When should service providers stop using “Cloud” to describe their services offerings?
A recent story in the Australian “Computer Daily News” reports on a global study done by KPMG and chooses to highlight the finding that a third of executives surveyed said they found that they found higher than expected cloud implementation costs and integration costs.
Now that’s a small signal of the sort of news you expect when a phenomenon starts to move along the Hype Cycle from the “Peak of Inflated Expectations” down into the “Trough of Disillusionment”. Only a small sign at this stage.
Remember “e-business”? What about “ASP”? Whatever happened to them? There was a time when everyone wanted to become an “Internet Business”. Then just about every company became one. So now, no-one is one anymore… because everyone is!
To be sure, there will come a time when you should stop using “cloud” to describe your services offerings.
I’m not, for these purposes, concerned with whether your offerings are “really” cloud services. However, that will concern your customers, who are, according to our research, quite confused about the offerings on the market. Rather, I’ll deal with how you describe your offerings and how effective that is.
As we saw with e-business, when everyone is on the bandwagon there’s no longer anything differentiating about being there. For cloud, that time is not far off. The main “cloud computing” phenomenon is already sliding down the steep slope into the Trough of Disillusionment on Gartner’s Hype Cycle for Cloud Computing, 2012.
That means that the most extreme hype phase is over and relatively soon we will see negative news and disillusioned user stories. On January 9th the Wall Street Journal published a piece about whether small businesses can save money by using cloud services. The story was balanced, but it did show some users whose experience was not all positive. Some were worried about security, outages and a lack of control. On the whole the story was still positive. At the bottom of the Trough of Disillusionment, there will be more negative news.
Of course that doesn’t mean that the advantages of cloud services will have gone away. Far from it. It just means that, as at the Peak the hype exceeds the reality, so in the Trough of the Hype Cycle, the gloom exceeds the reality. The good news for all is that that signals the start of the climb up the Slope of Enlightenment towards the Plateau of Productivity, when even the laggard adopters will buy in.
For some time you may have to retain the cloud word just to show that you have offerings in that category, but at that stage it has become a mere entry ticket. Your differentiation has once again to be built on the unique value that you deliver. That’s hard work. We know from our research how hard it is to differentiate IT services. Some of my colleagues and I addressed some of the mistakes that marketers make in Marketing Essentials: Seven Common Mistakes IT Services Providers Make in Differentiation.
It will be a balancing act to know when to drop the “Cloud” word. Each provider will have to do the hard work of thinking through positioning and value propositions and creating effective offering descriptions that work for their target segments. There are no simple prescriptions.
I’d appreciate your feedback as we research this topic further.
Rolf Jester is a vice-preisdent and distingished analyst at Gartner Research.