January 05, 2005, 11:53 AM — Even with the hope of continued improvement in the economy in 2005, the IT industry should not expect a return of old corporate technology spending habits. While most corporate executives recognize that technology innovation is key to gaining a competitive advantage, that doesn't necessary translate into renewed spending for more technology and renewed efforts to build their own corporate IT operations. Instead, as the past year taught us, corporate executives and end-users alike are increasingly interested in pay-as-you-go, utility computing alternatives to keep operating costs down and permit them to stay focused on their core businesses.
Rather than viewing this as a threat, leading suppliers should capitalize on this growing interest by taking the following steps to broaden the demand for utility computing:
1. Focus on service solutions rather than technology products
The growth of Salesforce.com is not an anomaly. Hosted applications and managed network, security, storage and other services are all growing exponentially faster than traditional technology product sales. Enterprises -- especially SMBs -- would rather 'lease' than 'buy' and are increasingly subscribing to various on-demand services to satisfy their day-to-day computing and communications needs.
2. Emphasize business benefits, not technology features
Nicholas Carr was right, IT has become a commodity and the days of IT product marketing have passed. Corporate customers only care about business benefits, not about technical features. Therefore, suppliers must adopt business-oriented solutions and marketing messages to convince customers of the value of utility computing.
3. Promote customer success stories
When it comes to effective marketing, nothing speaks louder than compelling customer success stories. These case studies are the most powerful sales tool for convincing new customers to adopt utility computing solutions.
4. Retrain salespeople
Traditional, transaction-driven, technology-oriented salespeople are going to be ineffective selling utility computing solutions. Instead, successful salespeople will need to be more business-oriented and skilled in consultative selling techniques.
5. Restructure channel programs
Escalating demand for utility computing solutions in the SMB sector represents a tremendous opportunity for vendors and VARs alike. However, VARs must also undergo a fundamental shift from transaction-oriented product selling to service-oriented solution selling. Vendors must restructure their channel programs to properly incent and support their channel partners.