Cloud(y) Trinity- The Cloud Providers

7 Jan

In the last part of this series, we examine perhaps the most affected entity in the cloud business, the service providers and their sellers.

While there are inherent challenges(and advantages depending on which side of the table you are) in the cloud business, the biggest change that the cloud is enforcing is the democratization in the service providers. By that i mean that you as an organization are no longer constrained by size when servicing clients. The service provider market is (currently) polarized between two extremes:

On one end of the spectrum we have the traditional IT players with large sales teams and set ups to service their clients. They have lived with these structures for far too long. These structures served very well during the past paradigms ( UNIX, Client server, ERP et al) but the cloud model will force a major shift there. I would even add that cloud era is the biggest (and may be the best) inflection point for these organizations to create the new structures.

At the other end of the spectrum are a set of new and niche cloud based outfits that are small but nimble and raring to challenge the traditional providers. They are what I call enterprises “for the cloud, in the cloud and by the cloud”. Cloud is breeding these new Cloudpreneurs (a term used recently by Bertil Chappuis of Mckinsey at Techonomy 2012) to challenge the traditional providers of IT services. It is not rare today to find 2-3 member team in Bangalore doing super critical Big data project for a client based in US. Cloud has given the power to these organizations to go and compete with the biggest in the world based not on how big their IT set ups are but how broad and deep their skills are. They no longer have to worry if they will be able to muster enough IT resources when a large contract comes their way. Cloud is truly freeing infrastructure (in a broad sense of the word that would include hardware, software and some services, all as-a-service) constrains for these organizations.

Let’s look at the change happening to the roles for people in both the above outfits.

The sales people in the traditional IT sales organization are a confused and (perhaps) desperate lot today. They have the same dilemma like the other IT sellers; to keep themselves relevant for the market and grow their careers but they sit in a much more difficult position, between the all-demanding client and the sales teams of the IT vendors. From both sides they are asked “What value do you bring?” This question has always been tossed to these sellers before but it has (and will take) taken gigantic proportions with the cloud models. If the client can consume IT at her will, why does she need any middlemen. Having said that, this by no means is the end of the road for these sellers. In fact if these sellers can slightly change track and align their sales skills to the cloud business models, they can create enormous values to their organizations and themselves.

At the other end, the Cloudpreneurs are keeping the sales teams nimble and putting their efforts focused on delivery and operational excellence(at least as of now). However they are trying to leverage the inside sales engines to the hilt and this will continue.

I feel some clear trends emerging from this situation:

End of the large sales teams era:  The days of throwing warm bodies into the market(this term has been mostly used in IT services organizations but i feel sales ORGs were/are doing this too) are truly over. With increasing internet based sales(and buying) of IT products, the strategy of putting more feet on street will have to be re-thought and re-looked at. I happen to bump into a friend of mine recently who mentioned that 2012 was perhaps his worst year as a seller. He is one of the dozen or so sellers who are “deployed” by the management to “ just sell” in the market. What he(and most of our breed in the sales community) fail to recognize is that the same skills that were serving him for so long are no longer required by the market. Unless he re-equips himself with new skills, he is in the danger of becoming an IT Dinosaur very soon.

Selling to a faceless audience: It is entirely possible that with the cloud based delivery models, you may not see a majority of your clients face to face, ever. That requires a very different set of skills (including soft skills, something that has got lost in today’s number chasing race).  In years to come, inside sales(more known by tele-calling) and internet selling will gain more traction and hence sales skills (and teams) will also get aligned accordingly.

Compensation for sellers: We discussed this in the previous blog too. Sales will become increasingly “value added sales”.  Though it should have been always been like that, no where will this manifest more now than in case of resellers and service providers. Since the cloud pricing model itself is so transparent(most of the providers publish their pricing cards online), it will force companies to rethink their revenue, pricing and margin structures. Closely aligned to these are the Compensation structures. The sales people should expect their compensation to get redefined based on the new revenue models which are more client-usage based than one time sales based. The more the client uses(rather than buys, e.g: licensing) your services, the more you get rewarded. This model will automatically ensure a happy client.

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