XChange 2014: Succeeding In Cloud Requires Major Sales Transformation

Powering big, monthly recurring revenue sales growth in the cloud computing era requires a major sales and business model transformation.

That was the big takeway from top solution providers on a "Sales Strategies For the New Cloud Era" panel session at the XChange 2014 Conference on Tuesday, hosted by The Channel Company CEO Robert Faletra.

"There has definitely been a lot of heavy lifting," said Michael Harwood, senior vice president of marketing for Sirius Computer Solutions, a $1.3 billion national solution provider that has transformed from a data center infrastructure provider and is now doing $400 million a year in recurring revenue cloud and maintenance business.

"Our sales team is phenomenal, but you need to retrain these guys. We also realized that not everybody is going to catch on to this new sales methodology. There are some guys who are going to get it and some guys who aren't."

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Key to Sirius' success in transforming to the cloud consulting model has been bringing in new technical and inside sales talent to help with the recurring revenue sales transformation. In fact, Harwood said Sirius added cloud sales specialists who are helping traditional on-premises data center infrastructure sales reps make the pivot to cloud.

Sirius worked hard to get its top sales reps "used to and comfortable with an annuity stream," said Harwood, rather than "getting all the money up front." One of the benefits for the new cloud era model is more predictable sales compensation for sales reps who, in the past, may have been used to wild swings in salary from year to year depending on the number of major infrastructure deals. "It's no longer all or nothing," said Harwood.

As part of the panel session, Faletra released exclusive research from The Channel Company that showed 60 percent of solution providers were planning to invest in retraining existing sales reps with strong customer relationships to make the cloud transition. Approximately 39 percent of those solution providers surveyed planned on hiring new salespeople with services expertise.

Among the other research findings from The Channel Company were that there are more executives than ever before making the buying decision, including line-of-business executives. What's more, The Channel Company research showed that 62 percent of buyers are doing research before they make a cloud or services buying decision. That change in customer buying behavior is driving a dramatic increase in solution provider marketing and branding.

"You need to know what your position statement is in the market," counseled Faletra. "What differentitates you? There is a lot of pre-research being done in the market before a customer reaches out to a solution provider or a vendor."

Cliff Sweazey, executive vice president of Innovative Integration, an $8 million Indianapolis-based solution provider that has moved to a cloud computing services model, said the changes in buying behavior precipitated by the cloud has shattered the old solution provider system integration business model.

"It used to be all about the relationship -- you were a trusted IT adviser, and customers looked to you to say what is out there," said Sweazey. "Vendors supplied the marketing materials. Now look at the statistics on self-driven research: Customers are determining what, before they ever decide on a who, and often it is not the original people we had the relationship with. It is not just a CIO or CTO decision anymore."

Innovative's marketing prowess is more important in the cloud era because "we are now having to sell ourself on top of selling product," said Sweazey. That has caused Innovative to look outside the organization for "marketing and lead generation," including appointment setting campaigns. "It is too expensive to have the traditional salespeople out there finding all the leads," he said. "It is a quantity play versus just a quality relationship."

NEXT: Taking Some Lumps To Succeed In The Cloud Era ‚Äč

Innovative's transformation from a one-time systems integrator to a cloud-era provider with 30 percent of its business now coming from recurring revenue has not come without the company taking some lumps, said Sweazey.

"We took the ugliest approach possible. We decided we were just going to jump into the whole sales methodology. Selling cloud and managed services compared to traditional infrastructure, turnkey projects is completely different. It is a different mentality from the sales and engineering teams."

Sweazey said companies starting from scratch to build a cloud services business have an advantage over traditional systems integrators. "That is smart," he said. "It's a hard transition to make."

Techcess Group, a fast-growing, 10- year-old cloud computing services provider headquartered in Houston was built from the ground up as a services company. It has thrived in the cloud era because of its sharp focus on driving competitive advantage for customers with an annuity-based IT services business model. The $6 million company is now driving a whopping $400,000 every month in recurring revenue.

"It is absolutely invaluable that we started as a managed services company," said Jason Wright, vice president of sales and marketing for Techcess Group. "If you want to get into this business, you can't hire the traditional VAR/reseller/hardware sales guys. You have to go out and find somebody who is selling consulting. You have to find someone that knows how to have a business discussion with executives and not a tactical IT boxes discussion."

Most traditional systems integrators are commoditizing themselves by having tactical discussions around technology issues like antivirus and backup, said Wright. "We go into clients looking at what risks they have, how they make money and what new markets they are entering into. We have a clear advantage because of that."

One example of Techcess Group's success: a four-year cloud computing services deal inked earlier this year with Texas Chiropractic College that leverages Techcess' own Infrastructure-as-a-Service and fully virtualizes the college's infrastructure. Techcess also is providing the college desktop support and disaster recovery.

Techcess Group's sharp focus on business services means that the company doesn't face the competitive pressures of a traditional systems integrator, said Wright. "We are not running into competitive situations," he said. "The way we engage with the customer, we earn their trust very quickly and end up not even having any competititon."