Do you view your cloud technology as a strategic asset or a commodity? The Commoditization of the Cloud

A commodity is a product or service from one supplier that is easily interchangeable with other products and services of the same characteristics from another supplier.

The impact and resultant change from adopting cloud products and services is accelerating and is impacting all individuals, all businesses and all industries. This is reflected in the dramatic acceleration from private data centres supporting physical servers and mainframes, hosting monolithic applications and implementing waterfall methodologies; the transition towards hybrid-cloud and containers, hosting micro-services and SaaS applications and leveraging DevOps.

An ever-increasing number of businesses are adopting ‘commodity’ based cloud products and services allowing them to leverage the benefits they deliver. This has the potential to create challenges for those suppliers offering these types of products and services.

The move by subscribers towards commoditised (subscription based) services leads to challenges to the suppliers of these products and services which has been  seen (witnessed) in other industry sectors. For the cloud suppliers who are, and who want to offer their consumers ‘commodity’ products and services that have all the benefits that their clients are wanting and drive adoption; they need to sit back and learn from what has happened in other sectors.  

Let’s take a look at the telecommunications industry and their consumer-based products and services. Broadband has become one of those products and services that has evolved to become an interchangeable commodity that the subscribers have leveraged to its fullest; by moving suppliers to leverage the offers that only focus on attracting new customers at the expense of existing customers. This is augmented by the ease of porting which is typically handled by the new supplier, making change easy, hassle free and consumers treating their broadband as a commodity.

This is also occurring in many other sectors, and when your product and services is a commodity, you make it easy to move suppliers, you only create offers for new customers, and do nothing for existing consumers; then you create a market that will be exploited.

Why is this happening?

  • Not understanding your customer satisfaction or experience
  • Not understanding where your customers are in their engagement lifecycle

The evolution towards the commoditization of cloud products and services has allowed the competition to take advantage of customer dissatisfaction. Too many suppliers are focused on revenue at the expense of the customer.

There is a need to transform and change the way companies engage with their customers and for those senior executives and leaders who do not understand the importance of this are in danger of being left behind. The cloud product and service sector has been a disrupter and has continued to bring further disruption through technology evolution.

It typically costs more to onboard new customers than retain existing customers. To maintain revenues and market share; understanding where your customers are in their engagement lifecycle, their diverse and constantly changing expectations and their satisfaction is needed if you want to ensure retention. Only through a continuous partnership with your customers can you meet and adapt to their evolving needs and wants.

Many suppliers will say they are relatively new entrants and are not hampered by legacy issues; however, many still have a ‘one size fits all’ standard approach to customer engagement. To truly compete there is a need to offer and deliver differentiated and personalised managed customer experience. This will present many challenges within suppliers where their organisational structure and processes are not ready or adaptable to the new paradigm of customer lifecycle engagement. To succeed a transformation needs to happen to business models, culture, processes, people, technology and data usage.

How customers discern the supplier marketplace will shape the future of the business to customer relationship. The new digital world, where information about products and services, suppliers and their customer service quality, is here to stay. Ensuring your portfolio and how that portfolio is delivered, the expectations from customers and keeping the customer engaged and satisfied are important to remain relevant and compelling.

To build customer centric momentum and meet the customer experience challenge, suppliers need to:

  • Embed a customer excellence and customer focused mindset across all employees.
  • Analyse and understand trends and patterns from customer engagement data from all sources.
  • Build an outside-in model that focuses on flexibility and empowerment towards the customer, which will lead to revenue generating recommendations.
  • Tear down silos and empower collaboration across the company teams which will lead to mutually beneficial outcomes to the business and the customers.

If you don’t want to end up like other industry sectors that have commoditised their products and services; then it is not just about focusing on your NPS score if you want enact market leading customer experience, it’s about:

  • recognising your company is about the customer, and not your company.
  • being willing to do something new – fail fast and learn fast.
  • communication and education across the company.
  • people interacting with people.
  • not just surveying your customers, but actually listening to them.
  • building a unified customer experience and customer-centric vision across the company.
  • Introducing technologies that can drive customer experience transformation.

Let’s talk about your cloud transformation and its resulting journey, and how the Cloudreach executive cloud advisory and our comprehensive ecosystem of experts and services, will enable your company to realize its vision. Download a copy of our Accelerate Cloud Adoption ebook.