We live in what Forrester calls the ‘age of the customer.’ The advent of technologies like Web 2.0 have empowered customers more than ever before, ripping up the rule book and forcing companies to change the way they’ve been doing business for years.
Organisations have lost control of their brands with social media resulting in consumers having power over their peers’ perceptions of a brand. Marketers are asking the question, “Does anyone listen to advertising messages anymore?”
Cloud Computing is yet another example of how consumers are becoming more empowered. In simple terms the cloud offers an additional choice of IT delivery.
Cloud has also brought a new pricing structure than that of traditional on-premise solutions. With the Software as a Service (SaaS) model, consumers pay for software based on their consumption. The outcome is that organisation pay for IT as an ongoing operational cost rather than capital expenditure.
Purchasing of traditional on-premise solutions usually involves a comparatively large upfront cost, with lower ongoing maintenance costs. As a consequence, should an implementation of a new system fail to meet the expected ROI, with such high investment there is likely to be a degree of loyalty to the system. The cloud pricing model totally negates this as switching costs are much lower.
I was not surprised to read the results of a study by Nucleus Research published in the BusinessCloud9 article, The swap is on – and the customer is the winner. The research found that of 542 users of cloud applications, 52% of them were (a) willing to switch provider and (b) willing do so within the first six months of use if they are not happy with the service they are getting.
Cloud vendors will be taking note of studies like this which should ultimately lead to an improved experience for customers. Vendors will have to ensure a high stand of service and the system will need to work as the user expects it to, demonstrating ROI quickly; a poor support experience or bug-ridden system won’t be tolerated, or as this research shows, users will quickly switch to another vendor and the lifetime value of customers will dramatically decrease.
Another aspect for vendors is that customers’ expectations of the system will need to be managed. During pre-sales, total transparency is essential to ensure that the customers’ experience post-implementation, matches that which they are promised. The sales team can’t promise a support response time of 1 hour if they can’t be sure that will be met.
The cloud is therefore another technological aspect that has evolved, further empowering consumers. This does not mean however that cloud software will be the best solution for your business. Both cloud and on-premise solutions on the market should be evaluated to find the best fit for your organisation.
