RIP the “Old World,” and why Cloud will cause Inevitable Change

be no, has never been truer. I have been speaking on the effect of the cloud for the past 8 years, and the past two have provided much comment on the visible effects we had and are seeing.

Before commenting on why IT supply chains have to adapt and why now is the time to take action I would like to draw context from other sectors and the customer experience they deliver that is causing a well-publicized demise.

In recent months and weeks unfortunately this has become a very visible truth to all concerned. We saw the demise of Kodak, devastated by the change in how we digest our photography. Consumerization of mobile devices driving many to abandon the traditional camera to be done with their inbuilt always with camera phones. With this and the online storage and photo media tools such as Flickr, Instagram, Facebook, YouTube (and I could go on) how many of us today use film or pay for developing pictures? We store and share them electronically, use digital photo frames, email them, print them on our own printers often as very high quality photo paper prints, and at best, for the retailer or E-tailor we upload and have them post us the prints. Even this is in our favor as the customer as if like me, you will realize most offer initial print deals.

So how do the traditional providers fair against online? Well they have advantages; existing brand image/name, established outlets, customers can touch and feel the products, personal service, you have the customer right there for closing in person and you have the ability to enthuse and delight your customer by the real world experience you give them. So do they?

So in today's competitive world where the customer is certainly the Prince (if not King), and has no need to put up with less-than-quality service, where freedom of choice and price is rife and historical brand loyalty is waning fast; it's time that real world brands you wake up and smell the coffee. Customers are more fickle and can afford to be, and you are being challenged fast.

Will this be the end??? Well, no. It's predicted by retail analysts that entering 2013 more than 120 retail brands were on the precipice and the cloud storm of online competition and service delivery continues to heat up. More mobile smart devices and tablets are being sold, bandwidth and access is becoming increasingly available, faster (4G with 5G not so far off) and cheaper.

The Zeitgeist today is online, mobile access and this will only accelerate; do not ignore it. Multi-channels and new ways of engaging with customers are here now, not something to put off or worry about later. The customer is king in their choice of buying medium and certainly is a more educated buyer from the wealth of information available at their fingertips, anytime from anywhere.

From an IT channel viewpoint this isn't you right? You are thinking “this is retail, and you can do as you have always done. Wrong. Analysts and the channel press are already reporting losses in the IT channel, and expectations are that a lot of IT resellers are on the brink. We have seen 2e2, a large U.K. reseller fold in early 2012 with losses of around 1,000 jobs (this after they bought over the years Morse Group, Netstore and Compel to bolster their size) and Fujitsu recently announcing a reduction of 5,000 staff and of course HP’s cuts of 30,000+ staff even prior to the Autonomy $8 billion write-down being discovered! Add to this the recently reported 2013 1st Quarter PC shipment sales nearly the worst all time and 14% down from the end of 2012 demonstrating another sign of change of end user adoption and needs.

Doing the same old same old won't deliver those old margin retaining results we all enjoyed 10 years or more ago. In our sector this is not only about supply and demand competition from online stores for physical product, but much like comparing Netflix to Blockbuster, we are seeing many IT solutions fully moved to the cloud. Meaning the actual customer no longer procures physical goods of hardware and software and no longer needs someone to plug it together and come out and maintain and upgrade it.

Having spent the last 36 months around Europe evangelizing to IT channels “Why adapt to the cloud” and the risks of ignoring it, I have witnessed a mixed reception. Those that are already there, are doing well and want it kept quiet and to themselves, and those that agree and are trying to figure it out and its nuances (cash flow changes, value propositions , commission schemes, etc.) and unfortunately the majority who are ignoring or putting off doing anything about it.

The clear warnings are there for us all from many other industries. Nothing is sacred or safe and everything needs review and forethought to ensure you do not become one of the 'do you remembers' of this economic and technological change. I have said to many: “Ignore it at your peril.” No I am not saying everything will be cloud, but review, appreciate, understand and make smart decisions; do not assume the cloud will not affect you and your customers.

There will be less product sales, installation and break/fix around as customers burn IT longer and selectively adopt new cloud based solutions to mix with existing on network ones. In addition, localized hardware will need less upgrading as cloud solutions only need that browser footprint, so expect refresh rates on PC’s or local devices to slow. Less server hardware will be sold as customers utilise the multi-tenancy servers at the datacentre’s to get more affordable and reliable server power and that sold will be to the datacentre, less to the actual customer.

Also understand you will compete with a variety of new challengers from cloud-only resellers who are nimbler, educated on the cloud and are built on the annuity and cloud billing model, through to MSPs, ISPs and telecom providers who step wider from their previous supply chains to deliver an increasing number of billable services to clients.

If you feel it is a threat, and is going to have an impact on your business, then address it, and start now. Don't ignore that feeling or put it aside for a later day as that day may be too late. We are seeing faster technological change than ever before, and it is all too easy to fall from that ledge that you saw approaching and ignored. The proof points are in from around us and believing the IT sector is immune and you can weather the storm by battening down the hatches and doing what you have always done is blinkered. Now is the time to educate, adapt and resolve to make changes to ensure future success and alignment with customer needs and spend.