2. Understand the value proposition of the cloud.
Now that businesses are adopting cloud computing, what exactly are they doing? How are they integrating the cloud into their overall IT structure? Are vendors delivering products to meet the needs of today's enterprises - both large and small?

One of the promises of the cloud is simplicity - deploying a service in the cloud must be just as easy as becoming a member on Linked In. Cloud services must be virally distributed, require no training, fast to install and usable instantly.

SaaS software companies worked hard to communicate their value proposition to enterprise customers and have now overcome many of the barriers to adoption which were originally seen in the model.

Ultimately, the cloud will only be successful for enterprise customers if it can deliver value on a large scale basis. Friction-free adoption and rapid ROI are musts. There is no room for the traditional technology adoption cycle, with its long deployment and significant integration investments.

3. Define the business model and value chain.
The simple fact that Dell sought to trademark "cloud computing" must mean that there is a pot of gold up there somewhere. But which services promise the best returns?

In the on-premise technology world, the systems integrators, software vendors and services companies took a significant share. Will the infrastructure companies take a chunk this time? Precisely which players in the cloud value chain will take what share of the market?

The venture community is very involved. One estimate shows that venture capitalists invested more than $70 million in cloud computing startups during the first half of this year. How much money needs to be funneled into a particular startup - and the ecosystem overall - to spur innovation and build out the necessary functionality for the cloud to be an option for all enterprises?

Technology vendors must demonstrate their ability to make money on the opportunities associated with cloud computing - not just launch the products that will enable the model. The challenge is not unlike the one faced by open source companies which spent many years proving that there was money to be made in "free software".

4. Redefine "Sales & Marketing"
Considering the amorphous nature of the cloud computing model, it is challenging for technology vendors to sell their wares in this new paradigm. How to position a particular offering, how a market is actually structured, who the competition is, and what pricing model makes sense are all questions that need to be answered in order to drive cloud computing revenue and customer adoption.

Today, vendors are selling via traditional channels and online marketing. They're pricing via service-based consumption and transaction fees. They're competing with their traditional competitors as well as megavendors and startups. New partnerships are forming across industries, geographies and product categories.

Indeed, marketing cloud services will be similar to the dawn of e-commerce. Early debates about the precise meaning of the term gave way to a plethora of new business models and marketing methods. The cloud will undoubtedly push vendors to develop a host of unique sales and marketing techniques which will drive sales and marketing in new directions.

Next Steps for Cloud Vendors
The next few years will bring the cloud to formation. Its potential is expansive, but the technology vendor community will need to step up in several areas in order to drive customer adoption of cloud computing:

• Clearly spell out the cloud's value proposition for customers
• Eliminate friction between cloud vendors and components
• Make cloud services easy to use, purchase and deploy widely

The proof will be in the pudding. If vendors can succeed in creating and communicating the model's potential in such a way that enterprises are driven to adopt the model, cloud computing will certainly succeed.


Join the discussion! Will cloud computing envelop the future of enterprise technology or will it dissipate into a model for consumers and small businesses? Join senior tech execs to debate key issues at the Cloud Summit Executive on Oct. 14 in the Silicon Valley. Register today.


M.R. Rangaswami is cofounder of Sand Hill Group , publisher of SandHill.com and host of the Cloud Summit Executive .

Pages: 1 2 3