Selling cloud services will be a major business priority for service providers in 2012, according to a recent SearchCloudProvider.com survey of 316 network operators and IT service providers. A majority of respondents identified developing cloud services as their main focus for 2012. However, these responses also pointed to a gap between service providers' desire to move to the cloud and their knowledge of how to get there.
About a quarter of providers categorized their company as within the "primary stages of cloud research" while 34% said they had just begun implementation and expansion of cloud services. Another 12% responded that they were looking to implement their initial cloud services in 2012. Before providers develop their cloud strategies, they must first understand the services before they plan to promote, said telecom and networking consultant Tom Nolle, president of CIMI Corp. Service providers must also educate their prospective customers about the value of these cloud services.
"The worst possible thing an enterprise can have for any project is a complete[ly] missed estimation
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of both cost and benefits, and yet that's exactly what happens in the cloud today,"
Nolle said.
Barriers to selling cloud services
As enterprises and small- and medium-sized businesses (SMBs) plan a transition to cloud-based infrastructure, service providers are finding that their clients are entering cloud projects blindly, with little working knowledge of what they can realistically expect from the cloud and what will be the most appropriate services for their customers.
The recent SearchCloudProvider.com survey identified several major barriers to selling cloud services. When asked what their biggest challenges were, 51% of respondents identified customers' reliability concerns as a sales barrier, and 69% cited cloud security concerns. The third most common problem cited was customers' reluctance to outsource to the cloud (33%).
Dealing with barriers to selling cloud services
Kevin Oleksa, president of Organizational Technology Systems (OTS), a full-service technology solutions provider in Johnstown, Penn., focuses on the SMB market and offers several cloud services to his clients, including remote backup and remote support. The company is now in the early stages of implementing ConnectWise's cloud-based help desk application for OTS' customer base, expecting to put the cloud-based professional services automation (PSA) software into production this year.
One roadblock that Oleksa faces is customers' resistance to outsourcing their data and applications to the cloud. His core customer base -- SMBs located outside of a major metropolitan area -- has been slow to embrace the concept of cloud computing. These clients are just now beginning to invest in cloud-based backup services, he said.
"A lot of our clients here still want that back up done on site," Oleksa said. "They want to be able to hold that cartridge in their hand and say that they still have control over their information."
Offer customers flexibility with cloud services
When selecting a vendor to partner with on cloud-based help desk services, Oleksa said it was essential to find a service that was flexible and able to grow as needed.
"We thought ConnectWise was the best fit and what was going to work for us -- and it has the capability to expand," he said.
And expansion will be key for a technology that is still evolving, Oleksa said.
"We don't necessarily have a clear view of what's going to happen [in] even as little as 12 months into the future," he said. "You have to leave flexibility in that plan for the further evolution of the cloud and if it's going to benefit the customer base that you have."
Understanding that customer base is one of the biggest hurdles that providers face today, according to Nolle, who noted that cloud providers are up against users who believe they now have a better understanding of the cloud.
"About 90%[of users] will say they have gained significantly different insights in their first year of cloud planning than what they thought before, so they were wrong about what they thought they understood," he said. "That’s the biggest issue now."
The trouble with undertaking a project that involves a new technology is, however, that unrealistic assessments could cause project delays and failures in addition to lost credibility for the provider, Nolle said.
Educate customers to adjust cloud services expectations
In order for providers to succeed with the promotion and sale of cloud services among their clients, Nolle suggested running seminars to educate enterprises and SMBs. The layout of these seminars should be consistent with the project flow that the companies are used to, he said.
"Providers that push the cloud on some of their clients either have no awareness on how an enterprise or SMB really starts a project or has no interest in helping them perform the steps involved," Nolle said. "[The provider] must give [the client] the steps that they need to take in the proper order, and then provide them with guidance through each one of the steps."
Cloud budgets present another potential roadblock for providers, as many institutions don't anticipate application performance issues than can accompany cloud services. Because the cloud is significantly more network dependent than traditional applications, unexpected issues with network availability or with network performance present a problem for application performance in the cloud.
"Many enterprises and SMBs are finding out that the application won't work unless they make the network faster, and speeding up the network up blows the budget." Nolle said.
These concerns are reflected in other challenges to selling cloud services that survey respondents identified. Thirty percent of providers said that customers' fear of outsourcing network infrastructure was a challenge, and 31% said that negotiating cloud service-level agreements (SLAs) was a problem.
Providers that gear their cloud solutions toward SMBs must pay attention to which cloud services a customer will actually benefit from adopting, Nolle said.
"What we are finding in cloud projects [is] that users are jumping into cloud computing and finding it unfavorable," he said. Nolle noted that educating customers will help avoid project pitfalls and to help them avoid selecting the wrong cloud service for their business. In fact, 20% of SearchCloudProvider.com survey respondents said providing services specific enough to the customer is a major barrier to selling cloud services.
The notion that all IT infrastructure will go to the cloud is unrealistic for both SMBs and enterprises, according to Nolle, noting that roughly one quarter of enterprises' current IT spending is actually “cloud- sourceable.” There are certain classes of infrastructure that can readily be outsourced to the cloud and other classes of technology that stand little chance of success, he said.
"Once [a provider] knows those classifications exist, then [the] focus can be on the ones that would succeed," he said. "The [resources] that won't [be easily outsourced] can be ignored."
“The cloud doesn't work for what we think it's going to work for," Nolle said. "If we get rid of that -- if we understand what we can really do with it -- then we can have enormously successful cloud projects."
Let us know what you think about the story; email: Gina Narcisi, News Writer
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