Expect to see more vendors exit the highly-competitive Cloud market in 2016, due to their inability to clearly differentiate their capabilities. As the cloud computing market matures and buyer preferences evolve, basic cloud infrastructure offerings reach commodity status -- with common technology and similar product features.
When vendor services are virtually identical, buyers will seek to place increasing emphasis on factors that extend beyond the basic product. However, when the internally-focused 'me-too' vendor fails to translate their capabilities into business outcomes, they more than likely will be judged based upon price.
How to Survive the Cloud Wars
According to the latest worldwide market study by Frost & Sullivan, an enterprise buyer's choice of cloud service provider are influenced by criteria that are the primary responsibility of the marketing organization -- including provider cloud pricing, service level agreements and developing meaningful brand equity.
Frost & Sullivan’s latest analysis, entitled "To Win the Cloud Wars, Invest in Marketing, not Technology", examines several service characteristics that shape buyer perceptions of cloud infrastructure services, as revealed in their 2015 Stratecast Cloud User Survey.
In these early days of the hybrid cloud computing era, businesses are still trying to understand how to leverage the cloud model; how it can help solve chronic IT delivery or business process-related problems, but also how it can create new digital transformation opportunities.
As cloud service providers focus their technology investment on higher-value services, it will be up to the marketing department to be sure their substantive message is heard and appreciated by informed buyers.
Cloud Market Development Upside Opportunity
"In our observation, many technology companies continue to underestimate the importance of marketing; instead, relying on their technology research and development organizations to introduce innovations," said Lynda Stadtmueller, vice president at Frost & Sullivan.
According to the Frost & Sullivan assessment, cloud service providers have a huge opportunity to differentiate their services by alleviating some of the known complexity that CIOs and IT managers associate with hybrid cloud computing deployments.
Providing clear information about pricing and SLAs, offering value-added services to help with planning and migration, and providing access to knowledgeable pre-sales consultants are examples of marketing tactics that cloud service providers can adopt to attract and retain savvy enterprise customers.
"The future of cloud will play out not just in the research lab, but also in the marketing department. Marketers will help to redefine how we purchase and utilize cloud-based IT resources," notes Stadtmueller. "To do so, they will need to engage in a continual dialogue with potential buyers -- both following the market (understanding buyer needs and preferences) and driving the market (educating buyers on the unique value of their own services)."