Cloud computing … can anything be more vague? A cloud is a mist that cannot be clearly defined and I am seeing that reflected in many business strategies out there. For you that have not given this term much thought, I recommend clicking on the image to the left; it will lead you to a world filled with unclear phrases such as “… the use of a cloud-shaped symbol as an abstraction for the complex infrastructure it contains in system diagrams …“, “… sharing of resources to achieve coherence and economies of scale similar to a utility (like the electricity grid) over a network …” and that the “… origin of the term cloud computing is obscure, but it appears to derive from the practice of using drawings of stylized clouds to denote networks in diagrams of computing and communications systems.”
For some peculiar reason, pitching SaaS services (henceforth termed ‘service’ for legibility reasons) as ‘cloud-based‘ is in many cases a sufficiently strong argument for business managers and professionals to take things seriously. I attend sales meetings quite frequently and have noticed the effect the word ‘cloud‘ has in these scenarios. It does not seem to matter how strong – or weak – the service is or how impressed the target audience is; once the word ‘cloud‘ is uttered, gasps and nods follow as if Moses just came down from the mountain with the Ten Commandments raised above his head. The only thing ‘cloud‘ really says is that ‘We host your data and provide you with a web-based interface to work with it.’ So? Does anyone remember the AltaVista translator? That was cloud. Google is cloud, Netscape (I was actually at AOL when these two fought for market leadership, so that link is quite gratifying) is cloud, most statistical agencies on the planet are cloud. So what makes ‘cloud‘ such a sales clincher?
I have begun to suspect that the market likes the word since it offers both sides a handy shortcut; sales people can dodge explaining how everything is pieced together and buyers can appear knowledgeable – both look smart and everyone is happy. There are some big problems associated with this shortcut, however. Many cloud services lack proper support as their go-to-market strategies are not properly thought through. Anyone with basic skills can build a cloud application. The most basic one is setting up a web page using this code (if you copy it into Notepad and change the ending from .txt to .html, right click and open in browser, you have taken your first step into the realm of cloud computing):
<p><strong>Need help with your Marketing Strategy?</strong></p>
<p>I have tons of experience there.</p>
<a href=”mailto:email@example.com?subject=I need help with my Marketing
Strategy” class=”button”>Contact me</a>
Not very fancy, but it does provide a service and uses code to deliver it – sending an email. It could be expanded to convert monetary time series into uniform currencies and aggregate data frequency into a calculating matrix (e.g. for international portfolio management, investment analysis or market research), but that little snippet is actually the essence of how cloud applications work. So how many will gasp now when they hear that word?
To me, ‘cloud‘ means much more than just providing something that works on the internet; it means servicing customers at the local level and that is where most ‘cloud‘ based companies hit a wall (and now I will address you developers directly):
You may have the best platform on the planet but still fail against a third-rate system simply because they provide local support and you do not!
There is a myriad of ‘cloud‘ solutions appearing every hour but only a handful make it past month twelve. Most perish, mainly because they lack a solid go-to-market strategy outlining how the service will be leveraged internationally or, more precisely, how the company intends to go truly global. A ‘cloud‘ service has to have centers in all target locations or local competitors will block them; it is as simple as that. If you are based in Colorado and want to attack France, get a French partner that will drive the effort by providing local support or local competitors will steal your customers (getting a customer that has already begun using one platform to change over to a competing platform is very difficult and expensive). Although it is an old term, GLOCAL should guide all ‘cloud‘ marketing and expansion strategies.
Google, Microsoft, IBM, SAP and most of the leading ICTs established global partner networks early on to drive their sales efforts. It worked and they are now international market leaders. Why emerging SaaS providers do not use that strategy is very odd and, in my opinion, a fatal mistake. First, if you are located in the English-speaking country, you can forget penetrating Europe except for Malta and the UK. You may get a few deals, but local entities will seize the market from under your feet simply because they offer localized services. I am seeing high quality cloud platforms being rejected here in Iceland as the localization element is missing, but I truly do not blame developers for leaving this 319 thousand people market for last. Still, we have an internet penetration rate of 96.62% (click on image left; source) so overall penetration rate will be considerable.
To continue on that tangent, many cloud developers use Iceland as a test market. It is absolutely ideal for this type of market testing, especially in terms of trying out different strategies before rolling them out to larger markets such as Germany, France, Japan, China, Brazil and South Africa. We at IceStat and the Icelandic Development Agency receive on average 3 inquiries a month from ‘cloud‘ developers from the US, EU and Asia but are very selective in who we work with. We urge ‘cloud‘ developers to adopt the GLOCAL ideology if they want to own their respective niches. We are well positioned to run strategic marketing tests here in a controlled environment that can be scaled up for attacks on larger markets. Capturing key sectors and market segments in the US or EU is difficult and time consuming; up here it is easy and fast. Make use of it!
When you go cloud, go all the way. In technical terms, the cloud may be described as the “… sharing of resources to achieve coherence and economies of scale similar to a utility (like the electricity grid) over a network …“
In strategic terms, that translates to:
“… sharing of resources to achieve market leadership at the local level similar to an organization (like the United Nations) over a well-integrated and cohesive partnership network.”
The word ‘cloud‘ may be great for sales, but it causes developers to forget what really matters – the customer.