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What Does It Take to Sell Cloud Services to SMBs?

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One of the biggest dilemmas facing cloud vendors is how to penetrate mainstream small and midsize businesses (SMBs). Selling to SMBs has never been easy and historically it’s been a task delegated to tech channel partners. However, the cloud business model has created a new set of challenges regarding this age-old dilemma that have raised questions about whether traditional channel companies can meet today’s demands.

Although many industry observers have believed that SMBs have been leading the charge to cloud-based alternatives, the truth is that SMBs have been reluctant to move to the cloud for many reasons. The myth about SMBs adopting cloud alternatives faster than large-scale enterprises stems from two misconceptions. First, many people misinterpreted Salesforce.com’s relatively small average deal size in the past as an indication that its service was being acquired by SMBs when the reality was that it was deployed by small sales teams within larger organizations. Second, startups that are comfortable adopting cloud services are not indicative of the preferences of the broader population of mainstream SMBs.

So, why are mainstream SMBs slow to move to the cloud?

First, SMBs are not as knowledgeable about the latest tech trends because they don’t have the benefit of full-time IT teams that keep track of new system and software innovations.

Second, the innocuous nature of the cloud terminology has been hard for many SMB IT and business decision makers to fully grasp. Conflicting definitions and deceptive marketing tactics regarding various cloud offerings (“cloud-washing”) has also created confusion.

And SMB decision-makers are more risk adverse because even the smallest moves can have a big impact on their operations.

It is for these reasons that many SMBs have relied heavily on local technology resellers, software value-added resellers (VARs), systems integrators and hosting companies as their trusted suppliers of hardware systems and business applications in the past.

Hardware and software vendors have been equally dependent on these channel companies to sell and support their solutions to SMBs. The channel partners can cater their solutions and scale their services to meet the needs of the SMBs in ways hardware and software vendors could never achieve.

However, the traditional channel companies are facing a similar set of challenges as their vendor partners. Both are having a hard time keeping pace with the changing expectations created by today’s consumerization of IT and move to the cloud. Business end users are taking greater control of the purchase decisions and they’re demanding more user-friendly and economical solutions. Channel partners that have historically sold IT departments on the “speeds and feeds” of the latest generation of hardware and software products are not sure how to appeal to the new buyer.

One of my favorite events of the year is the Parallels Summit because it is a great place to take the pulse of the cloud services marketplace. This year’s event was particularly timely because it brought together many of the leading hardware and software vendors, hosting companies and other service providers, as well as VARs and systems integrators. The challenge of cracking the SMB market was on everyone’s mind at the summit. To Parallels’ credit it is not only working hard to make its solutions easier to deploy and utilize, it is also offering business consulting, market research and a vibrant ecosystem where Parallels’ partners can trade insights and best practices.

This is the type of combination that is becoming increasingly essential as technology vendors and channel partners grapple with the challenges of attracting SMBs to their cloud solutions in an increasingly competitive marketplace.

Jeff Kaplan is the managing director of THINKstrategies, founder of the Cloud Computing Showplace and host of the Cloud Innovators Summit conference series. He can be reached at jkaplan@thinkstrategies.com

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