Changing Composition of Solutions in the Cloud Era

There’s been a traditional view of ‘Solutions’ in technology.  It’s often attributed to IBM, whose heritage in this area goes back a century when Thomas Watson was instructing sales people to sell large scale ‘tabulating solutions’, and to leave the small office equipment sales to other companies.

problem-solutionOften in Tech, Solutions management and marketing has been an exercise in providing the remaining 15% of an offering beyond what the core product can provide. The development and marketing of a Solution can be a function of a time-to-market crunch for a new product, or a means to address new uses or verticals for established products.

For instance, a relational database is a product that generically meets the needs of customers who want to store structured data, but customers would probably also want to protect that data, so rather than wait until that feature is built, it’s faster and often better to just partner with a third-party, in this case, a backup software company, to provide a more complete solution.  Traditional solution components therefore start with a core product offering, add one or more third-party products, and often some related service, and voilà, you have a solution.  Create a solution brief, do some training, supporting communications, and you’re in business.

Because solutions have their roots in a selling environment, not surprisingly there have been formalized Sales approaches around it. These efforts included variations on ‘solution selling’ delivered internally by businesses and externally by consulting services.  One course I took in this area was “SVS”, short for “Strategic Value Selling” which I studied while at EDS back in the mid 90s.  A related book I enjoyed reading around that time was “Selling to VITO”.  All of it still relevant today.  Identify the customer’s problem and focus your pitch, and solution, around that.

Key factors driving change in Solutions

But there has been a big change in the IT world since the 90s: cloud computing.  Gartner sees Public Cloud as a $300B market by 2021. The vast majority of today’s organizations, and even the federal government, are thinking ‘cloud first’.  Trying to craft a traditional value proposition within a product category that’s radically evolving from being strictly on-premises to in-the-cloud (or some combination of the two) can be a frustrating experience.  Central to this challenge is the changing nature of the solution itself — because the shifting context of the IT deployment fundamentally changes what’s the problem being solved.

I’ve identified at least three key changes in the technology marketspace that are leading us towards a shift in how we think about Solution Management and Marketing:

  1. Change in the Sales-Marketing relationship – In a recent Boston Consulting Group Article, “Building an Integrated Marketing and Sales Engine for B2B”, it details how the prevalence of web content and online marketing along with the familiarity of online product research and purchasing, has created a dynamic where more of the technology ‘sale’ happens before there is even contact with a Sales rep. Today’s B2B buyer is, “… is younger, digitally engaged, and doing more and more business online and on a smartphone.” And that according to recent research from Google, the average B2B buyer is two-thirds of the way through the journey before talking to sales.
  2. Change in the IT product form-factor – What we are producing and selling today is drastically different from a decade ago. IT spend is shifting from tangible products being bought and operated on-premises, to ‘Everything as a service’.  According to IDC, by 2018, at least 40% of IT spending will be cloud-based. This will grow to comprise over 50% of all IT infrastructure, software, services, and technology spending by 2020.  The impact here is that to create a solution around a tangible product is a different exercise vs. one around a cloud-based service.  We are seeing a growth business in Cloud Consulting services: some evolving from traditional IT consultants (Avanade) and off-shore outsourcers (Wipro, Tata), some sprang from tech manufacturers (IBM iX), some from VARs and SIs, and some were truly cloud-native boutiques. Some have grown, merged, died or gotten exits. Services is a more prominent component of modern IT solutions, whether hosted and delivered at scale, or provided bespoke.
  3. The rise of the Platform – I’m not aware of when I first picked up on the idea of ‘Product as a Platform’ but the management consultants have apparently been writing about it since at least 2016. And companies like Microsoft have shown how successful a platform approach can be, such as in the instance of the personal computer, i.e. launching an open system that can support a broad range of third-party applications and hardware. This is in contrast to the Mac with its sealed cases which I don’t believe ever got to be more than 10% of the PC market. More recently, SalesForce.com is a key example of a Software as a Service offering that serves as a platform for a huge ecosystem of add-ons and related services (‘AppExchange’). Amazon AWS is the ascendant example of a platform that has come to dominate the cloud; and this specific offering is at the heart of the sea change in how IT is being consumed, and therefore sold.

Collectively, these 3 changes are driving an evolution in how tech Solutions need to be conceived and delivered.  This following diagram shows the shift in the composition of a Solution: from Product to Platform, from complementary third-party offerings to integration, and a greater mix of Services that represent a greater part of the vendor’s value add.ChangingSolutions

 

Here’s an example: A traditional data storage-related solution could involve an external storage array (e.g. HPE 3PAR or HPE Nimble), plus a complementary product such as backup software from Veeam, Veritas or Zerto, and maybe some planning or deployment consulting service.  Package it up with a solution brief, Sales and channel training, a promotional offer or discount from that one tech partner, and some related Marketing and PR activity, and you’ve launched a solution.

Contrast that traditional solution with what may be the 2019 incarnation: the array as a ‘platform’ for on-prem data capacity, coupled with a broader ecosystem of partners including Azure and AWS who supply cloud-based capacity for colder data storage, or disaster protection. This solution is enabled with Integration in the form of a related web interface and/or REST API development.

Another key aspect are many more related services.  Besides capacity-based pricing and financing of the capital expense, there can be differentiated service levels and support, there can be monitoring, management, initial deployment consulting, follow-on management consulting, or the entire device itself could even be hosted in a co-lo and sold as a Service, priced per GB/Month. This on-demand delivery, buy-only-what-you-need pricing, as well as product positioning more as an enabling device, makes the old IT world look more like the mobile phone space. The customer still wants powerful devices that they can control, but the business model becomes more about the service as measured in minutes and degree of use.

In summary, not all traditional IT infrastructure products will go the way of Tintri tomorrow.  And just taking more of an appliance approach isn’t a guarantee for success – just ask HTC or Cirtas.  But thinking more flexibly about offering format, as well as business model, will help ensure a more successful evolution as the IT space, and the role of Solutions, change.

Are you observing similar changes in how you buy products, or bring them to market?  Share your experiences.

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