Cost vs. Performance: Positioning Cloud Services for Public Buyers
May 7, 2013 ‐ 0 comments

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Working with clients across a variety of industries, we're increasingly seeing cloud computing's economic benefits as the primary factor leading to its consideration and adoption. Yes, other advantages can be compelling, but so far it's the dollar signs that push organizations to get past their initial objections. Low price is an easy benefit for cloud services vendors to trumpet, but forward-thinking vendors need to start looking at positioning on higher ground.

The Government Accountability Office released a study last year tracking several agencies' progress against the federal "Cloud First" policy. Here's some interesting data: of the 20 cloud implementation plans the study identified:

  • 5 did not include any major milestones
  • 7 did not include any estimated costs (?!)
  • 11 did not include any performance goals (?!?!)

Putting aside the issue of what passes for 'planning' and 'progress' in the GAO's eyes, the fact that federal agencies are willing to look hard at cloud computing plans without factoring costs or performance into the equation tells us that we're still in the early adopter phase of cloud computing in the public sector.

But if the public sector's appetite for cloud computing develops like the private sector's, we'll soon see more consistently discerning government buyers emerge – ones for whom the price tag (or ROI) and service levels matter a great deal.

That's why some major cloud vendors are appealing directly to the cost side of the equation (here's the only benefit statement on the Amazon Web Services home page today: "One of the key benefits of cloud computing is the opportunity to replace up-front capital infrastructure expenses with low variable costs that scale with your business.").

Others are focusing on uptime (from HP Cloud Compute's home page: "Now backed by an industry-leading Service Level Agreement, HP Cloud Compute delivers reliable computing resources to handle your production workloads." And from 3 of 4 of Rackspace's home page banners: "Maintain Uptime"). These companies are giving their customers credit for understanding cloud's inherent cost-saving potential and communicating a value proposition around reliability. 

Smaller vendors selling to government agencies take note: simply positioning your products and services as "cloud" solutions may have sparked early interest, but times are changing. Public agency buyers and influencers will want to see more concrete ROI calculations. They'll expect SLAs that provide meaningful protection from downtime (not like the ones currently offered by AWS and HP). They'll even start to care about ways in which cloud services can be integrated to provide greater overall value - not just incremental benefits. And the brands that get more detailed about the benefits their cloud service provide are the ones that will be poised to capture more of these more sophisticated buyers.

 

 

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