Should SMEs Implement On-Premise or Cloud?

To cloud or not to cloud, that is the question.

While most solution providers aren’t quite in the quandary that Hamlet ponders in Shakespeare’s classic soliloquy, the decision to propose cloud or on-premise solutions to customers can be a challenge. Even if you factor in a third option—a hybrid cloud model that combines hardware and licenses as well as some hosted infrastructure or applications—it’s a lot to consider. Especially when you have customers who still are not sold on the benefits of cloud, or aren’t quite sure they’re ready for it.

Gartner believes less than half of organizations are using cloud today. But 80 percent of those who still haven’t made the jump to cloud intend to use some form of cloud services within a year. And when they do, those that are small and midsize enterprises will count on solution providers to be trusted IT advisers, to help them with their decisions and deliver and support their choice. Your response could have a significant impact on the long-term relationship you have with that customer. 


Making the Best Choice
Let’s take a look at the three environments: cloud-centric, on-premise, and hybrid to help determine which is the best fit for which customers.

Cloudheads. A likely candidate for a predominantly cloud infrastructure is a company that doesn’t have much invested in its IT infrastructure right now. Maybe it’s a startup, or an organization that relies on access to information from outside the walls of its business. Newer companies typically don’t have much capital to invest in IT. Maybe they’d rather invest in human capital, or R&D. So a cloud model, which is easier to deploy and easier to consume, makes sense because it gets them moving more quickly and provides the flexibility that a new company needs.


Groundlings. Some customers just can’t use cloud. Governance or compliance around their business may dictate they have on-premise solutions. Others simply don’t want the cloud. They may be flush with capital and ready to spend big on IT, or they may run their entire business within the confines of the walls of the office. Recognizing that you can’t push cloud to everyone is the first sign a solution provider puts his customers’ business first.


The majority. Most likely, you’ll find customers will adopt a combination of on-premise and cloud services. The key is to help them identify what is best kept onsite, and what can be moved to the cloud. Look at their business. Which functions operate in-house? Which are decentralized, such as CRM or field operations? Emphasize that the field will benefit from access to tools and systems when and where they need them. Some customers may enjoy the deployment and financial flexibility of the “as- you-go” operating expense for cloud services, compared with the upfront capital expense of an on-premise solution.

The ideal approach is to understand all facets of your customers’ business and guide them in a direction that makes the best sense for them. Focus on the benefits, address any concerns, and explain how cloud-based solutions can address very specific business needs.

Don’t Limit Yourself

We noted a couple of months ago in this space that most companies now are somewhat familiar with cloud, and that 2014 is the time to start implementation. If you hesitate to talk to your customers about cloud in addition to their on-premise solutions, you limit yourself to only one of the three scenarios for delivering IT. Anybody who brings all three to the table will have the advantage.

And don’t forget, most IT vendors are developing products and services with the cloud in mind. (I’d be remiss if I didn’t point out that SAP is among the leaders.) Solution providers will need to keep pace with where their primary vendor partners are going. Think about not just how the cloud impacts your business, but also how it impacts your customer’s business too. The more you understand what makes sense (and doesn’t make sense) for them, the tighter the bond will form between you.

What do you think?
@IraASimon