A Gartner Magic Quadrant product strategy for Cloud providers

Listing AT&T and Savvis as the Magic Quadrant leaders, the Gartner report ‘Cloud Infrastructure as a Service and Web Hosting‘ provides a framework for a product strategy for Cloud service providers.

Providers who want to drive their way to the top of this ranking can do so by responding to the core message and opportunity at the heart of the report, that the traditional web hosting and Cloud markets will converge over the next five years, and that this will provide a platform for expanding a full MSP solution portfolio (Managed Service Provider).

MSP Solution Selling

Gartner explain that the Cloud supply market is a new one that has grown out of the existing web hosting sector, and although it sits within this segment it offers a new level of technical capability that can enable an entirely new set of services.

Cloud services that supply the existing web hosting demand are typically servicing technical buyers who are making a tactical decision on where and how to host their web application. Hence this is a technical, ‘transactional’ buying decision where they make decisions on technical criteria.

In contrast Gartner also introduce the key to this article, a second, new type of customer who is looking for more; Cloud has inspired a new market of demand, where this group is approaching the trend strategically, they’re looking to:

“understand what Cloud can do for their business”. and “over time, intend to try and move some, if not all, of their data center infrastructure to the Cloud.

This corresponds with the most important point of Solution Selling, what Mike Bosworth describes as the “Conceptual Sales Territory” for salespeople to prospect new clients.

He makes the point that salespople typically approach prospecting as a process of looking for clients in an active buying cycle for what they sell, like an RFP.

However these are the most aggressively contested, force the lowest prices and as Mike also explains they are likely to be already influenced by another salesperson.

Instead expert sales prospectors focus on the much larger market of those ‘Not Looking’, and inspire new project opportunities through a process of needs creation. They are then in control of the buying process and enjoy much higher win rates with larger margins.

Cloud Feature Set

This provides a context for the Gartner MSP strategy because Cloud products that supply the web hosting market are essentially servicing the existing ‘Looking’ market, technical buyers looking for a hosting service for their web applications.

In contrast a broader set of new products will cater for proactive prospecting into the much larger ‘Not Looking’ market, because as Gartner says this segment “is looking to understand what Cloud can do for their business.” They’re more likely to be business people open minded to new use case scenarios.

Gartner highlight that the most heavily weighted criteria for their assessment is the product portfolios offered by the service provider, and their associated sales and service excellence.

Therefore quite simply and logically new product innovation is the key to industry success in the forthcoming Cloud market. A suitable product set will provide expert salespeople with the toolset to prospect very effectively in the Not Looking category.

The reviews by Gartner of each providers differentiating offerings quantifies the framework for this:

  • Core client needs: CSC is catering for software developers needs in a more in-depth manner, through working with Skytap to offer a greater set of value adds for them.
  • Vertical solutions: Media Temple specializes in the media industry and offers relevant micro-site application hosting, and Carpathia is tapping the gigantic government sector through Compliance capabilities.
  • Horizontal solutions: Sungard is a well established player in the Business Continuity market, and is moving to exploit the Cloud market that will drive new demand for this type of service.
  • Telco Cloud Services – AT&T is ranked as a leader because their Cloud services are tightly integrated with their core network products. VPNs et al are key to the MSP model as they bridge the gap between the clients LAN and the Cloud.

Savvis is also listed with AT&T as a leader of this Magic Quadrant, being recognized for their broad portfolio of solutions that includes the full range of MSP components, like managed enterprise applications, Business Continuity and SaaS platforms, as well as Cloud IaaS services.

Gartner also list this as a weakness though, in that these options sit on different platforms and this diversity can cause market confusion. However this repeats the message of where they see the market developing over the next five years, that the leaders who will ultimately win the market will be those who converge these two environments.

Our L5 Cloud MSP program will detail a roadmap for how this can be achieved.