CSPs – it is Not the customers’ fault

Many years ago I used to say that the one trouble with the IT vendor community is that it understands how to be `bought from…’ but has little idea how to `sell to….’, and over the intervening years I have not seen too much evidence of any change in that business model.

What is worse, the advent of the cloud is showing that, not only has that community not really changed in expecting the customers to come and buy - and build their businesses accordingly around what the technology can offer - but have also largely missed the fundamental shift that the cloud brings with it – namely the need to sell services, not technology.   

A recent survey, The Lloyds Bank UK Business Digital Index 2014, demonstrates some important evidence of this situation. What is more, it is evidence that highlights where the majority of the vendor community are going wrong. The survey has shown that just 50 percent of small businesses have a website, with the majority of these only providing basic functionality, while just under a third (29 percent) believe that being online isn’t relevant for them.

Given the number of years that web capability has been available, the fact that nearly a third of the survey sample can’t see the relevance of exploiting even that simple marketing tool is sign of the failure of the vendors to understand what they are trying to sell to their potential customers, especially the SMEs.

And the true nature of the problem is demonstrated by a response to the Lloyds Bank survey put out by 123-reg, the UK’s largest domain registrar. This demonstrates what is, to me, the classic problem of the inbuilt `bought from’ approach of IT vendors. `The report points’, its statement says, `to a worrying lack of understanding among UK SMEs when it comes to getting their business online. Businesses must plan for the future and wake up to the imperative of having an online presence’.

In other words it is their fault, rather than the fault of the IT and cloud service vendors, that they cannot see too much relevance in exploiting the technology.

In a statement, Matt Mansell, Group Managing Director of 123-reg’s parent company, Host Europe Group, said: “It’s staggering to think that in 2014 just half of small businesses have an online presence and that one in three seem to have dismissed the opportunity altogether. Having an online presence was once a nice-to-have, but it’s fast becoming a precursor to running a business. The movement of traffic towards the web is staggering, with more and more of us turning to the internet to assist us with simple everyday tasks.

“By not having a website, these businesses risk missing out on some very real opportunities. We aren’t just checking the news and accessing social media sites anymore, but checking whether or not the hairdresser is open and what new produce is in the local deli. Even if you aren’t selling on your site, it’s a great window to countless potential customers. If they can’t find you, and see what you’re all about, the chances are that they will take their custom elsewhere.”

And up to a point this is correct.  But what are the services they are being offered? Most often, I suspect, they will in the form of technology deliverables that make little sense to the bosses of small business struggling to keep their heads above water – or keep up with the flow of business coming in.

It is up to the industry to actually configure the final, end user services that the SMEs need, not just dump a bunch of `assorted technologies’ on their doorstep and tell them it is up to them what they do with it all.  This is like giving SMEs a tree stump, a block of graphite and a spoke shave, and saying: “if you’re clever, you can probably make some pencils out of that.”

The Parallels conference in February showed that the service providers, and their channel partners, largely do not understand their marketplace and what it requires. As the CEO of a business selling the services of an application to end users through CSPs said to me recently, “I have come to realise that most CSPs have no idea what their customers do.”

If they do not understand what their customers are about how on earth are they going to sell them anything? All that will be possible is that they sit there and hope that some customers come in and buy something. What is worse, I suspect many of them do not yet understand who their real customers ought to be, how to find them, or how to partner with them.  

Those customers should be the businesses and organisations that have the brand names that resonate with the SMEs. They may well be trade associations and similar organisations as well as commercial businesses. And what they will need is the aggregation of both the compute resources and the applications and tools relevant to their market sectors. Those businesses and organisations can then go out and service their subset of the SME customer base with a package of services configured to the needs of a specific SME marketplace.

Then the SMEs will buy because they are being offered solutions relevant to their business needs, and where they can see the sense in using those services. They will thank their lucky stars that someone thought of offering them a service that was a no-brainer to sign up for.