Can High Tech Survive the Cloud and “Anything as a Service”?

The End of Solution Selling “Solution selling” has grown over the last three decades to become the undisputed, orthodox religion of today’s high-tech, business-to-business (B2B) seller-suppliers. Trouble is, where it once helped differentiate the supplier from competitors, increase the number of items purchase—and the value of the final sale—now, more often than not, it facilitates high levels of complexity in the sales process. Which drives up costs. And in turn promotes risk. Customers are demanding radical changes in the way they acquire and “consume” B2B technology products and services. More and more, they want to try out capabilities first, ideally for free. Then, at their own pace, sign “pay-as-you-go” contracts for modular, optionally scalable building blocks—consisting of hardware, software, consulting and implementation services, together with maintenance and any other support services they desire. And then expand later on (if they want), hold steady on their deployment, or cancel the contract at a moment’s notice—effectively ending the supplier’s opportunity to earn a return on its investment. Why Is This Happening? And what could such a tectonic industry shift imply?
  • Too much is enough, thank you: the multimillion-dollar (upfront capital) costs, complexity, and risks of today’s tech solutions have reached unsupportable levels for customers. Organizational buyers want their IT suppliers to take on (much) more of the risk: in effect, to share in both risks and rewards, over time.
  • No more “drive-by” selling: the here-today-gone-tomorrow solution-selling model no longer meets the evolved and evolving needs of customers—or even those of suppliers.
  • But where’s the profit for suppliers? The new subscription-based delivery models that have debuted to date, though great for customers—and for revenue and market-share-hungry suppliers—have not yet produced a dollar of profit for a single B2B vendor. Not one. Not Salesforce. Not Amazon. Not nobody.
Solution? Customers are voting with their feet for software-as-a-service (SaaS) and “anything-as-a-service” (XaaS) subscription-pricing deals. So, can (instantly cancelable) XaaS-type delivery contracts alone save B2B suppliers’ bacon in this rising tide of customer rebellion against the old complex, capital-intensive tech-industry sales model? All signs, regrettably for sellers, point to “nope.” Answers: From “Solutions”—to Customer Outcomes That Count Today’s B2B tech suppliers know their customers want more cloud-based services—and, at the same time, fewer demands on their data centers, software budgets, and IT management resources. But how to survive and profit in this new world? The answers will not be found in lower margins and clever subscription models; these approaches simply point to the inevitable “race to the bottom.” The answer for the industry is to put collective “skin in the game”—to unify supplier success with customer success—customer by customer. In his review of the Technology Services Industry Association’s 2013 book B4B, Lanham Napier, CEO of Rackspace, writes:

“B4B is a groundbreaking look at the future of the tech industry. Customers have a whole new set of expectations, buying outcomes from vendors with “skin in the game” and valuing simplicity over complexity. B4B is a guidebook to position your company for success in this new world.”

Find out how to partner with your customers to give them the business outcomes they want and deserve. Download chapter one of B4B here.

« »