Are your customers considering transitioning to the cloud?
Chances are, they’re at least planning that migration, even though it might not have begun.
Gartner indicates that by 2025, more than $1.8 trillion in IT spending will be directly or indirectly affected by the shift to the cloud.
Further, a recent study reveals IT decision makers are increasing their budgets in 2022, expecting their cloud spend to rise by 29% in the next twelve months. However, due to the complexities involved with moving more than one application, many organizations haven’t yet begun.
Logic dictates that these companies will need help — which is where you come in. But do you have the technical skills and the shift in mindset to adequately help your customers with their cloud computing strategy? Because the process of moving from on-premises to cloud is much more than a lift and shift.
There are 3 key building blocks, as follows, that will enable a successful cloud go-to-market strategy.
1. Moving from CapEx to OpEx requires careful planning
One of the biggest challenges involved with customers transitioning to cloud is that they’re moving from a capital expense (CapEx) to an operational expense (OpEx) model, which changes the financial structure of the company. A cloud switch means companies can avoid costs of purchasing physical data center hardware and software, therefore reducing expenses.
However, by offering flexible billing and the ability to add services quickly, the right controls are needed to avoid less predictable (and sometimes higher) charges.
Thousands of companies’ IT planning cycles were thrown into disarray as they suddenly transitioned from on-premises to cloud computing. The immediate need to switch to work-from-home environments prompted companies to convert to cloud — from known CapEx expenditures to unknown OpEx expenditures.
Helping your customers understand the change and optimizing these costs is crucial since cloud spend could be wasted if not optimized. In fact, a Flexera study shows that close to one-third of money spent on cloud spend is wasted on unused services.
However, when optimized, converting to cloud provides the opportunity for your customers to spend less on software and hardware management, empowering them to realign budgets to more strategic areas aimed at driving profit and bottom-line results.
When in-house skills lack, Arrow can help your customers pick up the slack
Assessing a client’s environment, which includes documenting requirements and expectations, is the crucial first step to ensure success.
Cloud assessments consider the organization’s business strategy to:
- Determine whether public, private or hybrid is the best fit
- Understand the applications, dependencies and operational requirements
- Ensure compliance
- Create business continuity guidelines
All the above are important considerations when building a cloud strategy.
For a successful cloud migration and deployment, it’s imperative to have the in-house technical skills — or at least a partner like Arrow — to provide this crucial technical expertise that will enable your customers’ successful cloud transition. This is particularly important if transitioning to a multicloud environment.
The Arrow ecosystem has the skillsets to help you dive deep into your clients’ IT landscape and guide them through the entire journey.
2. It could be a time for a change in sales compensation
The shift to cloud requires more than willingness to change on your customers’ part. If your sales compensation structure fails to account for a shift in sales methodology, your efforts could fall flat. The sales cycle for on-premises IT equipment and licenses, for instance, is typically every three years, meaning large CapEx outlays and commission plans are based on this cycle.
However, cloud typically has a 30-day sales cycle — with no long-term commitment — meaning commissions are not easy to estimate on a total contract value (TCV) basis upfront, and monthly commissions in smaller amounts might not be as attractive to sales reps accustomed to chunky commission checks.
3. Cloud charges can be unpredictable
Cloud services based on consumption can cause unpredictable monthly charges if not monitored consistently. Development instances left unchecked, or unnoticed, can drive up monthly charges. Other optimization efforts should be taken to ensure effective use of the resources deployed.
If the cloud isn’t operating as it should — if it’s too expensive or isn’t optimized — it’s easy for customers to bail on cloud computing and revert to on-premises computing.
For instance, say a customer budgets $100,000 a month and 10 days in, has already spent $50,000. This red flag should prompt a partner-to-customer conversation, letting them know cloud usage is higher than it should be, along with recommendations for getting back on track or increasing their spend.
ArrowSphere, Arrow's cloud delivery and management platform, makes tracking customer usage easier as it gives you the ability to log in on a daily basis and see whether customers’ cloud is being underused, overused or right on track. You can set monthly budgets on consumption services and, as they approach monthly thresholds, ArrowSphere sends alerts to the customer and the partner.
The future of cloud is perfectly clear: at the least, your clients are in transition, if they aren’t already cloud-savvy. Your expertise in helping them transition to cloud — and from a CapEx to an OpEx methodology — could be a game-changer.
When in-house skills are skinny, we’ve got you covered. Arrow has years of experience and a substantive line card to change the on-premises game to cloud.
Speak with us today to learn about opportunities in the cloud.
This article was originally published in July 2021 and has been updated for relevance.
