Editor’s note: The following is a guest article from Sid Nag, VP Analyst at Gartner.
Today, organizations and their IT leaders are surrounded by digital technologies that can support innovation, including cloud, generative AI and edge. IT leaders want to transform their business through technology advancement while ensuring that costs are contained.
However, many organizations struggle to find the synergistic relationship between these technologies to serve complex use cases. Businesses that have moved beyond using the cloud as an infrastructure play to instead rely on cloud as a platform for their digital transformation needs are looking to leverage cloud features and functionalities to drive business outcomes.
The individual standalone services offered by many cloud providers do not help organizations address their needs. The siloed approach taken by cloud providers misses the bigger opportunity and benefit when services are combined to deliver outcomes aligned with the customer’s digital ambitions. Emerging technologies and their components can be combined in different ways to uncover new and better value.
Cloud IT services providers have an opportunity to simplify the issue for customers and level up their value proposition through bundling.
By shifting the focus from individual discrete services to interlocking components that can be combined, providers can help customers address specific use cases and drive better business outcomes.
Benefits of a bundled approach
Historically, cloud IT services providers have focused on two axes of a three-axes model. The first has addressed offerings for individual hyperscalers. These offerings are important, but in a world of multicloud adoption, they become less relevant.
The second axis has been the focus on industry verticals, whereby offerings have been created for specific industries such as government, manufacturing, retail or financial services. Such offerings have embodied and addressed unique regulatory and compliance needs across industries, and this focus continues to be important.
The real opportunity for cloud IT service providers lies in the third axis: creating offerings around business outcomes that employ a combination of discrete features, functionalities and technologies.
Providers that take this approach address the needs of the buyer, which wants recipes and prepared meals (outcomes) and not simply a cart full of ingredients (features and functionalities).
By taking a combination approach, cloud IT service providers can improve digitalization business outcomes for customers, offer more detailed management insight for CIOs, reach more users and use cases, lower costs for end-to-end delivery and achieve greater share of wallet.
How to create bundled offerings
Managers at cloud IT services providers can build bundled offerings by prioritizing specific use cases and outcomes. Choose use cases by considering the size of the market by industry, focusing on industries with high growth and revenue potential.
Also, evaluate the internal technical skills that are needed to address a specific business outcome and use case.
Partnering with public cloud providers is also key to the success of such an endeavor. Partnership falls in two broad categories: technology alliance partner and consulting partner.
A certified partner in one or more cloud provider partner programs is key, especially across multiple advanced technologies. These programs include selling, reselling, extending, supporting and adding value to the hyperscale cloud providers’ offerings.
Packaging cloud offerings involves creating comprehensive bundles that meet the needs of customers and demonstrate the value of the cloud services.
Leaders can package cloud offerings effectively by:
- Understanding the target audience: Identify your target customers and gain a deep understanding of their desired business outcomes. This will help identify the specific technologies to combine to achieve these outcomes.
- Defining and understanding your target: Determine the business outcomes and use cases for which you want to build offerings around. This may include combining infrastructure and platform capabilities or specialized services, such as data analytics, ML or generative AI.
- Create service tiers: Develop different tiers or packages to cater to different customer segments or use cases and business outcomes. Each tier can have varying levels of service, features, performance and pricing.
- Bundling complementary services: Identify additional services that can enhance the value of your cloud offerings, such as backup and disaster recovery, monitoring and support, security services or specialized tools and integrations.
- Determining pricing models: Pricing is the area in which differentiation is most achievable, given the reluctance of most service providers to stray from traditional models. Outcome-based pricing models can attract clients keen to engage in a shared-risk and shared-reward partnership.
- Developing user-friendly documentation: Create comprehensive and user-friendly documentation, including detailed descriptions of each offer for specific outcomes, technical specifications, setup guides and FAQs.
- Offering trial periods: Consider providing trial periods or demos to allow potential customers to experience cloud offerings before committing. This can help build trust and confidence in your services.
Cloud providers should seize the opportunity to drive and create offerings that move away from leveraging myriad individual cloud capabilities in a discrete manner. The ticket to success is to help organizations wade through these complex individual technologies that are being purveyed by public cloud providers in a siloed approach.