Perhaps the most significant trend facing web and application hosting providers is marketplace stratification. We’ve been looking into data presented by 451 Research in the 5-year forecast they published last fall. They say more and more end-customers are looking to specialized IaaS and SaaS environments rather than traditional, more generalized hosting resources (such as your company).
If this trend hasn’t already affected your firm, it will. Be prepared, and you can turn what looks like a doomsday scenario into opportunities to grow your company. Offering the Best Execution Venue (BEV) for your target customers will bring increased sales as well as an increased clientele.
With customers taking their business elsewhere, it’s no surprise 451 Research predicts slowing growth for our sector. Note, however, they are not predicting NO growth, just less. Is this the beginning of the end? Heck no. You simply have to adjust your world view as it applies to your target market. Use that new-found vision to redirect your business development and marketing plans. Nothing new there. You’ve always had to be sharp on your toes to succeed in the rapidly evolving technology field.
Opportunities Abound for the Alert Provider
For most web and app hosting companies, especially small companies, niche market focus makes more sense. Aside from the stratification issue, it’s more manageable. And focus allows you to shine brightest.
You can hone your range of products and services in ways that make you the Best Execution Venue for the prospects you want most. You can build meaningful partnerships that transcend commodity sales. Long-term relationships are less costly to maintain than constantly recruiting new customers. And loyal customers are far less likely to shop around the next time some new technology comes on the scene.
Of course it takes deeper insight to become the BEV of choice. 451 Research says, “Web and application hosting providers, which traditionally offer self-service and resource-focused products, may lack specific insight into their own user bases.” Niche focus enables you to study your target market in greater detail. To understand how they function day-to-day in their business, who they serve, what’s up (and upcoming) in their industry.
Gathering and studying customer demographic data can tell you where to specialize and how to create higher-value products and services. By proactively predicting and addressing their needs, you can help protect your customers’ ability to grow and thrive. What business doesn’t want a partner like that?
That’s Where BEV Comes in
The point is to align workloads with the infrastructure environment best-suited to them. One-size-fits-all is out. Customization is in. So is simplicity. Your customers don’t want to be in the IT business – that’s your job – but they must have consistent, reliable functionality. That’s also your job, to provide them a right-size, smooth-functioning solution.
The thing is, businesses large and small have used “best execution venue” thinking for some time without calling it that. They called it “finding the best tool for each job.”
IaaS and SaaS are gaining traction over traditional on-premise or hosted infrastructure. Specialized cloud-based solutions are gaining popularity over traditional shared, dedicated or virtualized hosting options. Exactly what’s best for each of your customers falls somewhere on the continuum between IaaS (as exemplified by Amazon Web Services) and SaaS (as exemplified by Office 365).
So while growth will be slower in web and app hosting, and it will be weak in the dedicated server market, managed hosting is coming on strong. Especially in the IaaS sector. If your customers and prospects could benefit from switching, shouldn’t you be the one to:
- Proactively work with them to identify and evaluate new opportunities, and
- Provide those new/different products and/or services?
If you re-think and refine what you have to offer wisely, you will be able to retain existing customers by helping them adapt profitably, and grow your own business and revenue by adding new customers.
Be Their BEV
Here’s a clue from 451 Research. They say “products such as do-it-yourself (DIY) website builders expose Internet infrastructure services to new markets of very small business users.” Hmmmm. Food for thought. They go on to note “strategy may demand specialization in workloads or in customer segments [our emphasis], an increased emphasis on managing infrastructure and apps, and even assisting users with consumption of third-party services.” Hmmmm, more food for thought.
Stick with us here at R1Soft, as we continue to look behind the headlines in major trends to uncover what it all means to you and how you can develop actionable responses. In our next article, we will look at the rise of managed services.
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