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Top 5 biggest challenges for cloud service providers in 2017 and tips to overcome them.

Cloud computing has been one of the most exciting and disruptive forces in the IT world in the past decade. The market for cloud solutions are expected to accelerate in 2017 and beyond, as organizations all over the world are moving to cloud with an aim to power their core business systems along with their customer facing applications.

Most organizations are embracing digital ways of doing business and are in the early stages of IT transformation. For it, they are relying on strategic partners for operational assistance and to help them align IT with their business requirements.

In the 451 Research’s recent cloud transformation study, nearly 80% of the organizations reported that their IT environments require moderate or significant transformation to meet business requirements over the next five years, involving migrating workloads to the cloud and keeping cloud spending on an upward trend.

Thus, digital transformation provides a huge opportunity to the cloud service providers (CSPs) to capitalize cloud. But, there’s a catch – the organizations who are transforming have demands and expectations of a dynamic nature. They expect a CSP to be the one stop solution provider for all their transitional requirements. Hence, CSPs need to be armed with a lot of skills, tools and cloud management solutions to provide a business-ready cloud infrastructure and tailormade solutions to their customers on demand.

“Those IaaS service providers who position infrastructure and technological innovation alongside meeting business requirements will be best positioned to capitalize on this market opportunity.” – Melanie Posey, Research Vice President and lead analyst, 451’s Voice of the Enterprise: Cloud Transformation service.

Hence, for a CSP, the opportunities are galore, but the situation is fraught with challenges. Here is an inkling:

Top 5 challenges for cloud service providers and tips to overcome them

  1. Absence of knowledge, fear of change and skills shortageInternal operations and workflows associated with a cloud business are still something that many service providers are wrapping their heads around. They know that with cloud, they have a tremendous technology at their fingertips, but not all know, what to sell or how to sell.They need to maintain their current business run rate, without stopping selling old services, but they don’t have knowledge as to how they can manage different cloud solutions along with their existing products, manage billing, inventory at one place and automate their solutions’ service delivery. In many cases, service providers are still using outdated methodologies or multiple tools that are holding their business back from running full-throttle in a cloud-first world.

    In other cases, they don’t have the required expertise on staff or the employees are not able to adapt themselves to the techno-commercial mindset that every cloud business needs. Some also struggle with automation – they don’t understand how manual processes are increasing their overheads.


    • Recognize the different needs, wants and desires of all employees and take an informed approach towards mindset transformation of employees.
    • Develop a proper plan of self as well as team transformation – address why change is needed and how it can be made along with the results it will bring.
    • Have a clear communication upfront, assemble the right capabilities and competencies, outline how digitally skilled staff can benefit both company performance and individual teams.
    • CXOs must now support digitalization wholeheartedly, and explore using powerful new tools and cloud platforms. They must take time to educate themselves about them, the impact they can have on business processes and service delivery.
    • In order to leverage the cloud, the foremost thing of importance is that cloud computing service providers should first understand which right tools they should have in place to make business cloud management easier.
  2. Absence of automation in cloud billingCloud technology being a subscription model, gives its users the flexibility to scale up or down the resources which means, CSPs need to bill their end customers on a pay per usage basis. Also, there are multiple ways to buy cloud services — on-demand, prepaid, reserved capacity, and enterprise agreements — every month, and this trend is supposed to accelerate in 2017.*The cloud pricing is quite complex, and it’s billing is completely unlike the billing mechanism used in traditional buy-sell model. Also, SaaS, IaaS or PaaS pricing models vary widely. This complexity has spawned the need of an automated invoicing tool for CSPs. However, there are several third-party solutions currently in the market to help service providers but it can be difficult to choose the right one.

    Tip2 – CSPs should adopt a flexible cloud subscription billing management system that will help them manage recurring cloud billing and also help them in upselling and cross-selling to their customers with minimum hassles. Build a system that gives your billing team and your customers visibility into service billing from a central place. This will help you to better manage your billing, while customers will enjoy transparency and self-sufficiency.

moving to cloud with an aim to power their core business systems along with their customer facing applications.



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