Top 5 Pitfalls to Avoid When Selling the Cloud

Monday July 09, 2012 , 5 min Read

As the organizations involved in traditional sales of shrink-wrapped software enter the Cloud business, they face a challenge dealing with the new paradigm. While the best practices of selling do not change much, they need to get comfortable pitching, positioning and selling the new ‘anything as a service’ model. Based on my experience, I am going to touch upon some of the pitfalls that can be avoided in closing a sale. These are not only important for the sales teams of Cloud service providers but anyone who is a part of the Cloud ecosystem.

1. Lack of grip on the pricing models – Traditional software release cycles are long and the price will not change for a long time. Once the sales team understands the SKU, price points and the licensing options, they will be able to confidently position the product to a diverse set of customers. Enter the Cloud and they have to deal with a price point that only drops once every few months and sometimes just in a few weeks! Amazon has dropped the price of their Cloud services more than 19 times in the last 5 years and the competition follows the suit. Knowing the latest pricing of various services including storage, compute and bandwidth is critical for the Cloud sales rep. He should be able to quickly identify the paid vs. free components of a solution that’s being considered and come out with a ballpark cost estimate that closely reflects the monthly bill of the customer. For example, AWS offers a free tier, which doesn’t charge the customer up to a specific threshold during the first year. Discounting those components from the estimate will show a significant cost benefit to the customer. Knowing what is free and what is charged is important for the sales team to accelerate the sale.

2. Inability to position the right solution stack – Though this is often differed to a presales specialist or a solution architect, every sales rep should be able to articulate the value of Cloud and do an elevator pitch of each service in the stack. Anyone who is in a customer facing role involved in selling the Cloud should be able to connect the dots and pitch a high level solution. Most of the sales reps harp on the CAPEX factor. But the fact is that the customer never considers the Cloud only for the cost advantage. Articulating the core value of Cloud in terms of the ability to automate, shorter mean times between failures and elasticity is absolutely critical to win the customer confidence. Knowing the complete stack that is rapidly evolving is a big challenge for the sales teams.

3. Positioning Cloud as a silver bullet – I have seen sales reps positioning the Cloud as the magic solution to most of the IT problems. Moving to the Cloud doesn’t alleviate the pain of high availability and scalability. Also, It doesn’t reduce the cost of licensing for the enterprises. In fact, moving to the Cloud involves going through a thorough assessment and doing a detailed analysis of the existing portfolio of applications. Promising the customer that just by moving an application to the Cloud will make it instantly scalable is a false promise and should be avoided. Similarly, the customer should be made aware of the fact that he needs to work with the provider of the enterprise software to check if the licensing supports mobility. Many enterprise software products have different licensing options when moving to the virtual infrastructure on the Cloud.

4. Asking the Customer to get rid of the IT and Servers - This is a risky proposition that may backfire in many cases. Cloud has not reached the stage where enterprises can fire the IT team and get rid of the servers in the datacenter. In fact, that is never going to happen. ERP, SCM and internal LOB applications may never move to Cloud completely instead they will work in tandem with their counterparts deployed on the Cloud. The IT team will change the direction from managing physical infrastructure to virtual infrastructure deployed on the Cloud. Organizations will have to invest in strong DevOps to keep the Cloud deployments running. Positioning the Hybrid Cloud and articulating the benefits with conviction is what will win the customers confidence.

5. Lack of understanding of SLA and standards – The most common concern that customers have is around security. The ability to demystify the standards and explaining them in the language the customer understands goes a long way! How many of us really get what are ISO 27001, PCI DSS II, FISMA, HIPAA and COBIT? But putting these terms in the context of customer business and explaining the benefits go a long way in closing the deal. Similarly, there are many misconceptions around the Cloud SLA. Letting the customers know what is covered as a part of the SLA and what is not is very important.

Making sure that we avoid these pitfalls will help us see a better adoption of the Cloud!

- Janakiram MSV, Chief Editor, CloudStory.in

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