Cloud Computing - Vaporware?

The Merriam-Webster’s Online Dictionary defines a cloud as a “visible mass of particles of condensed vapor.”  According to CIOs interviewed for an article in the June edition of the Harvard Business Review magazine, cloud computing might as well be defined as “vaporware.” 

The article includes research by Gartner Group VP, Mark McDonald, who found that CIOs interest in the cloud has grown from 5% in 2009 to 37% earlier this year.  However, three out of four respondents who said they were interested, reported little interest in the three key technologies it entails: server virtualization, service-oriented architecture and SaaS (software as a service). 

These figures may entice you to conclude that this is a great opportunity for a salesforce to provide value in explaining the Cloud and define a company’s solution; a rare situation where the salesforce can be “solution sellers”. Unfortunately, this is not necessarily the case, according to a Forrester’s Technology Buyer Insight Study: Are Salespeople Prepared for Executive Conservations?

IT executives interviewed for the April 19, 2010 study, only 15% of executives believe that their meetings with salespeople are valuable and live up to their expectations.  

Reasons given according to the report:

• Business leaders (24%) don’t believe salespeople are knowledgeable about their specific business.   
• Only 34% of buying executives said salespeople understand their roles and responsibilities. 
• And across the board, only 38% feel that reps are prepared to answer their questions. 

Could this be a case of the blind leading the blind?  Confusion around cloud computing even occurs at the highest levels of leading Information Technology conglomerates. One story accounts for the CEO of a large information technology firm asking his senior executives to explain cloud computing to him. When no one could convey a clear answer, the CEO fired back that if they can’t sell it to him, then their company cannot sell it to customers.

There is no doubt that the Cloud is making as much noise as any good thunderstorm.   Companies are reallocating resources and investments to the Cloud.  Countless marketing dollars are being spent to get companies in the consideration set.  As with any good technology trend the hype exceeds the reality.  

The real challenge seems not to be marketing the Cloud, but rather selling it.   Those companies who best enable their sales people to break through the noise will reap the greatest benefit.   

The New Partner Marketing Model

In the “good old days” companies like IBM built a ubiquitous brand with unique products and then dictated their terms and funds to sales channels. Brand advertising was typically done on one of the three major TV networks aimed at the mass market to create a “pull” that would have customers do whatever it took to get those products regardless of price, location or availability.

Product marketing teams would assemble sales and marketing material, and route it to partners via partner portals or directly to their offices assuming that the partner had everything they needed to sell the company’s products or services. And that worked, especially with those partners who were former employees.

Business was good and predictable, but then things began to change. More channels became available, and as a result, it was harder to reach and influence key customers; the window of having a truly unique product shortened, and partners started gaining a greater choice of products to recommend, with various incentive programs.

Gradually the power of the transaction was shifting further down the value chain leaving companies with less influence over the point of sale. Partners, now armed with options and leverage, became less willing to cooperate with the demands of the manufacturer.

In response, the manufacturers began exploring how to realign themselves as a key influencer and along the way they discovered the following:

• Inconsistencies in communication about marketing programs, incentives, service and who owned the customer, left partners confused and frustrated.
• Partners felt like they were getting little, to no, marketing support from manufacturers despite having piles of marketing material and funds.
• A concerning trend was starting to develop, in which partners were using less of the marketing development funds (MDF) available to them.

The old “push” product and programs through partners and “pull” customers to your products through mass marketing was no longer working. It was time to rethink the model.

To learn more about the future direction of partner marketing request a copy of the Channel Insight white paper by register for the live webcast by June 15th 2010 at www.gyrohsr.com/channelforum.

The webcast is scheduled for 12 PM on June 16th 2010 and will include a discussion of the New Channel Marketing model that is evolving in the Technology Industry.  I will be co-hosted the webcast with Bob Ray, President of the San Francisco office.   Hi-Tech clients managed out of that office include VMware, Sybase, Adobe, as well as others.