No, we’re not talking about the weather. Although that has been a very timely topic here in the Northeast with record snow we are still dealing with. What we are actually talking about is the challenges of traditional CRM consultants for on premise technology and the challenges they face shifting to the cloud mentality.
In the past 3 weeks I have been in two separate continents with two major software publishers and the messaging is the same, “Move your business to the cloud…now!”. Funny thing is that the challenge for these traditional consultants is actually the same for these publishers. Many software publishers are learning how to do business all over again or becoming a dinosaur like IBM.
With such an active discussion in the software and software consulting community I thought it was ripe analysis with a blog post. First, we will take a look at the problem from a publisher perspective. Then, we shift to the concepts that make the model a challenge for traditional consulting structures.
As a publisher the old model was based on the fact that in order to be able to have a successful customer there needed to be a guided implementation, often with customization, and traditional project management methodology. In order to accomplish this a firm would need to staff and manage utilization of its resources. For their troubles there was margin (often significant margin) and they would keep all margin on services over and above labor costs and expenses.
Publishers have realized that with cloud their business model has shifted. The need to surrender margin is less, the sales process is shorter, and the long term value of the customer is greater. The other true reality is that the relationship with partners is also significantly different. And publishers should be willing to “let go” because many of these consulting firms will not be able to make the fundamental mental shift to doing business in the cloud.
Why won’t traditional CRM business partners or ERP business partners be able to shift? Well, because the cloud DNA is fundamentally different and while people can change their clothes easily it’s almost impossible to change their DNA. As a lesson well learned in the past 10 years to use and example think about how many traditional technology resellers have been able to convert from being good ERP shops to good CRM shops. Realistically, very few, because the DNA of CRM consultancies is uniquely different from ERP.
So, in my opinion, as the traditional on premise technologies accelerate the cloud execution, they will essentially wake up to a new cloud channel in the next three to five years. The cloud is just different. Many people in traditional consulting roles are having a very hard time adjusting to the concepts in the cloud as well. For instance, customers tend to have a higher level of responsibility and the consultancies are use more for enabling, teaching and expertise.
The talent pool for cloud is also different than those higher priced resources that we might traditionally employ for on premise CRM business analysts or developers. Technical expertise will wain for higher energy and high availability of resources by having lower cost resources that are easy to reach. These resources will then evolve and become our cloud leaders for tomorrow. This is a fundamental DNA shift that many cloud only CRM consultancies already understand because it is the only way they have ever done business.
At the end of the day it’s not personal, it’s just business. Many consultancies will add or drop products this year as a change in strategy or focus. So on premise software providers need to face the reality that many of their existing partners are “cloudy” for a reason and it may just be easier to build a new channel rather than trying to change DNA. It’s just a hunch but let’s see how it plays out.