Churn risks rise when customers don't reap full benefits of the cloud

Editor's note: When customers only dabble in cloud services, they fail to realize the full benefits of the cloud. This isn't just a philosophical problem for providers; unmet expectations lead to customer dissatisfaction and a tarnished brand. In part one of this two-part tip, "If companies using cloud computing only dabble, providers may suffer

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," expert Lynda Stadtmueller outlined the challenges providers face from "cloud dabblers." In part two, she discusses how providers can prevent and mitigate these challenges.

The practice of "cloud dabbling" can be problematic for enterprises, since their first impression of cloud services is often dampened by unrealistic expectations for such noncommittal usage. In turn, the blowback that follows these disappointments and dashed hopes spells trouble for cloud providers as well.

For enterprises to realize the true benefits of the cloud, they need to commit. And for providers to succeed, they need to give their customers a reason to do so.

Dabbling ultimately undermines the value of the cloud, potentially hindering further adoption. By adopting a hodgepodge of cloud services without a plan, enterprises will likely see increased IT costs and administrative burden -- at least in the short term, as they will pay cloud providers' fees while still maintaining a full complement of IT staff to handle on-premises data center infrastructure. Since cost savings represent the leading driver for cloud adoption, IT decision-makers whose expectations are not met will likely slow down or scale back expansion plans.

Additionally, cloud dabblers risk losing control over their IT workloads and environments. A piecemeal approach to cloud makes it difficult for IT to establish and enforce consistency in security profiles, data handling for compliance reasons, and performance assurance across all corporate workloads. Since few providers' cloud services are truly interoperable, they also miss out on the chief benefits of the cloud, such as the ability to burst (for scalability), split workloads (for optimal price performance) and failover (for disaster recovery).

To discourage dabblers and maximize revenue per customer, providers need to rethink the way they position their cloud services. Education efforts should focus on the cloud as an important element of a strategy for optimizing IT infrastructure and processes -- not as an impulse purchase.  The product portfolio and market messages should support this definition. To combat this, cloud providers have several options:

  • Offer professional services to help businesses develop an IT and cloud strategy, including evaluating workloads to determine the best delivery model. As 72% of businesses plan to utilize third-party providers to develop their strategies, cloud providers are well positioned to step into that role. This enables them to establish credibility as cloud experts, expand their portfolios, and increase customer loyalty and share of wallet.
  • Educate IT on its new role as facilitators, strategists and protectors of corporate data. In the agile world of the cloud, IT no longer is the bottleneck standing in the way of business growth. However, all business managers must align behind corporate best practices, which are established by IT. Help IT develop and communicate new policies and procedures that give departments and individual employees the freedom to launch cloud-based initiatives and exploit the benefits of the cloud while remaining within the framework of the overall corporate IT strategy.
  • Focus on how your service supports a cohesive, heterogeneous IT environment. For cloud providers whose portfolios already include private and hybrid cloud options, be sure the messaging goes beyond a single workload and instead emphasizes the flexibility to accommodate every workload. For providers that have limited service offers, explore partnerships with virtualization and private network providers that can help deliver a private or hybrid cloud configuration. This will add value to your services and make them "stickier."

The truth is, no company ever dabbled its way to success. For enterprises to realize the true benefits of the cloud, they need to make a commitment. And for providers to succeed in the cloud, they need to give their customers a reason to do so.

About the author: Lynda Stadtmueller is program director for Cloud Computing Services Research at Stratecast, a division of Frost & Sullivan.

This was first published in November 2012

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