Case Study – Cloud Buyer Behaviour and Commercial Model Preferences
Cloud professional and managed services
Accelerated’s client wanted to increase their market share of the cloud professional and managed services market. As an input into their strategic planning and proposition development, they needed to understand buyer behaviour and preferences better, specifically:
Buyer purchasing criteria
Product formulation preferences (buying in silos vs spanning each stage of the E2E value chain)
Pricing architecture (fixed vs variable, chargeable components, discounting, risk sharing)
Typical contract composition (time to negotiate, implement, contract duration)
Buyer characteristics (e.g. tech maturity) and their impact on purchasing preferences
Accelerated’s approach to the research:
The project was led by an alumnus of McKinsey with both technology and voice of customer experience gained from having conducted more than 1,000 expert interviews
Over four weeks 12 in-depth interviews were conducted with buyers and providers of cloud services:
6 buyers selected from a range of industries and differing cloud maturity journeys
6 cloud professional services providers including tier 1 / 2 and boutique
The most common purchasing criteria are cost, track record, product / service offering, hyperscale functionality and support, and security / compliance, with some nuances by company size, industry, location, IT cloud maturity
Buyers with a strong IT capability tend to purchase in silos and do so in a phased manner, with less mature IT buyers tending to purchase holistically
Pricing tends to be fixed when the scope is known. When the scope isn’t well known, variable pricing is common and based on a rate card or consumption. Discounting is limited with value-added pricing observed for specialised technical areas / skills (e.g. refactoring, containerising)
Contracts are typically multi-year with MSAs (they can be staged) and take 3-6 months to negotiate
The key buyer of cloud within an organisation tends to be influenced by the sophistication of the IT function. When IT is strong they are the primary decision maker, with finance and business areas consulted, and procurement playing a supporting role.
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