Why do many small and midsize businesses continue to reject cloud-centric IT proposals from managed services providers? Vembu (the backup software provider), Forrester Research and RackSpace each (independently) provide some interesting theories. Plus, Vembu offers up four secrets to successfully selling cloud services. Here’s a look.
In a recent blog post, Vembu points out the following:
- Two-thirds of U.S. SMBs are not familiar with Cloud Hosting, according to RackSpace
- Half of SMBs decline to embrace cloud computing because of security and privacy concerns, according to Forrester
- A lot of SMBs don’t understand the benefits of cloud services vs. traditional hosting services
Frankly, MSPmentor’s parent (Nine Lives Media Inc.) went through a similar business exercise back in October 2009, when we started to migrate our web sites from a dedicated server to a cloud provider. Our motivation was simple: Our dedicated server was running out of horsepower and couldn’t scale if/when we received bursts of traffic.
Our move to a cloud platform seems promising: Our virualized cloud systems actually costs dramatically less (on a per month basis) vs. the old dedicated server. And generally speaking, the cloud system seems to scale as our traffic grows — though we have suffered a few very short (5 minutes or less) hiccups about four times since October 2009.
So why aren’t more small businesses like us moving to the cloud? Vembu makes a good case that VARs and managed services providers have to talk more about the four clear benefits of cloud computing. They are Budget, Authority, Need and Time Frame (BANT). Check out the Vembu blog to see each of the four key benefits explained in deeper detail.
It’s a timely read for MSPs that are (A) evaluating cloud strategies or (B) trying to strengthen their sales pitch to customers.
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Posted In: Sales | Software as a Service and Hardware as a Service
Tags: Forrester Research | online backup | Rackspace Cloud | SMB Cloud Services | Vembu
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Joe -
We spend a huge amount of our time in the trenches with MSPs/VARs, etc. Here is some feedback from our experience:
1) The learning curve not only affects the SMB, it affects the MSP/VAR too. Keep this in perspective: Our entire industry has been spoon fed vendor best practices entirely based on sell and support methodologies that are MUCH different than cloud. It will take time to erase 30 years of vendor brainwashing.
2) Nothing drives change like mo-money for the change-resisters (the sales guys/gals). The difference between an MSP/VAR that succeeds in the cloud and one that only pays it passing lip service is hidden in the compensation of staff. The most successful partner we have actually STOPPED all commissions for hardware deals under a certain water mark.
3) Too many cooks does spoil the soup. When getting started in the cloud it is very very important to assign an internal Champion (or in some cases 2 – 1 tech, 1 sales) whose job it is to customize the integration plan for cloud services.
Just a few quick hits. I could probably write a full blog post on this stuff…
J
John: It’s been a while since we caught up. Keep me posted on your efforts. And thanks for the three observations above.
In terms of vendor brainwashing. I’m not sure I agree with the term but I hear what you’re saying… I still attend a lot of partner conferences where the thrust of the content focuses on product resale and margin protection. An important topic, no doubt, but not really a strategic sales topic, especially as some things shift to cloud…
-jp
Joe-
Interesting take on the cloud issues facing SMB’s. I think that even in this post there is some confusion over the definition of cloud hosting – are we talking putting your website in the cloud or moving your entire back-end infrastructure (email, file, AD, SQL, etc…) into the cloud? Your post seems to point to the web site, but I wonder if you went all in and moved everything up.
To cut to the chase, most SMB’s that I come across are confused by the terminology, but not the technology. It’s pretty common knowledge that it’s a good idea to park your web site at GoDaddy, but many people don’t consider that a “cloud host” because a web site is supposed to be on the web. But the thought of moving your infrastructure servers into the “cloud” is a scary and daunting thing. It makes IT all that more intangible and the one thing you do have control over, you basically hand over entirely to someone else. You get promises of big returns, but who’s to say that the provider won’t go rogue and lose your data. That single act could devastate any small business.
Right now, people are cozy with the idea of putting bits and pieces out there, but keeping the main functions at home where they can see it and feel it. I also see customers that don’t want to risk data leaks and would rather keep it all internal. Heck, I’ve got one that won’t even send encrypted backups offsite.
Finally, I think a real concern is still bandwidth – and more specifically outages. It’s not a regular event, but I think it’s safe to say that even with a T1 one day of downtime a year is to be expected (we are talking about Verizon after all). When that comes and the servers are offsite then everything shuts down and people go home. With the servers on premise, at least you can still get some work done.
Either way, these are all just stop gaps. SMB’s move cautiously and slowly. The technology will continue to evolve in this direction and SMB’s will continue to realize the benefits – both costs and access. The cloud is still gathering itself and in five years people buying hardware in their office will be the minority.
Jason
We see what Jason sees as well. Clients might not understand everything – but they do understand the idea of moving their infrastructure to a data center – they just don’t like it (even if it will save them money) – ultimately it’s not ALL about money. They’re still more concerned with the basics such as GOOD Service.
I do agree that the cloud approach will become more significant in the coming years – I think clients would be more comfortable if they had a local copy of all their data – which they could quickly turn up at another provider – right now that type of portability is not there – I’m sure someone’s working on a product to address that need though.
One way of cracking this is to go in between a pure on-premise play and a pure SaaS play with what’s called AbSD (Appliance-Based Service Delivery.) This is a natural for penetrating SMB/SME because it allays the fears of loss of control with an on-premise appliance but couples the advantages of a cloud-based services. This in particular works well for dedicated cloud-based services such as disaster recovery.
I’ve blogged recently on this at the “Modern Backup 2″ blog; ended up writing a white paper (see http://bit.ly/b7xPQX) on cloud-based computing and this phenomenon.
Oh holy Internet, cloud be thy name. Beseech thee with thy good graces and shower the unworthy with riches of cloud-born enlightenment. For that which is old is now reborn as the “cloud.”
By whatever name it’s called, at the end of the day you gotta manage your business regardless of wherever your hardware and services lay. From my perspective having been on the ASP, Datacenter, VAR and MSP side, it really is just semantics.
I will grant you that there may be cost-savings from certain “cloud” services. But for every change there usually are hidden or deferred costs. That being said, the cloud is not the alpha and omega of IT service. It’s part of a business continuum of technical capabilities which combined with dedicated usage, hopefully, brings about a desired result.
Managing the user-technology interaction is where true bottom-line results occur. Uptime and availability are important, but without a means of understanding the direction that users are taking a business, cloud, terrestrial or hybrid services won’t mean a thing. Without visibility into IT-business process, you may as well have your head in the clouds. Pros and cons?
Amen
Interesting post. We blogged recently about why the cloud is suited to SMBs and what opportunities it can afford them, you might be interested in reading it – http://bit.ly/cysqXv
We Are Cloud: Reader comments are always welcome on MSPmentor. But we push for readers to disclose their company affiliations. Sounds like you work for a SaaS BI Specialist?
-jp