Objection Defenders: How to Answer Your Customers’ Concerns About Consolidation in the Cloud Space
What do you do when faced with a CIO who won’t convert due to fears about mergers and acquisitions and their impact on service levels? Andrew Pryfogle, SVP Cloud Transformation, and Raymond Nelson, Cloud Integration Specialist, help you formulate a response.
THE CIO’s OBJECTION: There is a lot of consolidation in the cloud space and while I might sign up today with a service provider that offers a great service with awesome support, the company could be acquired in the next few years and then you never know what kind of support or entity I will end up having to deal with.
THE ANSWER: Industry consolidation has always been a reality. IT leaders have to be ready to deal with change at all times. Any forward-looking IT strategy should take into account how to manage unexpected changes. Here’s how you can response to your customer:
I’d like to ask you five questions …
1. How long have the service providers you’re considering been providing the service? Far more likely than industry consolidation is a service provider’s internal philosophies around support and operations. Are they still figuring out how to support customers? How proven are their operational processes? A brand new provider will naturally go through lots of evolution in these areas, which can cause pain for customers.
2. What is the service provider’s exit strategy? What you’re really looking for here are companies that are built to operate, versus companies that are built to be acquired. Those looking to be acquired won’t tell you they are, but there are always signs of it, such as higher investments in sales and marketing, versus operations. Rapid growth followed by rapid cost cutting is also a frequent sign that a company is improving their financial picture for a sale. Then look at the pedigree of the executive team. Were they placed there by private equity or venture capitalist firms looking for an eventual exit? Do they have track records of building up companies to be sold?
3. Is the platform you’re considered proprietary or standards-based? Proprietary platforms are much harder to replace later. Standards-based platforms more easily allow you to change providers while not losing any hardware investments, such as IP handsets. Additionally, most contracts can be written with a performance clause. Choose a platform that eases portability, and it will give you the ability to move to a new provider with minimal rework and disruption.
4. Is your alternative a premise based system? You’ll have just as much exposure in this market, as companies are being acquired, and worse, failing and shuttering their doors. Having the right solution provider navigate a cloud based solution means you can rely on them to stay on top of all the potential outcomes.
5. How forward thinking is your own IT strategy? Far more likely than your cloud service provider being acquired is turn-over of your existing IT staff and/or leadership. As an example, the average tenure of a CIO is <2 years. How well is your IT strategy documented? Do you have a well thought out plan that could be passed on to the next IT leader to continue executing? Does it take into consideration unexpected changes in the environment and technology needs?
At the end of the day, the basic design of any quality IT solution is to architect for change. A well thought-out cloud strategy will better prepare you for unexpected changes of all shapes and sizes. I can help you build that.