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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.

Cloud(y) Trinity- Confessions of an IT Seller

30 Dec

The world is changing fast for the seller community. I am using the word sellers in an all-encompassing way to mean all sales people who sell to an external audience(clients/partners etc.) in IT organizations. At the cost of making some people from my own community(sales) howl in disapproval, I would say that sellers are a species most prone to extinction in the cloud era. Of course that statement needs some deeper debate and understanding so let’s look at the profile of a typical seller in IT sales organization.

In my years of working in IT sales, I have seen one general tag tossed about when it comes to discussing the role of a sales person; “Relationship manager”. To be honest, this is not far from truth. The era of sales people is long gone and we in sales have become little more than “mail forwarders” and “meeting organizers” between client and our internal organization. I have seen people taking pride in the fact that they KNOW the client, even if not what they actually sell (and that’s fine with them). A typical salesperson at a vendor has been used to “selling “ products(or services) and licenses for far too long. Even in the name of selling solutions, all we have been selling is productized services. The basic approach to selling has not undergone any change for a long time even though the quality of selling has gone down substantially. It served all of us, up till now. Nothing can be more perilous for sales careers.

In most cloud based delivery models, IT services sales is becoming increasingly dependent on the internet and the touch points for the client from the vendor side are shrinking. In fact in case of certain segments in the market, e.g SMEs, a cloud vendor may never see a client for the whole lifecycle of the service consumption. Even in case of large enterprise accounts, with their own IT teams for implementations, the actual sales part of the whole engagement would undergo a drastic change with little “sales” required than ever before. When you can download a service in a few minutes (with all its features and details available at the click of a few buttons), you hardly need the same old “salesman” skills. Clients have never had it so easy “buying” products and services in any period of time than today. So what’s the change required and how should sales people cope with these changes? Let’s  look at the sales roles in the vendor organizations and how these roles have to change to find an answer:

Selling to Value added selling: I have heard a lot of sellers complaining that they have terrible time fixing meetings with their clients and how clients refuse to meet them citing one or the other excuse. Instead of challenging the clients, it would be good for sales people to do some introspection and understand the reason for this. The day you hear a client saying “ Let’s meet later” or “i am busy”(if you are smart enough, you know the difference between genuine busy schedules and excuses), you know your value has started diminishing in the eyes of the client. That’s because she does not find any value in the interaction with you.

Sellers have to transform from selling to value added selling. In most of the organizations I know of, sales people have bequeathed their sales work to others. Pre-sales reps end up doing work of sales guys; educating clients of the products features, responding to RFPs(even that is mostly copy pasting job but that is another discussion for some other time) etc. or delivery people manage and monitor client expectations, implementation etc. between clients and internal teams. It’s just about time sellers take back control of some of these activities if they want to remain relevant to their clients (and to their careers). I am in no way saying that sellers have to do someone else’s job but my view is that sellers have to become more technology sellers than “relationship sellers”. They have to show value to the client by being able to discuss the technical and business issues of the client rather saying “I will get back to you” or “I will ask my technical guy to get back to you”. Only then will you see clients respecting us as equal partners in their growth and success. Currently, most of that is being outsourced to someone else(pre-sales in most cases) and that is reducing both the value in front of the client as also some great opportunities for learning.

So all IT sellers rise, shine and take back your seat at the client table which is rightly yours by being less of sellers and more of Values Adders and Thought Leaders clients look up to for solving their business and IT challenges!!

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Next we will see the changes happening to those in the “Cloud Brokers” or “Cloud Services Providers”. They are perhaps the most affected in this whole game.

Cloud(y) Trinity- The Buyer

19 Dec

The buying (and in turn buyers) is undergoing a sea change.

Since cloud by definition is a new way of consuming IT resources, it is also changing the description of who the IT buyers are(they are CMOs too these days). In my interactions with IT buyers, I have a seen a range of emotions when they first come in contact with cloud services. The emotions vary from fear(what does it do to my role) to awe(you delivered a service in minutes) to smiles(I indeed bought what I wanted and not what the vendor wanted to sell), though not necessarily always in the same order.

I see four broad changes happening in the buyer’s personality:

1) Thou shall THINK: Cloud has brought solutions closest to buyer. With a few clicks on most software marketplaces, clients can search and buy what they wants and most importantly, get the same delivered instantly over the net. But it is also a very uncomfortable position to be in because it has put unprecedented responsibility on the buyer. Cloud is compelling the buyer to think more and more and thinking is inherently an uncomfortable task. Since the delivery is instantaneous, it also will compel buyers to think if they are ready to consume. This way it will surely moderate(and balance) over consumption of IT. While the client can go and buy the best enterprise solution that’s out there in the market, it also needs her to be equally learned to be able to make that decision. Its easier to download a solution at a click of a mouse than to be able to integrate it at the same speed. Clients who succeed would be those who Think IT and not manage IT.

2) Thou shall UNLEARN: Cloud is as much a business concept as technology, some would even say more. It remains embedded in technology stacks but is very a business model. Unless this aspect is understood, buyers will keep comparing apples to oranges. Increasingly the IT stream will merge into business and finance streams. Along with these would be the associated skills. The sooner the buyer learns the nuances of these three streams, the better for her. The first step towards this process is the unlearning of IT. Unlearning of IT is the biggest service IT managers can do to their careers. Learn business of IT than IT of business.

3) Seek and thou shall find-TIME: Not since the days of renaissance has this been more pronounced. One of the reasons Europe and the western civilization raced ahead after the dark ages was because people got time to THINK(and they indeed put that to good use in various fields) after some of the inventions like the steam engine. Cloud will force such a shift in IT because it is freeing up one of the most precious commodity we have, TIME.  No longer are you waiting for weeks for a server or storage delivery, its made available to you when you need. It has tremendous repercussions for project time lines and productivity gains in employees. It will also lead to changing of standards of measuring employee productivity (what Dev-ops solutions have been doing). So what will you do with your new found extra time??

4) Thou shall take Risks: This has been the bane of IT managers. What if it fails? Best then is to follow the policy of least resistance. In the new world, it’s ok if you fail. You don’t have to wait for the project to finish to realize that it was a mistake(and mend the same). Neither do you need to sink money till eternity to realize the returns. You can pull back at the 1st step, the 10th or the last. There is nothing  called point of no return. At any stage, you have the ability to rehash(at minimal cost) and paint the canvass once again from the start. In the fast moving world aided by instant success or failure in the social media, the luxury of retrospective is precious. Cloud gives you that luxury. You can wind up a project at any point with minimal impact financially and technically. It will hence lead to bolder decision making skills and in turn innovations which hitherto were thought as impossible. Welcome to the age of rIskTakers.

Stay tuned!! In the next post i will discuss the sellers.

Cloud(y) Trinity- Understanding the human side of cloud

17 Dec

The word Cloud, like cricket(or football for those like me who hate any Indian sports starting with letter C :)), elicits strong emotion in the IT world. You got to love it with all its trappings(largely vendor driven like BCCI) else you are considered virtually(pun intended) no one in the IT landscape these days. Today, it means something to everyone who is in the business of IT. Everyone who is someone in IT has declared love for the word cloud, so much so that it is difficult to differentiate wheat from the chaff. There are cloud software/hardware/middleware/freeware and the list of “wares” goes on an on. It’s reaching stage where you either suffix or prefix “cloud” in front of every IT word. So you have Cloud(replacing the term IT) solutions/services/management/audit/ and what have you. As if enterprise cloud was not enough, we have personal cloud too. The industry lexicon has started to see verbs like “cloudify”.

Jokes aside, while the decibel levels in the “cloud world” still are very high and there is obvious clamor for reason, there is no doubt cloud services (for the purists in us who try using that term with the respect it deserves) are fundamentally changing the way world operates. While there possibly are a zillion books by now and humongous analysis on this topic, what’s missing in that vast literature is the human dimension to the phenomena called cloud. I call it the Cloudy trinity, the Buyer, the Seller and the broker. Over the next three episodes,starting with the Buyer, i will try to articulate the human angle to this cloudy trinity.