Cloud based applications are sold on a subscription basis (monthly, quarterly or annually). The greater the number of seats deployed per client, less frequent the billing cycle typically becomes. Often a minimum number of billing cycle commitments is required from enterprise clients. Subscriptions are always paid at the start of the billing cycle to incentivize channels and inside sales teams.

Transactions are becoming more automated through e-commerce enabled marketplaces for the lower end of the buying spectrum. Purchasing is becoming departmentalized across the board. This is impacting deal size and volume, which is directly impacting margins and driving sales teams towards more automated inside sales, especially in the high volume and SMB/SME segments. Degree of customization is degreasing in the high volume and SMB/SME markets. Sales cycles are narrowing, impacting the amount of due diligence done by the buyer, which is increasing the importance of self-study value content offered and self-service product evaluations.

Distributors are taking on a cloud solutions aggregation role, creating single SKU product bundles, simplifying the VAR’s job from an ISV partnering perspective. Microsoft has the concept of ‘industry solution maps’, which defines an industry specific best practice architectures and product combinations. This has never had global partner coverage, especially beyond the EPG group of globally managed ISV partners. Distributors have now the opportunity to craft their own industry solution maps with a greater degree of flexibility.

Hosters are evolving from virtualization to supporting multi-tenant solutions in private clouds (virtual data centers). Microsoft also offers appliantized versions of Azure that hosters can use to build their infrastructure, bridging private and public Azure clouds.

ISVs need to understand their segmentation and respective channel profile to be effective in taking a cloud solution to market. Through self-discovery exercises, building on the Business Model Canvas, TELLUS will address this topic.