The Cloud Industry: Middle Child No Longer
Mid-market companies can no longer be overlooked.
Even if you didn’t grow up watching re-runs of the Brady Bunch, you know the saying: “Marcia, Marcia, Marcia!” It’s the exasperated cry of middle children everywhere who too often get overlooked — caught in the twin shadows of younger and older siblings who always seem to get the attention, just like poor Jan Brady did in every single episode.
The cloud industry has its own middle child whose needs have too long been underserved in favor of its larger and smaller siblings. It’s mid-market companies who have gotten far less attention from cloud providers compared to 1) the wide swath of small businesses that represent a lucrative market for retail-style cloud services; and 2) large enterprises who have much deeper pockets and whose large implementations are a magnet for cloud providers’ sales teams. Mid-market companies have been the Jan Brady of the cloud industry, but that middle child status is about to be as outdated as the 1970s fashion in those re-runs.
A “Cloud” burst on the Horizon
In large part because of the lack of support from cloud providers to serve their unique needs, mid-market companies have lagged behind both large enterprises and small businesses in cloud adoption. But that is changing rapidly and it will re-shape the landscape of the cloud market, which for years has been dominated by the upper and lower ends of the market. Large enterprises have naturally led the way in cloud adoption because of their far greater staffing resources and financial resources for experimenting with the cloud, conducting more pilot projects, launching more products that leverage the cloud, and more. To complement that internal momentum, large enterprises have also received tremendous support from cloud providers who provide specialized services and dedicated teams to meet those needs.
On the other end of the market, small businesses have also been very aggressive adopters of cloud because retail-style packages of bundled, plug-and-play services meet their basic needs, achieve some clear savings and require minimal support from cloud providers. This lower end of the market has also gotten a lot of attention from cloud providers who frequently utilize a retail sales and service model to tap into this massive market of hundreds of thousands of companies with pretty basic cloud needs.
That focus on the needs of the biggest of the big and the smallest of the small meant that the mid-market has too often been left on its own to figure out the cloud for itself. And without adequate support from cloud providers, it’s no wonder that the mid-market has lagged behind on cloud adoption. It may have taken this size of company a bit longer to start and finish their cloud pilot projects, but everything I am seeing in analyst research and my own conversations with customers says that the mid-market is going to embrace the cloud in a big way in the next six to 12 months. Mid-market companies — all 200,000 of them in the U.S. economy — are ready to start transitioning critical applications and business operations to the cloud, and they will need help to do that in a way that factors in the lessons that early adopters have learned about the cloud.
One Size Doesn’t Fit All in the Mid-Market
So what are the key challenges that mid-market companies will face as they move ahead more aggressively with cloud adoption?
One is that mid-market companies often have far more nuanced drivers for cloud adoption than their bigger and smaller siblings. For large enterprises, it often boils down to nimbleness in delivering new products and services to market. For small businesses, it is largely about replacing pricier IT costs with far cheaper cloud-based services. Mid-market companies typically have a more complex set of drivers because they aren’t just trying to save a few bucks, they are trying to reduce complexity. With smaller IT teams and limited IT budgets, mid-sized companies desperately want to tame the unruly scope of their IT operations so that it is manageable for their IT team while also making sense financially. When a mid-market company embraces the cloud, they aren’t just saying, “move these things to the cloud.” They are often doing a fundamental re-thinking of what their IT infrastructure should be today and what it needs to be in the future. Simply put, cloud implementations give mid-market opportunities to do a re-set on legacy IT systems that are woefully complex, outdated, expensive, and ill-suited for future growth.
That means a lot is riding on how mid-market companies handle their cloud implementations, and the honest truth is that they need help, and CIOs and IT managers of mid-market companies are themselves often the first people to admit that. Small companies typically only need the basics that are pre-packaged in the bundles they sign up for, and the support they need tends to be more customer service oriented than strategic in nature. For large enterprises, they are usually up to their eyeballs in strategy and support from their in-house teams and from the dedicated external teams from their IT consultants and cloud providers. Mid-market companies need external strategic support to supplement the in-house brain power they have, and the cloud providers who do the best job of meeting that need will position themselves as the go-to providers for these 200,000 companies looking to go big with the cloud.
Strategy, Not Simply Tactics
One of the biggest strategic challenges that mid-market companies face once they sit down with their provider to map out a plan is to determine what type of cloud to use. The vast majority of cloud pilot projects by this segment of the market are done only with the public cloud, so when mid-market companies are given the green light to deploy a larger cloud implementation they are typically working with limited information or zero information about how to use private cloud services and how to decide when to use both public and private in a hybrid cloud strategy. For the mid-market, a blended approach is often the most appropriate solution because it matches the security and performance of private cloud for select applications with the lower cost of public cloud for other applications. No two mid-market companies are the same, so this hybrid strategy must be designed in a thoughtful way that meets near-term needs while also flexing to adapt over time as the company’s size and IT needs change, including future adoption of technologies like SD-WAN.
Being the middle child isn’t fun, as Jan Brady articulated so well for all of us who grew up watching too many television reruns. But it is possible for middle children to break the mold and not live in the shadow of their “perfect” older sibling and their “too cute” little sister. Mid-market companies are poised to turn the dynamics of the cloud market upside down in a way that demands more attention for their unique needs. For all of us who work closely with mid-market companies (or who are simply middle children), this is something to celebrate. For once, Marcia might be the jealous one. We can dream can’t we?