Historically, “buyers” have absorbed the majority of the risk associated with their technology and/or application investments; projects were largely delivered on a time and materials basis, software was provided with “as-delivered” caveats and product demonstrations rarely resembled actual out-of-the-box user experiences. IT enabled projects consistently ran over budget and seldom delivered the business value that justified their initial funding.

Moreover, time and materials engagements became blank checks while fixed fee projects were assigned to maniacal project managers that squelched creativity and/or delivered a predictable stream of change orders. Software was as likely to cure on IT shelves for years as it was to be installed on servers; and through it all vendors generated double digit returns while customers experienced 65% IT project failure rates; and, most importantly, unrealized business cases.

The business community has been inundated with incremental requests for ever-expanding IT budgets to upgrade technology solution sets they seldom understood; held hostage by an IT community with risk-riddled arguments they found difficult to challenge. And after decades of broken promises the business and IT communities find themselves wary of each other and poorly aligned.

Enter the cloud:

• trial engines provide comprehensive access to application capabilities PRIOR to engaging vendors in the procurement process
• vertical applications are replacing horizontal solution sets
• hardware/software/services costs are bundled together into easy to understand, predictable monthly subscription fees
• new competitors offer infrastructure-free solution sets to prospects on a pay-as-you-go subscription basis
• infrastructure headaches are replaced with penalty bearing SLAs
• large capital outlays are replaced with monthly subscription fees
• business cases move from long-term ROI to in-year payback
• business buyers are replacing IT buyers

For decades, prospects and customers have begrudgingly complied with a “pay first, benefit later” value proposition and have been rewarded with failed projects and underwhelming ROI.

As technology solution sets increasingly become commodities the ability to switch from one supplier to another becomes dramatically easier; and the penalties and risks associated with making poor technology or application choices is diminished. Cloud computing has provided the buying community with the freedom of choice it has long yearned for, with project risk being clearly passed back to the vendor community; which brings us to the need to revisit our sales engagement approach.

Sales professionals that understand this fundamental shift in risk and control, and can articulate the benefits of that change in terms prospects understand will have a decided advantage over sales professionals that continue to promote traditional on-premise, pay and pray delivery models; which fundamentally increase resistance and undermine the unspoken promise of cloud computing.

And while there are short-term compensation and cash-flow impacts that both partner organizations and individual sales professionals must navigate; the price of resisting the inevitable transition to cloud is too great to ignore. Because while we can look at cloud computing and debate its technical and operational merits as well as the benefits of funding projects with op/ex vs. cap/ex budgets; at the end of the day we cannot ignore the underlying EMOTIONAL buying drivers that will accelerate cloud adoption. Let us not forget that buying is an emotional, not practical, process and that evidence is generally gathered to support conscious or unconscious predisposition or bias. From a prospect’s perspective, cloud migration is as much about regaining control as it is about saving money and reducing complexity.

For partners to successfully and profitably evolve their business practices and processes to service cloud customers they must revisit their current risk profile with an eye towards taking on a greater portion of risk moving forward, and sales professionals must re-evaluate their selling strategies to align with a radically different set of customer buying criteria. The cloud tide has begun to turn and sales organizations with an appetite for increased risk will find their messaging resonate deeply with a new breed of technology buyer.

Complex Models = Added Time x Added Expenses

It cost more to hire people smart enough to understand what the management team wants done in a complex model.  It costs more in time, communications, systems and training to have people do the tasks that should be relatively repetitive.  It creates opportunity for error and Mr. Murphy to show up, and he does every other week, resulting in large write-offs of time and unhappy clients.

So why make the business model so complex?

I think the answer lies in the fact that the entrepreneurial mind is not really a manager or leader mind.  It sees walking away from a line of business or prospect as a loss rather than risk reduction.

Rarely does the entrepreneurial mind contemplate how anyone else, other than themselves, would be able to complete this piece of business. They do not take this into consideration prior making the commitment. They jump in with both feet; then get angry when others become confused or fail to achieve the result they were looking for.

They never considered the fact that:

• Certain customers buy in a certain way.
• One vertical approach does not work in another.
• It’s difficult for consultants to transition from vertical manufacturing to horizontal food distribution customers in the same week.

This complexity is wreaking havoc with the Partner’s bottom line as well, with an average 6.1% through April 2010.

The Bigger Picture with Microsoft

Microsoft’s whole vision of bigger, healthier Partners will test the limits of the entrepreneurial mind, because to scale an organization it will require that you:

1. Make it easy for everyone to understand who the customers are and what value you bring.

2. Narrow the focus to certain types of customer scenarios, in certain industries, so everyone knows how to approach them.

3. Make your marketing messages crystal clear, simple and meaningful to the prospects.

4. Make it easy to onboard new young talent at a better cost basis and make them billable quickly.

5. Eliminate errors by doing similar types of projects repeatedly.

When we consider the whole world of cloud computing, SaaS or S+S whatever you want to call it, the model will demand the Partner simplify their business to survive.  The current context of how systems are paid for and deployed will be changed forever and there will be no return to ways of the past.

Simplify to Survive

So it is far better for every Partner to consider the complexity they have allowed to creep into their business and examine whether or not it is supporting their efforts to build a bigger, healthier business.  If you do that over the summer, come fall, there will be a lot of people simplifying their business to make better progress against the changing tides of this industry.