Since Saugatuck began surveying buyer preferences for Cloud-based solution (SaaS) providers in 2003, there have been two constants when it comes to the data.
First, while enterprises buy Cloud business solutions from a mix of channel providers, they overwhelmingly prefer to buy direct, as reflected in the data from our 2013 survey, presented in Figure 1 below.
Figure 1: Direct-buy is the Preferred Cloud Sourcing Approach
Source: Saugatuck Technology Inc. 2013 global Cloud survey, n=218
There are some variances according to those with IT management roles versus business management roles, geographic region, and relative size of buying enterprise, as follows:
- IT vs. Business buyers. IT leaders indicate a significantly greater predilection toward multiple types of providers when compared to their business leadership colleagues. That indicates greater comfort in the IT camp with Cloud than previously seen. It also suggests much greater awareness by IT regarding different
- Cloud service sources. The IT side of the house has become a Cloud asset for Business.
Regional preferences. IT providers of all types take note - Asian firms are much more likely to procure services from Consulting firms, and much less likely to use VARs, than are their North American and
- European counterparts. The huge Asian presence and roles of consultancies (and MSPs) like Cognizant, InfoSys, and Wipro no doubt play a role in this.
- SMBs vs. Large Enterprises. While everyone’s first preference is to buy directly from Cloud services providers, the smallest firms are by far the most likely to procure Cloud services via MSPs and local VARs and SIs – no surprise, as these already tend to be the de facto IT departments for many.
The second constant has been a continued shifting and jostling below the first tier of provider preference. Figure 2 uses color-coded blocks to illustrate the relative rankings of provider types – and how they have jostled – just over our past three surveys.
It should be noted that while “Direct from Cloud Solution providers” ranked as the most preferred provider channel to acquire SaaS in our three most recent Cloud surveys, buyer preference has skyrocketed over this time period – from 37 percent in Dec 2010, to 57 percent in Feb 2012, to 61 percent in June 2013.
Figure 2: Relative Rankings of Buyers’ Cloud Provider Preferences, 2010 - 2013
Source: Saugatuck Technology Inc. 2010, 2012, 2013 global Cloud surveys; total n = 970
Why is it Happening?
The core reasons for these two constants are fairly simple in nature, but vast in their scope of effect on IT markets – and on IT organizations.
Cloud as a means of acquiring and utilizing IT is still a relatively young phenomenon within enterprises. Everyone “gets” the concept, but familiarity and comfort with services and providers is just now beginning to permeate most firms. Early adopters had little choice but to acquire SaaS directly from SaaS providers, as there were practically no alternatives. As more and more enterprises climbed aboard the SaaS bandwagon, most traditional software and IT services providers were slow to follow, and so buying directly became the de facto pattern of acquisition.
It took several years for traditional IT providers to first understand what they might do with SaaS, which resulted in many (probably most) fighting against it to some extent. For the first few years of SaaS growth, we found many IT vendor sales teams cautioning their IT buyers against SaaS. This, along with IT department uncertainty regarding security, provider viability, and their own roles, helped to align traditional IT departments against SaaS (and Cloud), and helped cement SaaS providers as the preferred choice among buyers.
The past few years have seen a significant shift in this approach, by traditional IT suppliers and by enterprise IT departments. SaaS/Cloud is now a core architectural and developmental strategy for both. This has upset the mix of offerings and capabilities from these providers. As they work to build portfolios, expertise, presence, and acceptance, buyers’ perception of them as SaaS providers shifts.
Meanwhile, we have seen a vastly-increased number and range of solutions, providers and provider types, along with increasing sophistication and awareness of these on the buyer side. And as this mix of providers and services becomes more complex, IT departments are shifting from fearing, restraining, or preventing SaaS/Cloud toward being the “go-to” SaaS/Cloud resources for their enterprise users.
This blog originally appeared at Saugatuck Lens360. Published with permission.
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