03 Feb Consulting in the cloud, change is here
The introduction of cloud computing to the world of business management software has created a large-scale change in business models. Among the most significant of these shifts are the changes that professional services and consulting sectors are seeing. Microsoft Dynamics recently released its Cloud Profitability Guide for partners, and it had much to say about the changing role of consulting in the cloud.
Demand is up for a lighter-weight, robust out-of-box solution that is easy to deploy and delivered through through using a cloud model. The solution is largely made up of packaged, repeatable code or content when compared to on-premise systems which start with generic code that is combined with heavy customizations and longer implementation periods. The increase in demand for a lighter-weight solution has created some decline in demand for services.
“In most present-day Partner businesses, anywhere from 50% to 80% of revenue on a specific deal comes from customization, implementation and installation, and not from its own IP (intellectual property)… “The exact opposite is the case in the Cloud, where nearly all of the revenue is derived from the product.” —Microsoft Dynamics Partner Cloud Profitability Guide.
This “Product” is essentially Partner-specific IP which is the true differentiator in the Cloud among competitors.
Partners’ traditional services business is seeing a decline in implementation and customization services resulting in shrinking margins.
This is creating a trend toward software that is specifically targeted to individual verticals. What’s more, the cloud has enabled these tailored solutions to increase their reach. Customers are veering away from the high cost and time consumption of lengthy customization. Consulting in the cloud is no doubt changing the game. The cloud promises faster, cheaper, and simpler.
“This is what customers want of you today – more utility, rapid “time to value”, lower costs, and no surprises,” –Microsoft Dynamics Partner Cloud Profitability Guide.