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For broader adoption, Cloud must go Vertical!

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By Allan Behrens, Managing Director of Taxal


Allan-Behrens-200pxI like to look at IT topics in the context of the industry you’re in.  And that goes double for Cloud.

Let me explain… If I’m an automotive manufacturer, new technologies (and importantly those for this discussion in the Cloud product and services business) must add value to my business directly; notably to developing, selling and servicing better cars, trucks etc. If I don’t understand the linkage between what the IT providers offer and what I do, is it a surprise that I chose to stay with what I know and trust?

If I don’t understand the linkage between what the IT providers offer and what I do, is it a surprise that I chose to stay with what I know and trust?

I believe that one of the reasons for (arguably) slower take up of Cloud in general within the manufacturing sector is to a large degree due to the gaps between what user companies need, what they understand to be available, and the value that the new paradigm brings to support and enhance their business initiatives. These gaps are unfortunately (and embarrassingly) exacerbated by the significant amount of techno-babble (and acronym hell) that’s an age-old promotional ethos of us in the IT industry. Of course this gap in presentation and understanding/acceptance isn’t unique to manufacturing, it applies across many industries. Needless to say there are many other reasons that affect the take-up of Cloud (or any new paradigm for that matter), among these are the past stigmas of over-selling, drawn out implementations and lock-ins attributed to some of those in our IT communities.

To my point on the experiential gap between IT suppliers and their customers. It would be naive to simply pin the reasons for the absorption of new technology in one vertical over another as being one of semantics or misunderstandings. The availability of suitable Cloud enabled software (and security and hardware/software infrastructure) plays a fundamental role.

The challenge is what comes first, the chicken or the egg? Should software providers be developing (and migrating) their offerings for (and to) the Cloud in advance of client demand?

The challenge is what comes first, the chicken or the egg? Should software providers be developing (and migrating) their offerings for (and to) the Cloud in advance of client demand? In reality the availability of Cloud software for manufacturing companies is somewhat mixed. There are, of course, many, what many would call ‘horizontal’ applications available that are non-manufacturing specific, CRM (e.g. Salesforce www.salesforce.com) being one example. Naturally, some developers are waiting to see what demand there is before committing to Cloud, but we’re seeing some interesting service providers deliver Cloud delivery platforms that allow users to take advantage of non-Cloud based apps; for example Rescale http://www.rescale.com/ in the engineering simulation domain.

Of course there are long-serving application developers moving/developing product and services on the Cloud; Oracle, SAP, Dassault Systèmes and Siemens PLM amongst them. With their large suites of software it’s no surprise that it’s taking time to “Cloud-enable” their portfolios, but I tend to feel that many of them are still in the ‘wait and see’ category. There are, of course, developers who have whole-heartedly nailed their flag to the post. I’d include in the latter group suppliers such as IBM (www.ibm.com) active in a number of areas including those of analytics and software engineering, engineering solutions supplier Autodesk (http://www.autodesk.com/) with new Cloud based design simulation and manufacturing services, and ERP solutions from Netsuite (http://www.netsuite.com). Of course the promise of elastic and on-demand resource also provides an attractive option for many software start-ups, and we’re also seeing innovative solutions emerging in many areas including those of design, engineering, collaboration and supply chain management.

IT suppliers may want to consider a change their sales and marketing strategies; one that better promotes Cloud software and infrastructure focused on client (industry specific) business outcomes;

Rounding off then, Cloud adoption in industries such as manufacturing requires both technology and commercial catalysts. Of course enabling infrastructures and applications need to be available, and these are rapidly evolving/works in progress.  But Cloud acceptance can be further improved; for one thing, IT suppliers may want to consider a change their sales and marketing strategies; one that better promotes Cloud software and infrastructure focused on client (industry specific) business outcomes; business value-add rather than ‘technology for technologies sake’. As for potential user companies, perhaps it’s time for them to consider new the opportunities and advantages that Cloud can bring to their businesses; not only from financial or technological standpoints, but also in its ability, especially for small and medium sized business, to allow them to ‘punch above their weight’.

30 comments
prologicfirst
prologicfirst

Agree with you Allan, the cloud application developers should also concentrate towards manufacturing sector as cloud technology is on demand across every business considering the various benefits the cloud has to offer. Understanding the benefits that Hospitality industry could leverage from cloud technology, we at Prologic First have come up with cloud based hospitality solution http://www.mycloudhospitality.com/.


Bevanp
Bevanp

@allanbehrens, Thanks for a great, timely post. Should technology companies (of any hue, cloud or not) be promoting their offerings focused on client business outcomes; business value-add rather than ‘technology for technologies sake’; the answer is an unequivocal YES! Does that automatically mean that those offers/solutions/products should be aligned vertically; my answer would be, MAYBE. A good market segment, with a common business issue, where the potential customers would naturally reference each other can be made up of companies from different verticals.


Many tech companies “talk vertical”, but either fail to make the link between the business issues and how their companies’ products or offerings help solve those issues, or they try and squeeze as many of their  products into a bottom up vertically aligned story that screams “never mind the quality, feel the width”.


The result is generally the same. If the salesperson has managed to get that all important C Level meeting and talked knowledgeably about the vertical industry for a few minutes, he or she generally gets tripped up when the customer executive says “you seem to understand my industry, so how are you going to solve this specific business problem I have.” A software/SaaS salesperson might have a fighting chance, but most platform or infrastructure sales people will wallow helplessly at this point.


At best you will be pointed at the IT department as “just another technology vendor” where you will have to compete with a host of other look- a-likes, one of whom is probably already shaping the agenda. At worst you will be shown the door.


There is another way to break into a vertical…and stay there. It involves pinpointing that business issue you think you can solve, and which you will be known for. It requires a deep insight into your customers’ businesses, which you can only get from them. It means working out in detail what part you play in helping solve that issue. It means talking business and resisting the temptation to jump straight to your technology features, or telling   them about all your other capabilities that might be relevant (or not!). If you get in and help sort that one business problem you will have earned the right to talk about everything else you can do.


I’d love to wax lyrical about the role of communities and eco-systems that got mentioned in a number of posts, but I have written quite enough for one day…particularly as our thoughts all turn to the holidays.  Have a great Christmas everyone and maybe we can pick up this debate at a Cloud Burger event in the New Year!! 

Imoyse
Imoyse

We have already experienced great growth and benefit from vertical'ising our approach to our cloud customers, thus where possible delivering more than a cloud CRM, but in cases a membership management system,  an event management customised portal or an IT support tracking serial numbers, product sales and service contracts.


Showing the aligned business value to the specific clients needs is far more effective than simply proposing an all encompassing cloud generic benefit that is less tangible.

eoinjennings
eoinjennings

It's hard to move communities of interest or supply chains to the cloud in one hit cos they all have to move together. Usually lead by a supply chain leader like EDI. Ass a sector manufacturing I have found to be ahead of many but mainly for non core apps ie not manufacturing apps. Ipr theft increasingly a concern but not specific to cloud - often moving to cloud can be a catalyst for changing a poor ipr protection regime

neilcattermull
neilcattermull

I hope this does not become a rant but this subject is very close to my heart so I apologise in advance.

Community clouds, vertical clouds, industry clouds or whatever else we call them, make perfect sense in the evolution of cloud. Let's take a market sector, say recruitment. If the community of consumers are bundled together securely, ISVs for that industry can also be made available in the form of an AppStore, giving the consumers the choice of line of business applications at a click of a button, with certain common information sharing between each consumer (where relevant) to enhance their business in a collaborative approach. This coupled with the cost reduction of co-tenanted infrastructure designed for that sector. Make sense?

Industry standard security regulations that each firm would need to implement, down and offered for all and not a big cost for each firm to pay for. Hence the finance world was the first to pioneer this.

david_terrar
david_terrar moderator

Completely agree with the main thrust of your argument allan - it should be about real requirements and business outcomes.  More vertical solutions, particularly around manufacturing, engineering and maintenance, makes perfect sense.  One of my predictions for Cloud in 2014 is that ERP solutions will come on to the table in a much bigger way, whether from the likes of SAP or NetSuite, but also Workday and even Infor.  On top of that there are a number of Salesforce1 based solutions like Kenandy (from Sandy Kurtzig, who founded ASK - anyone remember them?) that might come on to the radar too.  Not sure Cloud ERP will be crossing the chasm, but we'll be talking about it a lot more. 

neilcattermull
neilcattermull

Allan, I totally agree! I was pushing the idea of community clouds for industry verticals back in 2010. In the US this was first done in the financial sector for integration ease of trading feeds back in late 2009. It makes so much sense on all levels. Great post by the way.

BillMew
BillMew

Allan - you and I have chatted about this at length and I know that we're both in violent agreement about the need for VARs to make their solutions (both Cloud and non-Cloud) industry aligned and therefore aligned to the client's business rather than simply what the VAR has to offer. 


Obviously its topical for us at IBM as we are currently announcing Industry-Specific Cloud Services bit.ly/IXJ6hf


We are doing all that we can to encourage our Business Partners to be more industry oriented and aligned - hence the partner industry specialties, education and accreditation that we do. The challenge we find is partly mindset - getting the BP to think like the client which automatically makes them more industry oriented - and partly a question of skills - having or building the industry skills in their sales and marketing teams.

comparethecloud
comparethecloud moderator

Cloud (selling) must focus on business outcomes! And that starts by getting to know your customers' businesses... Makes perfect sense, but you'd be surprised how many CSPs, ISVs, SaaS providers etc don't formulate messages for vertical industries. Or perhaps they don't need to?  Comments welcome, just log into Livefyre.

allanbehrens
allanbehrens

@ALOK MISRA Hi Alok, good article and endorsement....hopefully it'll add to the credibility of the case in discussion, and provide added incentive for change to some of our readers!

neilcattermull
neilcattermull

@ALOK MISRA Hi Alok, thanks for this link. I know of Navatar (or the group should I say). Pure speculation but I heard a rumor a very large company is looking at you at the moment to increase their footprint in the Financial Services space? not sure how true that is and it was only pub talk.


Anyway, I have always liked your CRM system and the ease of integration. Thank you for your comment!

allanbehrens
allanbehrens

@Bevanp Good points! The ability for sales people (and their companies) to link business to offers is one of competence and can be supported by a solid enablement program at the supplier.


There are two parts of this enablement worth mentioning (briefly). The first is that of the product and market messaging and supporting 'infrastructure' at the supplier. The quality of this has been somewhat light as many IT companies have battened down their hatches over the past few years. The second is that of sales enablement. I still see too much of this spent on product and not enough on customer value - especially as it relates to industries. In fact I also have a gripe about the enablement that some IT OEMs deliver to their channels. Yet again too much on product and not enough on value.


Do you agree?

allanbehrens
allanbehrens

@Imoyse Great to hear it's working well for you Ian and I appreciate your feedback. Your comments on business growth will hopefully serve (added) incentive to others!

allanbehrens
allanbehrens

@eoinjennings I too believe that Cloud will be a catalyst to business change. In fact I'm really hoping it helps support a move to more agile businesses (and their processes), not least through greater openness in both infrastructure and apps.

neilcattermull
neilcattermull

This as well as a word that we all hate to love, standardisation. A standard Core Cloud Infrastructure that adheres to the appropriate governance and requirements, a type of "build it once, replicate it many" type of approach that vendors and clients can join on a subscription model. @david_terrar Dave, you're correct with the competitive nature of businesses and configuration challenges that you have to overcome, but the ISV`s have their challenges in this area today if they are hosting applications into vertical markets. Why reinvent the wheel and adhere to this singularly, in a Community Cloud that offers this the end consumer could benefit of the cost reductions that they achieve by doing this. Or maybe its a "nice ideal" if we could all just get along so to speak. lets face it, the current commonality within any ISV`s today is connectivity. If this was similar across all vendors the applications and functionality provided by them would need to be the differentiator anyway?

comparethecloud
comparethecloud moderator

@neilcattermull @david_terrar  Does the pooling of resources or sharing of industry-specific burdens actually make sense though?  

For sure specialist industry / vertically focused software needs to make the leap to cloud and SaaS, and broad scope "horizontal" SaaS & Cloud services need to refine their solution and their selling to solve industry specific problems, like Allan suggests.  

But if all the software providers in a particular industry all clubbed together to build a shared "community" (or chose a single provider) vertical IaaS cloud, it would mean creating a closed system - an effective monopoly and level playing field - and where that happens there is always incentive to pursue lower costs and greater agility / differentiation / competitive advantage / broader market opportunity by venturing outside of the community / vertical / industry cloud. So we end up right back where we were.  

In Finance, there may be examples of it working, but I would suggest its in areas that don't significantly impact the (lion's share of) profitability and the competitive edge of the institution?  All businesses need to compete with each other and technology strategy is a key part of securing lower costs and/or performance advantages.  

allanbehrens
allanbehrens

@BillMew Understood Bill, and thanks for the comments. I see IBM doing quite a lot around industries and that's a credit to you. One can of course be cynical and say that we can espouse all we want, but the proof will be through (more) satisfied customers. Of course if a partner neglects the opportunity they stand to lose out on opportunity, or worse still, lose customers.

allanbehrens
allanbehrens

@comparethecloud @neilcattermull @david_terrar Great conversation BTW! Just to add my two penneth....

I don't think that bringing together the ecosystem for a vertical would necessarily create a closed system - in fact it may create a more open one without the need to resort to standards bodies to create degrees of interoperability and conformance.

david_terrar
david_terrar moderator

@comparethecloud I can only see community cloud style solutions working for verticals where there is no competitive advantage like local government, or if it is a marketplace, so I agree with you that it would be to those areas that don't add significant value.  However, we've always had a whole host of general ERP solutions - a few large, and many mid range, and then lots of vertical specific variants that are successful in a particular sector, because the products have had lots of configuration options and scope for being used differently.  That will follow in the Cloud ERP space too.  The fact that it's taken longer than the other more horizontal apps means that the likes of SAP (or Oracle, or Infor) still have a chance to get their Cloud act together properly.  @neilcattermull 

neilcattermull
neilcattermull

I understand where you are coming from Dan but surely the future mass adoption of cloud is better suited for more business tailoring. What I mean by this is that the business ease and choice comes first and if this can be achieved with industry specific app stores that combine tailored vertical business applications with end consumer collaboration (end user firms having the ability to work in hives so to speak with like minded firms) must be a good thing? Not so much a closed architecture, but more like a tailored on to that particular industry. I see your point about vendor collaboration but this must happen anyway in the future or vendors just won't survive (or they get purchased).

comparethecloud
comparethecloud moderator

@neilcattermull 

A central place to find apps focused on your specific industry? - Agreed, good idea in principal.  Basically Apple's app store or Android's Play store, but for specific industries.  But to do this all providers have to be on the same platform - e.g. iOS, Android, etc - otherwise all you've created is a software directory.  So you're suggesting a common platform which all these apps run on.  A platform itself doesn't need to be industry specific obviously, so what you're proposing is that an industry gets together and chooses a particular platform.  The question then is whether you're forcing all users of that common platform to use the same underlying infrastructure, and pay their proportion of the fees of managing that platform. If that is the case then my original points stand - you'll always have user and software vendors breaking away the second the collaborative community platform stops offering them the best cost efficiency and performance.

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