The Cloud and The Customer

In my conversations with business owners who run mature, highly successful businesses the conversation often goes like this:

Client: "So what's the 'Cloud' thing all about? It's just like hosting right?"

Me: [explains value proposition of cloud]

Client: "OK so reduces upfront capital expenditure, but probably costs about the same or more in the long run"

Me: "Yes, once you add up all the costs, there's not really a substantial cost difference."

Client: "So why would I give up control if there's no price advantage. I guess if I was starting again it might be worth looking at. But there's no way I'd put my companies communications infrastructure and my systems with [telco/large IT company. Have you tried calling those people? They can't even do simple things right, imagine if our email was down and we had to talk to some offshore call centre to try and get it sorted out?"

And that's pretty much the end of the conversation about Cloud.

So, you might ask at this juncture if we are anti-cloud as a business. The answer to that question is simple - we are all about recommending the solution that gives a client the outcome they need. Cloud is not an anathema. It's the right solution for some businesses, but not all. So Cloud is valid where it matches the desired outcomes.

We could, of course, wrap our managed services expertise around cloud solutions to add value. But while the big players sell 'Cloud' as a commodity, its difficult to convince a client who likes cloud on the basis of a sub $10/month cloud bundle that they really need your ongoing managed services at $50 - 100/month. Especially without the advantage of white labelling and bundling a full service into a single bill to the client.

So why does a client need something other than the sub $10/month cloud bundle offered by a telco/large IT provider?

Because the client still needs expert help to navigate translation of their business requirements, to manage user questions, service provision issues, training, desktops, application integration, internet connectivity, back ups, disaster recovery.

And before they even get that far, is the average business owner or executive qualified to select the right type of cloud service for their business? Do they have an adequate understanding of systems complexity, risk management, etc to choose a service that will meet their business outcomes?

Successful businesses value their relationship with their trusted advisors - accounting, financial, legal and IT providers. Disconnect the trusted advisor from the client/IT relationship and results may vary.

As IT providers, we are far more excited about the technology than our clients are. If you can deliver enough productivity and profitability to your client that they can upgrade their BMW, buy a boat, have a better family holiday or more time off, this is gonna float their boat alot more than using 'cloud' ever will.

The successful business person is focussed on outcomes, not technology. Choose the right technology for their outcome, be that cloud or on premise.

Technology Forecast: Increasingly Cloudy

As talk of the cloud in IT media circles increases to deafening point, many SMB focussed providers are facing the reality that the push to the cloud could have real impact on their business.
Thats not to say that if you're focussed on the SMB market you should pack up your toys and open a lawnmowing business and leave selling IT services to Telstra. Rather, cloud services needs to be part of your business plan, even if it sits in the category of stuff you don't plan on offering right now.

The simple reality is that many of us already offer cloud services to our customers - remote monitoring and management, hosted exchange, backup replication to a data centre. So really, cloud services in SMB are nothing new. What is new is the immediate need large vendors have to fill their scorecards with cloud services sales. Those SMB IT providers helping vendors like Microsoft and Telstra to hit their targets will be rewarded with actual face time from a partner account manager they never got when they were selling on premise solutions. Will this face time help your business achieve higher levels of success?

Cloud services are no easier or harder to sell than on premise. And that is the key. You must decide if cloud services are part of your product offering, how you will attract customers who want this service and how you as a business owner will make a sustainable product on their sale. Its clear that the margins available on the Microsoft/Telstra BPOS offering are low, so simply reselling this service, or that of Google or any other cloud vendor will only work if your business relies on volume. If, like many SMB IT business owners, your business predictably hits a 20 - 30% margin, then you'll need a good suite of services to add to your cloud services sales if you intend to transform their sales into a sustainable business.

If your business doesn't have a predictable sales engine or regular marketing actions to attract new customers, then frankly it doesn't matter what you sell. You will be left behind as SMB IT service delivery is aggregated and streamlined.

So before you waste another breath on explaining to a vendor or fellow SMB IT community member why you think cloud services won't work, make some time to document your business plan and how you will make sure that you have customers this year, next year and for years to come. The names and specifics of technology has always mattered more to those in the SMB IT community than it has to customers. What technology delivers the business results to customers is irrelevant - what counts is the valuable services you deliver in packaging those solutions into a consumable product that delivers consistent profits to your bottom line.

Keira McIntosh is the General Manager at Directions Technology - an Australia owned small business providing managed and reliable IT Support in Brisbane. You can also find her on Twitter and Linked In.