'Education is moving to the cloud' might have seemed like a bold statement a year ago, but there's no doubt that for some functions - like providing student email - so many institutions have moved, that for the rest, the question is when not if. And other business systems are following.
On Monday we announced that we're moving our Dynamics ERP system into the Cloud - using Windows Azure. The side note on this is that it gives another option for implementation, because customers can stick with on-premise systems, or switch to a cloud service, or use a bit of both (for example, to help with demand peaks). InfoWorld has a good overview on the ERP in the Cloud story.
But as this general shift to the Cloud happens, the business model for suppliers is changing too. Because moving to the cloud normally means saving money (which means spending less somewhere along the line!) and also moving to subscription services - and away from buying software and hardware with up-front costs and licences. If you're a supplier to education customers, what does this mean for your business model?
Many of the answers will be in the 'Microsoft Dynamics Cloud Partner Profitability Guide'. It's a well written business strategy guide - one for the CEO or CFO - and talks about the customer benefits of Cloud solutions:
- Reduce time to value - especially as you can use the cloud elasticity to implement quickly, then scale up and down
- Optimise investments - reducing up-front costs, the bureaucracy of capital investments and reduce working capital
- Realising cost savings - by reducing conventional ICT infrastructure costs
And it then goes on to summarise what it means for the industry as we move to the Cloud. We have to:
- Increase demand generation - to produce a higher volume of customers that are better educated about our solutions
- Close deals with fewer interactions - and productise more solutions to avoid custom-building every solution
- Give customers cost-effective, valuable, low risk solutions (to avoid customer attrition)
- Carefully manage the customer life cycle
There's a lot of detail in the report about business models - and what it does to your (and our) existing business models - and the chart to the right caught my eye as it pointed out that the break-even point for a Cloud solution is later than today's model.
I know that there are customers in education that read this blog, who at this very moment will be wondering why we/you have to make a profit. But with Cloud services, they pay for a good service that supports their business goals - and if they're not getting it, they can switch - so I'm not shy of them reading this too!
If you're in a Microsoft software or solutions partner, then you, or somebody in your organisation, would be wise to read the Guide, and hopefully learn some of the business lessons we've learnt so far as we move to the Cloud too.