Thursday, 8 September 2011

Heads in the Cloud

Talking up the game is not unusual in sales and marketing - heck, we are all guilty of over calling success whether be the development of our kids or making a slightly 'exaggerated' claim on the success of a product.
The Cloud is not unusual on that front. I love the way that Microsoft says that it has been in The Cloud for many years with such things as Hotmail and LiveMeeting. Such statements are, indeed, true but these are not chargeable services, even though I remember the time when Microsoft acquired PlaceWare and bundled part of the Meeting technology for free when we charged for it. That is the crucial difference here for the likes of Microsoft. This time around, they have to make money out of the Cloud.
It's fine giving a free email service - people accept it's free and worth every penny in that if it goes down then they should not get uppity. But in the world of Business to Business Cloud software and services, there is a rather big problem if the service goes down as not only are people more dependent on the services but they are paying for it.
It does also come down to whether people understand and care what that difference makes. We have all been brought up on being in corporations where glib messages are sent out that email is offline or a server is down and we tut and get on with it. When that happens in the Cloud, many more companies at the same time may share the same outage and suddenly it becomes a serious issue. If you sell on-premise software as well as Cloud based, you can easily turn to your customer and tell them the virtues of having hybrid environments or warning them off the Cloud. That's fine if you get paid both ways. But true Cloud people don't have that life raft - they get measured on success on only their Cloud service being available nearly all of the time.
 I still have this issue about tree-hugging by the Vendors of on-premise software who are now offering Cloud versions. Not only are the salespeople less knowledgeable about the benefits in the Cloud but they are equivocal because they do not live or die by the results of their expert advice. I think this will decrease the traction of Cloud version software for traditional vendors as they will not instil passion in their salesforce, their channel players and their end users. There is always a safety net if something doesn't quite hang together. The other issue, is that most of these people have not been in SaaS based businesses before so they do not understand what impact selling monthly recurring services has on cash flow, P&L and how you incentivise salespeople. It isn't a question of holding a transformation workshop, it's about giving the practical tools to help. It's about sharing the migration experience and if both parties don't model their businesses the same way how can they truly help or advise one another?
The likes of and NetSuite never thought that way when they evangelised their Cloud services. It was live or die, win or lose. Get paid or not. It instills total commitment and belief not only in the attributes of their product and service but in the benefits brought by the Cloud. They didn't try to bite off more than they could chew or do mass conversions - they stepped their way to success by persuasion, trials and proof of concepts and then they referenced like crazy. Today, these are some of the fastest prowling, most profitable software companies in the world, but it didn't start that way and that's part of the issue. To a person, vendor salespeople are telling key channel players that whatever effort they make in Cloud it has to produce an ROI in the first year to get any vendor funding help. Then don't be surprised if the channel player turns off.
So I think traditional software vendors are holding themselves back by using the same tactics, channel and salespeople to sell their Cloud products. They need to embrace the challenge even competing within their own installed base to truly gain traction and success. They need to have people who not only can demo and talk the story but to use it and live it.
Only then will they get success. Applying old methods to the new world will not work as fast and may even lead to failure. These vendors need fresh blood, fresh methods and people who understand the new world.
Until then, they risk Clouding their own story. 

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