Why too many cloud relationships turn sour

Summary:Mid-sized firms are still signing on the dotted line for external services without checking the right things

Are customers asking the right questions of their cloud providers? A conversation I had recently with managed services firm Star's chief customer officer, Martino Corbelli, suggests they are not.

Cloud
Mid-sized firms are still signing on the dotted line for external services without checking the right things.

According to Corbelli, the UK's mid-sized companies — the bulk of his customers have between 100 and 1,000 employees — are getting stuck in what he calls bad relationships with their cloud services provider because they lack either the management and negotiation skills to handle problems with the relationship, or enough money to cover the cost of getting out.

The reason for their predicament is often because customers fail to do enough due diligence before awarding a contract, Corbelli said.

Soft issues

He discussed the amount of work that potential cloud customers ask Star to do before awarding a contract. In contrast to three years ago, when potential cloud users were interested mainly in facts and figures, speeds and feeds, today the main discussion points centre on 'soft issues'.

About half the negotiations revolve around issues such as people, governance, processes, and compliance. "It used to be all about just the technology," Corbelli said. "Now it's about who you are, your culture, your reason for being, the peer-to-peer relationship. People want to know if you can be trusted, if you're on the same wavelength. They want to feel that their CFO can call your CFO and talk to them as equals."

The reason for the extra caution and pickiness isn't hard to find. "These are hard issues. The technology is fraught with issues," he said. "People have tried to manage inhouse for years but have decided to look at an outside service. That's all shrink-wrapped around the SLA and other agreements."

"It used to be all about just the technology, Now it's about who you are, your culture, your reason for being." — Martino Corbelli, Star

As with most business decisions, the people side of things is a major factor. "You can tick the boxes but still not get the deal," Corbelli said. "It could be because of all sorts of reasons: financial, such as a venture funding with outside interests that means the company has to go down a particular route, or the CFO has relationships with another company. If we lose the deal, price is used as a deflector — you don't find out the truth after the event."

Mid-sized companies are increasingly buying enterprise-level services, according to Corbelli. "What resonates with the mid-market is accessibility to private cloud services," he said. "This is developing into a hybrid cloud approach."

Email

And the most common problem that organisations ask Star to resolve is — surprise, surprise — email. Internal email systems are often a tangled web, having evolved from an organisation's beginnings but added to through acquisitions and mergers, and branch offices doing their own thing. The cost of sorting that lot out can be more than the cost of asking an external provider to start again and do it centrally.

The moral of the story seems to be to choose your external service provider carefully, check them out fully, and be sure you feel comfortable with them before signing on the dotted. And be sure you know where the exit is, and how much it will cost you to turn that handle.

Topics: Cloud

About

Editor, journalist, analyst, presenter and blogger. As well as blogging and writing news & features here on ZDNet, I work as a cloud analyst with STL Partners, and write for a number of other news and feature sites. I also provide research and analysis services, video and audio production, white papers, event photography, voiceo... Full Bio

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