Are Our Heads in the Clouds?

CloudBroker

By Tom Fedro

The cloud as a computing concept is relatively new, though it had its roots in central database management that’s been around before the personal computer.  Still, outsourcing not only data storage but also applications and customer management technology is a new concept that’s rushing forward with the kind of intense inevitability that has a great many technology pundits excited (and sometimes I think we get excited just to get new buzzwords and new acronyms) and more than a few businesses confused.

Vendor relationships require work, and vendor relationships that are technology based require even more work.  While individual projects (when done right) will include a thorough needs assessment and a path toward meeting those needs within budgetary guidelines, when a relationship will be ongoing and mutually reliant, several issues present themselves.  A cloud company such as a customer and relationship management hosted application or even hosted email like Google Apps is in the business of developing software, not handholding.  A company that offers financial services isn’t looking to learn the ins and outs of a piece of software but instead to gain from its functionality.

We can think of cloud software a bit like we might a car.  Sure, we need to learn to drive it and sure, we ought to know how to fill it with gas, check the oil, and keep the tire pressure up.  Except for enthusiasts, though, none of us want to be to the mechanics.  Businesses are a lot like us.  They want to use the software and are ready and willing to perform basic minor maintenance, but they don’t want to waste company time and resources dedicating heavy intellectual resources into the process.  So, while value added resellers can certainly tout the advantages of cloud products, they have to do so with a basic understanding in mind, that the technology is no more the business of the consumer than a car is an end in and of itself for most people.

All of these factors lead me to agree with a number of experts in the field who believe VARs will soon become CSBs, Cloud Service Brokerages—integrating cloud computing services together to fit the needs of a particular business and helping that business get what they want, to move from point A to point B, just the thing I want to get from my truck.

The New Funnel

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By Tom Fedro

I remember back in elementary school (okay, vaguely—but no jokes about how long ago that was, please) when I first learned about converting measurements.  Back then, we’d spend forever turning inches into feet, feet into yards, cups into pints, pints into quarts and every other measurement of volume, distance, and time into other measurements of volume, distance and time.  Then things got crazy when we had to learn how to change centimeters into meters, milliliters into liters, and so on.  Want to drive a kid insane?  No problem.  Add in converting from standard measurements to metric system measurements.  I remember a test in which we had to measure various shapes in order to discover their area.  We had to be careful to use the correct ruler (some of us, the correct side of the ruler) so we measured in the right system.  If you measured correctly, you got good marks.  If you tried to use a standard ruler for a metric question, you failed.  If you didn’t use the correct formula for determining the area of a square, you failed.

Well, you probably know by now that I’m not just reminiscing.  I belong to about twenty news feeds too many, and on one of them, a marketing piece popped up.  With my background in marketing, sales, and business development strategy, it’s hard for me to pass up on clicking on a title that involves marketing.  This particular post declared that the funnel model of marketing is dead.  That’s right.  Dead.  Not in trouble, not sick.  It’s dead.  I read with interest, and I’m always amazed at how quickly business experts move to declare the end of something.  You see, I don’t think the funnel is dead at all.  I think it’s just been converted. A short while ago it was liters, and now it’s gallons, or something like that. Just as a European in the United States has to put some thought into distances expressed in miles before beginning a journey, marketing executives now have to put some thought into how they measure marketing effects and a customer’s journey into the funnel.

The funnel represents a fairly clear understanding of the path from a potential customer to an actual customer, but the AIDA (Awareness, Interest, Decision, Action) process is no longer influenced in the same manner it was a few decades ago or even one decade ago.  I find it interesting that so many marketing experts are ready to throw away the model instead of learning new ways to understand and influence customers within the various stages.  Certainly, there are new factors to consider that might give us four or five different kinds of prospects in the Interest or Decision stage, but realistically, they’re still in that stage, right?  Has all of humanity changed into something else or have people instead changed the way they gather and act on data?  I think it’s the latter, and I think marketing professionals have to start thinking about the funnel in a different light, but I’m not ready to say it’s not a funnel just because I have to measure it with a different ruler.

Predictions and Postulations

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By Tom Fedro

Have you ever watched a television show or a movie from your youth and just sat astounded at the way everything in the show doesn’t mesh with today’s world?  I’m not just talking about the emotional or political aspects of it.  Sure, when Ricky Ricardo gives Lucy a spanking, our eyes get wide and we shake our head about how different our world is now; but I mean the way technology has become such an integrated part of our life that things just seem off when it’s not part of the equation.  There’s something about watching a police officer put a quarter in a pay phone or a detective open up a phone book that seems strange.  I catch myself wondering why Starsky doesn’t just call Hutch on his cell phone!

Nobody in the 1980s could have predicted the way things have progressed.  Sure, Alvin Toffler was pretty close when he wrote The Third Wave and announced the end of the industrial age and the beginning of the information age, but even Toffler’s genius didn’t anticipate the completely wired-in (or wireless for that matter) access to…well, to just about everything.  In fact, while the beginnings of the information age focused on technology—Can we do it?—the new focus is on service based delivery of functionality and information.  Content is king in ways never imagined before, and this means that opportunities have really shifted from pretty buttons to secure methods of storing, transferring, and accessing data.

With every major company trying to get in on the Cloud in one way or another, predictions explode from tech pundits like one of Lucy’s cooking experiments gone wrong.  How many of these predictions will go the way of the flying car or the teleportation device?  There’s no way to tell, really, because so much of what we get in the world of technology is driven by market forces that are fickle.  One thing I believe is certain, though, is that we have to interpret technology based on trends we anticipate for the future.  Twenty-five years ago, we couldn’t have anticipated (absent sheer genius) the social media explosion, the complete mobile revolution, or the trend toward instant access, but the one thing that we could have and should have anticipated is the reliance on data and its complete takeover of our daily lives.

Someday, our kids will watch television shows and movies from our time and wonder why the hero doesn’t hop in his flying car or simply order up a logical answer to the dilemma or something else that seems impossible now.  Who knows what technology will be standard in thirty years.  I’m willing to bet, though, that at its core it will deal with information and access to it.

 

Successful Exits

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By Tom Fedro

Most of us have the dream, right?  We imagine taking our company public or selling it for a dramatic windfall.  A great many of us saw at the height of the Internet boom when a successful exit didn’t necessarily require anything resembling fundamental business health.  We watched companies that were giants merging with companies less than a decade old.  We watched kids become millionaires with stock options and public offerings.  In many ways fundamental business planning gave way to product development intended not for profit but for eventual sale to someone else.

There are still some examples of this kind of attitude, but the opportunities to sell non-monetized companies have faded significantly.  The days of impossible valuations are numbered if not already gone.  Take Bebo for example.  It sold for $850 million to AOL and almost immediately tanked.  AOL’s CFO lost his job and when the founders bought it back for 1/85th of its sales price, the fiasco finally ended.  This isn’t to say AOL was cheated or that the founders of Bebo didn’t deserve an exit.  However, it was AOL’s desperate attempt to remain relevant in the world of social media that led to overpayment and then a complete loss of more than three-quarters of a billion dollars’ worth of shareholder value.

If you’re looking at this and seeing an $850 million exit strategy, you’re looking wrong.  For all intents and purposes, the purchase of Bebo signaled the end of insane valuations. The key to business is and always has been valuations, and the slap in the face to each of AOL’s shareholders illustrated that far more effectively than anything I could ever write.  My advice?  It’s absolutely appropriate to build a company with the intent to sell, but  you have to be in for the long haul with genuine value creation and profitability over time because you never know if or when that buyer will actually show up with the big check.