July 24, 2018

Is Your Cloud Pricing Flexible?

Kevin Shaker
Senior Analyst at immixGroup, An Arrow Company

As IT infrastructure increasingly becomes a hybrid of on-premises and cloud-based services, vendors will have significantly greater sales opportunities. They will also need to make sure their sales strategies match the needs of their newer customers.

Specifically, vendors must become comfortable with developing “flexible cost models” for pricing to accommodate various types of hybrid cloud users.

For example, cloud service providers will need more IT infrastructure technology to handle the growing transition of enterprise IT to the cloud. On the other hand, enterprises may choose to keep some mission-critical or highly sensitive data in-house.

Real growth will mean addressing both of those audiences with tailored programs that account for each group’s buying habits.

With that in mind, here are some factors driving the commercial IT business, which I explain in more detail in my recent marketing intelligence webinar, “IT Infrastructure Trends: What You’ll Need to Know.”

IT Infrastructure

Hardware and IT infrastructure spending accounts for almost half of overall IT spending worldwide, or roughly $1.4 trillion. This includes servers, storage, networking and infrastructure software.

As enterprises shift to hybrid cloud solutions, they are rapidly replacing outdated IT infrastructures and emphasizing operational expenses over capital expenses.

This is particularly true as infrastructure as a service gains ground. In fact, IT infrastructure software is expected to reach nearly $300 billion by 2022. That means there is enormous growth potential in automated network monitors and enterprise architecture suites as customers look for subscription-based products both on- and off-premises.

Data Center Evolution

The hyperscale data center market is expected to grow by more than 10 percent through 2021, as hyper-converged infrastructure replaces legacy mainframes.

Businesses will need faster, more efficient servers to run more virtual machines as they migrate to public, private and hybrid cloud infrastructures. The shrinking talent pool for data centers means more organizations will turn to automation and smart machines for their enterprise architecture.

IoT and the Intelligent Edge

With an estimated global count of 20 billion IoT devices by 2020—and up to 90 billion connected to the internet by 2025—some $6 trillion is expected to be spent on IoT devices and support technologies. IoT acceptance means a growing demand for storage, networking and compute capability at both the gateway and cloud data center.

Servers

In North America, the server market is expected to grow at nearly 7 percent CAGR through 2021. Hyperscale data centers will continue to gain ground, and with it, a need for more services-based computing with API support. Therefore, to reduce human error in compute infrastructure, future offerings will need to include a strong automation component.

Storage

The conventional storage market CAGR is projected to shrink 3 percent by 2021. Customers now want flexible storage solutions and are switching to CSPs for storage capacity, which means more money for operational expenses and less for capital outlays.

Networking

Most network budgets are expected to be relatively flat through 2021, with customers looking for technology management solutions, such as SD-WAN, SDN and APIs. The focus in this category is improving network uptime, rather than any other business need.

Vendors take note: Customers want flexible cost models for infrastructure acquisition, with growth of IoT storage and compute support leading the way in infrastructure requirements. So rather than focusing on conventional enterprise clients, savvy hardware vendors should target CSPs for increased sales to go along with this projected demand.

Suppliers should also market technologies for today’s expanding hybrid cloud framework and include compatibility messaging that bridges the divide between CSPs and enterprise hardware.

Looking Ahead

Remember that flexible pricing and acquisition options are essential because many customers are starting to think more about operational expenses than capital expenses when approving purchases.

Looking ahead, be sure to tailor your solutions and services to this new era of IT. And if you do, you’ll put yourself in a great position for better infrastructure sales – not only today but also in the future.

To view my marketing intelligence webinar, “IT Infrastructure Trends: What You’ll Need to Know,” click here.