By Jamie Stafslien, President, Complete Technology Resources, Inc.
As IT companies look to take their clients and customers to cloud solutions, there are many challenges that they have to overcome. One of these challenges is a shift in how revenue is generated. In a traditional IT firm (non-cloud or pre-cloud), your sales person, and maybe an engineer, talk to the client or prospect about their needs – including what company to choose to build their server (Dell, HP, Lenovo, etc.). Eventually, the conversation comes to a close and the deal is won. A deposit check is typically required to start the project and then a final payment when the project is completed. If the project was $20K, then you received $20K and move on to the next project.
Enter 2016 with cloud being the leading topic of conversation in the IT industry. It is here to stay and not going anywhere anytime soon! The challenge for companies to make this transition can be a huge undertaking, especially if they have been around for many years. No longer are you selling a $20K project that you collect over 4-5 weeks, you’re selling a cloud solution where that customer spend is still $20K, but over 3 years, and the profits potentially taking almost five years to actually see. This is a huge challenge for the sales force and engineers in larger IT companies. You no longer need the amount of staff to support what you use to build.
So, how does one address these challenges?
For starters you must look at cloud as the newer way of IT – it’s here to stay and only getting bigger. Research firm IDC projects that cloud services will reach $500B by 2020. This is a huge opportunity and one must embrace it, not run and hide from it. There is a lot of re-training and re-thinking that needs to happen. Sales people need to be compensated for their efforts, along with the techs and engineers. Sales commissions must change or your company will eventually run out of money. Techs and engineers will have to rethink their roles and how to go about delivering solutions, but if done properly, it can be a huge win for everyone.
I, myself have been through this transformation with my own company. It was touch and go for a while, but we stayed the course and are now seeing huge growth in cloud. As a company, we spent 6-12 months figuring out what we were going to offer to our clients. We tested the solutions in-house before ever showing them to a customer. Over a two year period, we began slowly transitioning our customers, one by one, to cloud-based solutions, while at the same time, taking on new customers right to our cloud solutions portfolio.
Additionally, commission plans switched from a big commission on a $20K sale to being spread out over several months and the life of the customer. More customers had to be gained to keep the numbers going, but in the end, all these challenges were worth it. Everyone sleeps better at night knowing the cloud keeps humming and working while we sleep without our interaction.
David Graffia, VP of Sales at dinCloud, and two-time CRN Channel Chief says, “There is a paradigm shift occurring in the way your clients will consume technology. The market is evolving right before our eyes and the time to adapt and embrace is now. I applaud Mr. Stafslien for his willingness to adapt and embrace change. We have found that partners who take the time to thoroughly understand the customer’s use-case, and lead with a cloud-first approach, are growing at a much faster rate than those trying to hold on to the traditional sale. Once the partner understands the agility and scalability that cloud based on-demand compute brings, we explain how building an annuity that runs in perpetuity is much better than a one-time transaction.”