We do not see the market for on premises software for enterprise IT disappearing anytime soon. We have recent experience working with large organizations in the private sector where data center security policies still prohibit access to some cloud applications delivered over the public Internet. For what it may be worth, the cloud application is a virtual computing environment that demonstrates an application.
Of course, it may be the case that some cloud applications will pass through data center security systems, while others will not. Nevertheless, at a minimum, sales teams should be educated about demonstration software to equip them to detect an obstacle like the one we have just recounted, very early in the sales development process. No one likes potentially dangerous surprises that can entirely derail a progressive opportunity to provide enterprise customers with a high value solution, least of all the sales team running the engagement.
The flip side of this problem, of course, is that enterprise IT ISVs with on premise solutions can plan on at least an additional 5 years, or more, of data center market interest for their products. We think that highly regulated industries, including finance, and energy, will be particularly slow to move, entirely, to cloud computing. The risks are just too great.
Nevertheless, as Gartner, Inc., recently noted, we are inundated with hyperbole about cloud computing and its promise for enterprise business and large organizations in the public and not for profit sectors. If prospects from heavily regulated industries are unable to even evaluate, first hand, whether or not cloud solutions work, as claimed, then what potential is there, truly, for sales?
For enterprise IT ISVs with cloud and on premises solutions, we think it makes sense for sales teams to focus on selling on premises solutions, and then introduce cloud offers if, and when, prospects demonstrate an interest in cloud offers as well as a capability to utilize them. Certainly there are advantages for these same ISVs to market cloud offers to small to medium size businesses (SMBs), where the security bar may not be as high. But on premises solutions should the focus of enterprise IT sales opportunities, especially at a very early stage in a sales cycle.
Sales teams selling pure cloud solutions to enterprise businesses will have to pick their opportunities with great care. In fact, for these ISVs, we think it may be more advantageous to skip over prospects from heavily regulated industries, in entirety. No one likes to waste time, especially sales teams.
© IMB Enterprises, Inc. & Ira Michael Blonder, 2012 All Rights Reserved