Rolf Jester

A member of the Gartner Blog Network

Rolf Jester
Vice-President, Distinguished Analyst
16 years at Gartner
46 years IT Industry

Rolf Jester researches the business of IT services, particularly business and marketing strategy and best practices for IT services providers. He focuses on the IT outsourcing business globally, and also on the IT services market and service providers in the Asia/Pacific region. Read Full Bio

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When to Stop Using the Cloud Word

by Rolf Jester  |  February 13, 2013  |  9 Comments

When should service providers stop using “Cloud” to describe their services offerings?

A story today 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.

The original report is at http://www.kpmg.com/global/en/issuesandinsights/articlespublications/cloud-service-providers-survey/Pages/default.aspx

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.

 These blog posts will continue to look at the business of marketing and selling IT services, based on my research and that of my colleagues.

9 Comments »

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9 responses so far ↓

  • 1 Joel Berman   February 14, 2013 at 2:22 am

    You make excellent points Rolf. I am seeing people making a face when the hear the C word.

  • 2 When to Stop Using the Cloud Word - well? - e-businessguide.eu   February 14, 2013 at 9:10 am

    [...] When to Stop Using the Cloud Word.   Filed Under: Blog, FEATURED Tagged With: cloud, e-business, gartner Search [...]

  • 3 Keith Hinde   February 14, 2013 at 12:39 pm

    I agree. Excellent points and I am similarly both seeing (and making!) similar faces – “The Cloud Wince”?

    It’s become a case of cloud-with-everything and many of them are seemingly no different from ASP offerings of lore.

  • 4 Tom Vetterani   February 14, 2013 at 3:25 pm

    Rolf – great piece. One of the biggest challenges we have as a services provider is to help educate customers and prospects on what cloud is and its potential for their business. Many have consumed the Kool Aid of cloud and see it as a solution to all of their ills. And, many service providers “cloud wash” everything they offer to ride the wave of cloud.

    Cloud offers great benefits to those prepared to properly embrace it. But that requires good preparation on the infrastructure and application side before real benefits can be achieved.

  • 5 Rolf Jester   February 14, 2013 at 7:56 pm

    Agreed, Tom. Unfortunately, while we’re at the current stage of the Hype Cycle, this confusion adds to marketing and selling costs. It may be one reason to start stressing the underlying business rationale and service outcomes rather than just the word.

  • 6 Colin Currill   February 15, 2013 at 9:22 am

    I wandered lonley as a cloud . . . a cloud hides the sun when I am sailing . . . there’s a cloud over our Will’s mum’s.
    Just three examples of using the word cloud, I could quote more but that would be perdantic.
    If you take a word that has a general meaning to all and apply it to something new and different you might as well be comunicating in a foreign langauge.
    I could be a customer of your “Cloud ” product but if I don’t understand it’s uses and benifits from the off how am I ever going to be able to make a buying descision and subsequent purchase. More to your point how are you going to make a living?
    Colin.

  • 7 Who’s Who in Cloud February 15, 2013 Gathering Clouds   February 15, 2013 at 2:17 pm

    [...] Rolf Jester asks: Will the term “cloud” eventually become [...]

  • 8 Richard Fouts   February 15, 2013 at 10:47 pm

    this reminds of me digital marketing, email marketing, social marketing … all kinds of adjectives are showing up in marketing…and I wonder when the most overused one (digital) will go away.

  • 9 David Walton   February 26, 2013 at 4:32 pm

    Funny. I just wrote a blog post on whether or not cloud was hype or here to stay – http://djwalton.com/work/fluffy-white-cloud-computing-hype-or-here-to-stay/ – and in there I use Google Trends to track ‘ASP’ and ‘cloud computing’. You’ll be interested in the results!