Cloud Provider Commentary

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» VIEW ALL POSTS Feb 20 2012   7:32PM GMT

Cloud commandment No. 1: Know thy customer



Posted by: Jessica Scarpati
Tags:
cloud adoption
cloud sales strategy
cloud survey
Parallels
SMB channel
SMB cloud
SMB market

It sounds pretty obvious, right? Whether you’re trying to close a sale or just get a foot in the door, of course you should understand the requirements and limitations of your specific customers and market segment. As well-seasoned channel vets know, this is especially true in the SMB market. And with SMBs expected to be at the start of the cloud adoption curve, this dogma should be top of mind for cloud providers.

But for some longtime hosting providers and network operators trying to get a foothold into SMB cloud services, this mentality is somewhat of a lost art, according to John Zanni, vice president of service provider marketing and alliances at Parallels, which hosted its annual customer summit last week in Orlando.¬†After years of selling what eventually became commodities — bandwidth and rack space — some of these providers must now revisit their sales and marketing strategies because remaining competitive is no longer just about price and technology, Zanni told me in a recent phone interview.

“To be able to continue growing and profiting, you need to be able to offer services beyond those horizontal services,” Zanni said. That means focusing on specific segments within the SMB market, which “is just an expertise that most of [those providers] did not build,” he added.

The backdrop of our conversation was a recent survey Parallels published about the SMB cloud opportunity, the 2012 Parallels SMB Cloud Insights Report, which proved that market segments are far more nuanced “enterprise vs. SMB” or “healthcare vs. financial services.”

For example, one way the survey sliced respondents was by size: micro SMBs (1-19 employees), small SMBs (20-99 employees) and medium SMBs (100-1,000 employees). The survey also analyzed results based on a company’s IT resources and cloud adoption attitudes, but let’s just look at size for a moment.

When respondents were asked to select multiple reasons why they would keep their servers in-house, as opposed to SMBs adopting IaaS:

  • Security concerns were a far bigger reason for so-called medium SMBs (about 80% of them) to avoid IaaS, versus about 30% of micro SMBs. A similar discrepancy between the two groups was evident for the response, “specific applications need to be in-house/other technical concerns,” with about 60% of medium SMBs identifying it as a reason to keep servers in-house, versus 25% of micro SMBs.
  • Size doesn’t always matter. All three groups (micro, small and medium SMBs) showed near-equal concern about issues around pricing (60% of each group said it was a factor), unfavorable recommendations from a trust consultant/IT staff (14%) and bandwidth/connectivity issues (10%).
Just as customer with four employees will have different requirements than a customer with 40 employees (which will have different requirements than a customer with 400 employees), differently-sized companies will pursue or avoid cloud services for their own reasons — meaning that cloud providers must adjust their strategies accordingly.

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