“The Cloud” is one of the principal Cs of The Marketing Id’s E=MC5 theory of connectivity, which states that a social Enterprise must support Mobility, Cloud-based Communications, Cyber-security, Collaboration & Content.  While the other Cs seem to be more easily understood, there appears to be some confusion regarding “the Cloud?”  The Marketing Id believes that as a branding reference, “the Cloud” probably suffers from varying perceptions of mood (gloomy) and color (gray).  Most people eventually want weather clouds to clear and sunlight to stream in.  So we thought it might help to let some sunlight in to what we know as “the Cloud” in the business world!

To be objective and thorough, The Marketing Id will analyze this perception problem from both, the provider and user (i.e., customer) viewpoints of “the Cloud.”

From a provider perspective, The Marketing Id was intrigued by a November 2012 publication, “BVP Top 10 Laws of Cloud Computing 2012,” in which, Bessemer Venture Partners posits that cloud computing providers must adhere to the following ten laws in order to succeed:

1. Drink Your Own Champagne
2. Build for the Doer, Build Employee Software
3. Death of the suite; long live best-of-breed and even best-of-feature
4. Grow or Die
5. Play moneyball in the cloud, and check the scoreboard with the 5 Cs of Cloud Finance
6. Build the Revenue Engine, and only invest aggressively if you have a short CAC Payback Period
7. Make online sales and marketing a core competency
8. The most important part of Software-as-a-Service isn’t “Software” it’s “Service”
9. Culture is key as you build your dream team
10. Cash is (still) king – Cloudonomics requires that you focus on cash flow above operating profits, and plan your fuel stops very carefully

While each one of their Top 10 laws is compelling and elaborated upon in the BVP paper, The Marketing Id would like to focus on a couple of the laws.  Law #5 suggests that a provider needs to “play moneyball in the cloud” by focusing on five specific financial Cs.  The relevant paragraph from BVP’s Law #5 states:

“After surveying hundreds of leading public and private Cloud Computing companies, 5 key “C” metrics now rise above the others as essential top level performance indicators: CMRR, Cash Flow, CAC, CLTV, and Churn.”

Thus, a successful cloud services provider must be concerned with Committed Monthly Recurring Revenue (which is MRR minus the churn) as opposed to Total Contract Value or Annual Contract Value, both of which are often manipulated by sales to their advantage.  BVP also provides a detailed discussion on their other 4Cs, which makes for a worthy read.

BVP’s Law#7 is a natural for The Marketing Id to highlight as it simply suggests, “make online sales and marketing a core competency.”  We couldn’t agree more.  In fact, their opening statement seals the deal as far as The Marketing Id is concerned:

“You’re a cloud business, so by definition, your sales prospects are all online. Savvy online sales and marketing is a core competency (sometimes the only one) of every successful cloud business.”

BVP then goes on to criticize some of the B2B leaders in the cloud business:

“The most innovative B2C companies are lead generation machines, leveraging social media marketing, search engine optimization (SEO), viral marketing, search engine marketing (SEM), email marketing, and other technically-advanced methods. Yet many B2B companies don’t have a clue. The incumbent technology leaders like IBM, Oracle, and SAP have done very little in online marketing, and thus have given their smaller challengers a huge opportunity.”

So while B2B cloud services providers have some work to do, cloud services users (i.e., customers) also seem to have a “cloudy” vision when it comes to their understanding of how best to match their needs with the benefits and value offered by these services.  Accordingly, from a user/customer perspective, The Marketing Id found a June 2013 Forbes magazine article, “The Top 10 Myths About Cloud Computing,” by Bob Evans, Senior Vice President, Communications at Oracle, pertinent and useful.  Mr. Evans disavows the top ten myths (listed below) that dog cloud computing:

• Myth #1: Public cloud is the only true cloud.
• Myth #2: You’re either in the cloud or not.
• Myth #3: Clouds are one-size-fits-all.
• Myth #4: There’s no difference between virtualization and the cloud.
• Myth #5: Clouds only run on commodity components.
• Myth #6: Cloud will lock you in.
• Myth #7: Cloud is about pay-per-use.
• Myth #8: Public clouds are still not secure.
• Myth #9: I need multiple clouds to run my business.
• Myth #10: The biggest benefit of cloud computing is lower costs.

Again, while each one of these myths is certainly worthy of discussion, The Marketing Id will focus on a couple while encouraging our patrons to read the original article.  Myth #3: Clouds are one-size-fits-all is apparently a prevailing myth that probably has its roots in the B2C user base.  Most B2C users avail of online services from Amazon to Zynga without knowing or caring that they are, in fact, cloud services.  The average Joe simply sees these as a part of his regular online activities and because his experience doesn’t differ much from one cloud client to another, would probably think of any one of them as a “one-size-fits-all” service?

However, in the B2B world, a one-size-fits-all cloud services offering is a non-starter.  Because, as Mr. Evans explains, B2B users/customers require and have a wide range of options available to them.  First, they can choose from different deployment models, namely, public cloud, private cloud, and hybrid cloud.  Then they have a choice of basic service models, such as, Software as a Service (SaaS), Platform as a Service (PaaS), and Infrastructure as a Service (IaaS).  Wikipedia (see their diagrams below) notes that these have been further expanded in recent years to include:

“Other key components in anything as a service (XaaS) are described in a comprehensive taxonomy model published in 2009, such as Strategy-as-a-Service, Collaboration-as-a-Service, Business Process-as-a-Service, Database-as-a-Service, etc.  In 2012, network as a service (NaaS) and communication as a service (CaaS) were officially included by ITU (International Telecommunication Union) as part of the basic cloud computing models, recognized service categories of a telecommunication-centric cloud ecosystem.”

Diagrams – courtesy of Wikipedia’s “Cloud computing” article

Mr. Evans also suggests different operating models for a cloud solution, wherein the:

• customer owns and operates it;
• cloud provider owns and operates it; or,
• customer owns the solution but the provider operates it.

Thus, it is pretty clear that in the B2B world one size does not fit all and there is a cloud computing solution that fits the varying needs of every business from a startups to a SMB to a large enterprise.

Finally, The Marketing Id would like to briefly mention Myth #8: Public clouds are still not secure.  Since Cyber-security is another principal C of the social Enterprise, we would like to cover it in a separate post in the future.  However, it is important to dispel this myth surrounding public clouds not being secure.  Nothing can be further from the truth on the B2B side of the public cloud infrastructure.  As Mr. Evans points out that public security providers have at least the following:

• a dedicated team of cloud security experts,
• processes that ensure full compliance with regulatory, and industry standards,
• regularly scheduled third-party security audits, and,
• automatic updates for their hardware and software.

We would like to end this lengthy post by putting the ball in the B2B cloud services marketing court.  There are too many misconceptions and misrepresentations out there of what is broadly known as “the cloud.”  Moving to the cloud might not be simple, but it should be as structured, staged and seamless as possible.  In order for providers to get there, they should be factually marketing the cloud, not further clouding the market with myths!