As Cloud Upends Traditional IT Sales Channel, Software Companies Eye End Users

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When I spoke to SugarCRM CTO Clint Oram last week, he sang a familiar refrain: The software sales process was changing profoundly from one which had been completely IT-focused to one centered on end users and business units — and this was due in large part to the ease of deployment brought on by the cloud.

The idea is for software companies to provide easy access to a product, then let happy users sell the product for you.

As Oram told me, “The days of downloading CRM software are over.” He said that people are expecting to be able to try software in the cloud, and his company is going to provide that for customers moving forward.

While they will still provide an on-premises version that caters to IT for those customers that want it, he expects customers will transition slowly to the cloud product in the coming years and they are building a foundation to make that as easy as possible.

And there are numbers to back this up. A recent Avanade survey of over 1,000 executives, business unit leaders and IT pros found that 71 percent of those reporting as an executive or business unit leader believe that they can make technology decisions better and faster when bypassing IT.

Consider that last week, venerable IBM announced a new cloud marketplace. Big Blue’s GM of platform services, Steve Robinson, told me they were creating this new marketplace in large part because they recognized that sales weren’t funneling through IT as they once did. The business units and end users are trying software and making decisions separate from IT and they needed a way to reach those people.

It’s an attempt to change the way IBM has traditionally marketed and sold software. Instead of sales teams in suits meeting IT, they are providing a web-based marketplace for customers to browse, try and if they wish, buy a range of cloud services. At the very least, when the sales team finally gets involved, they can take advantage of the business unit interest.

Microsoft is also seeing this trend, as it tries to move customers to the cloud. In fact, you can try a range of Microsoft cloud products today for free from Office 365 to Microsoft Dynamics and even Intune, a tool actually geared toward IT pros. In the case of Office 365, for example, you can get a 25-user license for 30 days for free and decide if it’s for you before committing to buying.

Each of these companies recognizes that the way businesses procure software and other services has changed dramatically due to the cloud. People don’t have to go to IT and beg for what they want. They can go to a place like the IBM marketplace and try some software without risk and it’s having a direct impact on sales strategy at these companies.

These mature companies are actually borrowing this concept from startups that have long recognized that if you provide a free version, it gives you a way inside companies and lets you build a user base quickly. Once you’re inside, you can send in the sales people, and they have something to work with because people are already using it. Even a free trial or a limited free version for a certain number of people can achieve the same result.

In an interview in 2012, Box CEO Aaron Levie told me he believed the company would always offer a freemium version because he sees it as a foundational element of Box’s business model. As he told me at the time, “The alternative is that we become a traditional software company and sell to the CIO. We want end users to have instant access.”

And that’s precisely what these other companies are trying to do too.

It’s clear, if people like your free version, it’s like a Trojan horse for the sales team, creating a more traditional sales opportunity from inside the company. And certainly, enterprise software companies, large and small, are recognizing it’s time to exploit this new way of selling by aiming at end users instead of IT.

IMAGE BY FLICKR USER GEORGE THOMAS. USED UNDER CC BY 2.0 LICENSE.