In our recent research we asked if companies would evaluate new cloud-based solutions or on-premise solutions. About 25 percent said cloud (Figure 1).
At first it was hard to determine if that was good or bad. But when we looked at our previous research results for this or a similar question, something important emerged: The percentage of people who will evaluate cloud has tripled in the last 2+ years.
That unto itself is impressive. But also we looked more closely at the ‘don’t know’ category. Before we talked to the ‘don’t know’ respondents, we wondered whether their doubts were because they were as uninformed about cloud as pre-2010 respondents. At that time, many people did not know that cloud was an option for the application space they were considering. And many were skeptical about whether cloud was a good choice due to many performance factors.
But 2012 is different. The ‘don’t knows’ today are mostly people who are evaluating both on premise and cloud as competing options and weighing the trade-offs and benefits of these approaches.
Why Cloud Growth?
Everywhere you go, world-wide, people are connected to the cloud. This is not a new trend, though we like to think about it that way. Cell phone usage continues to climb, and people have been using cloud for personal use more and more every day. Think Kindle, eBooks, streaming movies and music, Video on Demand, Google. And ‘not in the cell phone zone’ excuses have disappeared as performance has improved steadily, assuring connectivity, quality, and higher speed.
In addition, businesses have become more virtual, more mobile, and more agile, requiring communications between partners, customers, wholesalers, dealers and remote employees and services. Access is attained through cloud-based delivery methods.
And the fifth column in the corporation is looking for responsiveness and lower cost in IT. Their thinking is, “Why not try the freeware that gives access to new functionality without going through IT?” Our research shows more use of freeware in the coming year — not just by SOHOs (Small Office/Home Office), but by big business users.
Millions of users are already using freeware options. And over time, many expect to upgrade into more advanced services.
Other interesting aspects appear to be the growing market in third-party managed services. Human Resources, Payroll, Accounting, Logistics and Warehouse services organizations, for example, often have managed services as well as IT. Part of the evaluation when selecting a service provider often includes the technology. And connectivity to these services comes from the cloud.
Conclusions:
Action Plan: Education for buyer!
When I talk to cloud providers they tell us that more prospective customers want cloud services. But clearly, those who are evaluating cloud vs. on premise still need to be educated (or convinced).
For solution providers in both camps this means:
- Explaining the delivery model in straightforward terms
- Giving users the ability to evaluate the trade-offs in software license, purchase, or subscriptions
- Creating pricing models that users can understand and evaluate so they know when they are getting a good deal
The issues of educating and marketing clearly become more challenging as companies sell into the mid- to small-business markets. These markets contain large populations of users who are doing their research on the internet, and purchasing their solutions and services online or buying through channels. Hence, it is critical that technology software companies use their websites and marketing info to provide clear explanations of their technology. Unless the technology companies can differentiate between the various solution options and pricing, customers will remain confused.
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