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The Cloud and SaaS, or applying Schumpeter’s theory of economic evolution.

Many people working in IT and telecoms tell me they find it a difficult world to leave. Even if the economic pressure of the last 10 years means it isn’t always as much fun as it used to be it is still true to say that this is a very attractive field to work in.  One of the big attractions is the feeling that we are living an accelerated Darwinian experience and that ultimately we will be both players and observers of the changes taking place in the industry.

The arrival of the Cloud and SaaS in IT distribution is no exception to the ongoing rule that one has to constantly adapt to market changes. The parallel between Darwin and Schumpeter is important.  Each placed evolution at the centre of their respective theory; for Darwin evolution is based on natural selection represented by incessant combinations of DNA and the elimination of the least well adapted. For Schumpeter evolution is companies’ capacity to innovate and find ways to create value in a market. At the heart of this process lies the inspiration for change, change often preceding need, which is why it can be difficult to anticipate change with market studies.

According to Schumpeter, the source of inspiration is the company director or, I should say, the entrepreneur. The entrepreneur is not motivated by financial gain alone, he or she is also motivated by a multitude of factors… many of which are irrational, which, in my opinion, probably explains why there are so many management schools and so few schools for entrepreneurs. So what has all of this got to do with the Cloud and SaaS? This: Many of our clients are asking us to help them find partners who can commercialize Cloud or SaaS solutions, Cloud Builders or Managed services resellers.  How can you find the right market players in a mass of several hundreds of thousands of companies each of which has a very different profile? We are currently right in the heart of a Schumpeterian period where innovation has created such a rupture that we know certain companies won’t be able to adapt. How can you tell which companies will and how can you be sure to pick the right one? What determines that a company will be able to adapt to a change in business model, profession, and company organization?  Does the solution lie in the type of company activity or in the type of company management?

During interviews we’ve had with resellers we’ve seen to what extent the personality of the company director is central to company success. Companies that had everything to succeed were failing, or at least were not making the most of their potential, whereas simple entrepreneurs with market intuition were racing ahead. In this great Schumpeterian movement, the company director has never been so important. Ideally it would be good to be able to identify them in this mass of skills and know how, but since the “ideal” is not always possible we have had to develop other techniques to optimize our search for the perfect partner. The method we used consisted of an analogy of company characteristics.  By using a control group of recognized Cloud partners we identified sets of characteristics. These groups had characteristics which individually didn’t mean a lot, but by comparing each partner in our database with each set of characteristics, and by using a point system to gauge their correspondence we were able to establish a “Qualitative Scoring” of companies defined by their aptitude to have a Cloud activity and above all, their ability to develop one quickly.

To validate our approach we then carried out surveys on each segment to see if the model matched reality… and it works.
This is leaving analytical or targeted marketing to enter predictive marketing.

This model, which we have now made available to our clients means they can gain 4 steps in their partner recruitment program. Of course it would also be good if we could know the entrepreneurial mind set of the director… but meanwhile the world goes on and, after all, isn’t adaptation today more than ever, about making the best of the constraints you live with?


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