Has Cloud's Silver Lining Gone?

10/Jan/2014 08:53

IS Cloud dead? Gartner says not, then why are so many mid-size Cloud service providers floundering?

In Gartners February 2013 ‘cloud’ release they predicted the worldwide public cloud to exceed $131 billion with IaaS growing at over 42% and for 2014 Gartner now predicts global IT spending to exceed $3.8 trillion with $963 billion in IT Services.

These are HUGE numbers!

So the question is why are so many CLOUD and MANAGED SERVICES PROVIDERS not experiencing this kind of growth?

Alternatively the question is why is their marketing failing them? Or is it just the way the Cloud is being interpreted?

To answer this question I’d like to take a step back to an earlier point in my career when working for a global company that was the entering into the market selling this new global service called IP VPN using a technology called MPLS (RFC 2547). The analyst firms had all predicted astronomical global IP growth with MPLS being the game changing technology. My company was first to market with a truly global offering however we were not experiencing the predicted growth after spending 10’s of millions of dollars on hardware and development.

After accepting the challenge to get to the bottom of the problem, the solution itself was relatively simple – eliminate confusion, simplify the offerings, and achieve clarification through education.

Although simple in it’s idealism, the implementation required addressing several problems:

Market perception – how to address the naysayers (competitors and laggards) actively bashing the security
Product overlap – eliminate confusion internally and externally by converging the technologies and products
Roadmap development and implementation – build a integrated technology, product, marketing, and pricing roadmap that clearly communicated the benefits internally and externally then stick to it this way customers signing multi-year contracts knew we were in it for the long term.
Education – Market, analysts, media sales, and clientele needed to understand the differences between IP (Internet / Public) and IP MPLS (private / secure) as well as legacy offerings (ATM/Frame)

The end result was that in less than 9 months running this global project with an exceedingly small team, the product was launched as MPLS IP VPN (not much of a difference in naming but required), billing, and support were ready etc.

Most importantly, everyone was on the same page for messaging – Analysts, Management team, investors, media, and every sales and sales engineering person was educated face-face globally. With the first global orders signed before official launch and the the service delivering 100’s of millions in annual recurring revenue in under 18 months it surpassed all expectations.

Big deal so what does this have to do with cloud?

Cloud rides IP, IP is still interpreted as being the Internet, it leverages ‘shared resources’ hence is considered (touted/marketed) as being inheritably insecure by many.

So let’s think about this a little more, Cloud is a generic term that has been used over the years to represent many things in technology such as the Internet itself, iCloud, Amazon, Networks etc. the list goes on. The thing is depending on your angle the term Cloud can be used positively or negatively.

In it’s most recent incarnation as it relates to computing, referring to the automation of the delivery of resources (disk, CPU, ram, OS, software etc.) typically on some type of heavily integrated, in many cases shared infrastructure. (sounds like a network to me)

Is cloud a product? A service or technology? Any or none of the above.

Cloud orchestration technology delivers many benefits, most significantly the ability to provision, change or tear down service / product offerings usually with the capability to provide very granular billing and reporting. These benefits have been marketed extensively on a very large scale, hence many providers out there continue to ride this wave and market accordingly while competitors (laggards) look for weaknesses and position against it (usually security & SLAs). Hence we get back to the slow adoption issue in enterprise IT and lagging sales for the smaller players.

How can a Cloud provider or MSP turn this around? Stop selling Cloud!

Many Cloud providers managed services providers decided that implementing the Cloud offering was the way to go while not wrong maybe what they should have been focused on is leveraging Cloud as being the solution to automate the offerings they have today and continue to market advanced services based on the technology to IT for example:

Before Cloud, the managed services provider may have sold "Hosted Windows Servers" or “Hosted Microsoft Exchange” whether or not it was on a virtualized infrastructure was irrelevant to most – they may have even accepted a private network connection. After implementing Cloud technology they now started selling “Cloud Windows Servers On-Demand” or “Cloud Applications on-demand”. The service offered is predominantly the same with added benefits associated with automation, reporting, resilience and granular billing – complete with all the negative marketing associated with ‘Cloud security”, shared services etc. – and you probably still get a private network connection!

So what’s the learning experience? The technology may be great but you don’t have to lead with it.

When bringing a new service to market that leverages a highly hyped technology what may be good for investment purposes or for raising media coverage may not necessarily be good for continued business. As with all highly marketed and highly hyped services there are supporters and naysayers therefore as usual in the technology world it's the naysayers the slow growth in order to prolong the sales of their existing offerings.

Become a thought leader and impartial educator. Don’t get wrapped up in the tech and loose your message!

Focus on what is in it for the end-customer (make money, save money), understand why they are buying from you today, and what they’ll really need tomorrow, improve on your service offerings and educate them on the real-life benefits at a departmental level (is more safe, secure, resilient and carries a better SLA than before) and when necessary how it works ‘for you’.

The thing is, Cloud isn’t dead – it’s just misunderstood!

One things that has stuck with me from the MPLS days is this, whenever I went to a client meeting (usually a large cross departmental group reviewing an RFP) I would ask the question ‘ you know how MPLS works right ?’ – there would be a nod of heads (having already met most of the tier 1 players before hand). Then I would ask ‘so do you want to know how we do it and where we fit with the others? ‘ The heads would nod again. I’d then give them the impartial here’s the benefits of A,B, and C providers and how they do it. So did they really know? Probably not, did we get a sale? Most of the time.

With Cloud, IaaS, SaaS, XaaS, Public, Private, Hybrid whatever I still take the same approach and encourage my clients to do the same.

Educate, educate, educate - be impartial (mostly)

What’s up next? SDN – (software defied networking) - So how’s that is going to perceived and marketed will be interesting.

View other blog posts from this author and are our friends at Sage Research
(Author: Darryl S Brown Principal Advisor & Founder, MyPropHead.)