but the reality is that it’s a little more complex than that.
Definition and Differentiation—Or, Why did the Cloud Cross the Road?
Crossing the Chasm
For those of you who haven’t yet read Geoffrey Moore’s book Crossing the Chasm, it talks about the principles of marketing and selling high technology products to mainstream customers. It’s this we’d like to address while looking at how various types of managed, outsourced, and hosted services have morphed into today’s cloud services. Partners who have been providing these types of services for many years know the feeling of increasingly seeing their offerings assumed by the ‘cloud services’ moniker, and many wonder what has changed for them in terms of the services they offer (apart from the name of course). This change has been accelerated by a number of market dynamics that have allowed cloud services to not only cross, but leap across the chasm, riding a wave of customer interest combined with vendors joining the cloud marketing bandwagon. The level of marketing about ‘cloud’, and the customer interest in being able to consume applications and services as a utility and at a perceived much lower cost, means that potential demand is growing (IDC sees cloud services growing at 28% CAGR over the next 5 years).
Key Wins in Key Markets
In ‘crossing the chasm’ one of the ways highlighted to take a product (or service) to the next level is to gain key customer wins in key markets and use them as case studies to grow in those markets. We think this approach is a great parallel to consider when managed services providers look at their own offerings. The keys here are definition and differentiation of your offerings, as well as gaining a better understanding of your customers, their business needs, and their specific market conditions for building further differentiation into those products. We feel that in the past, outsourced, managed, or hosted services might have been seen as a price-based contract sale, whereas moving forward they should be seen more as a customer service sale. Additionally, there is now the ability to use them to gain more customer knowledge through usage statistics, and therefore gain better customer insights, and hopefully sell further solutions.
Defined Services and Levels of Service
One of the downsides of all the activity and noise in the cloud services space—which has also been impacted by the challenging economic conditions—is price pressure. As with all markets (IT and otherwise), when commodity products become available at scale, and also are available through many different channels, there is always competitive price pressure exerted. We see email as one example of such a commodity cloud service. Again, the key here is to have defined services, and even levels of service, with an entry level offering and higher level offerings that address more integrated uses of the more basic applications, such as email.
One final thought on defending these kinds of offerings is for partners to consider a more proactive partner-to-partner networking strategy for your business. If you are a specialized hoster or managed services provider, you are still likely to be dealing with customers with other broader IT needs. In this case it would be useful for the customer to be able to have an extended network of trusted technology providers that are endorsed by you, and maybe even have solutions that are already tested by you. On the integration services side we often mention the trusted advisor role, and there’s no reason why partners can’t offer some of this as a hosting or managed services provider to their customers.
So, the answer to why the cloud crossed the chasm, while not simple, is actually: because of a combination of technological, economical factors and a little marketing noise. And definition and differentiation of services is the way to cross the road to success.