Many companies are reluctant to put applications with sensitive data in the cloud. In the U.S. and Europe, the applications least frequently shifted from on-premises computers to the cloud were those that compiled data on employees (e.g., payroll), legal issues (legal management systems), product (pricing and product testing), and certain customer information (e.g., customer loyalty and e-commerce transactions). Still, some companies had shifted applications with customer data to the cloud, especially in customer service, and many planned to shift a number of customer-related applications to the cloud by 2014.
- Cloud applications most frequently shifted from on-premises technology
- Cloud applications least frequently shifted from on-premises technology
- Case study: Dell Inc.
In the previous section, we mentioned that across all four regions of the world, companies were in most cases putting the largest share of their cloud applications budgets in marketing, sales and service. Yet in spite of that, many companies appear to be staying clear of putting sensitive data into cloud applications.
We found this to be the case in looking at other data in our survey. In the U.S. and Europe (where we had large-enough sample sizes to explore what applications companies had in the cloud in each of the 10 core business functions), we found that the applications that were most frequently shifted from on-premises computers to the cloud were those that typically do not have highly sensitive information on employees, customers, new-product plans, and other data that companies go to great lengths to protect (see Exhibit VI-1).
In the U.S., when we looked at the applications that were least frequently shifted to the cloud from on-premises computers, several of them were applications that often store highly sensitive data:
- Legal-related – legal management solutions (which can contain the status of lawsuits against a company)
- Employee-related – compensation planning (employee salaries) and payroll/time and attendance systems (which, of course, in the U.S. can have Social Security information)
- Product-related – product testing systems (which often compile data on product efficacy and of course reveal a company’s product launches), and pricing and promotions systems (which, in competitors’ hands, can tip off pricing changes)
- Customer-related — customer loyalty (which can reveal buying preferences), customer/market research applications, E-commerce, and customer analytics — all of which can risk customer privacy and provide competitors with useful targeting information
- Risk-related – risk assessment and monitoring systems, which compile data on a company’s most vulnerable activities
In all five areas, less than 20% of companies had shifted on-premises apps to the cloud (see Exhibit VI-2).
Still, that doesn’t mean that all customer data is being kept out of the cloud. For U.S. companies’ customer service applications, 42% have shifted customer order-entry systems from on-premises technology to the cloud. And 37% have moved their archived customer records to the cloud. (See Exhibit VI-3.)
In addition, the numbers in the chart above indicate that many companies’ fears about putting customer records in the cloud are likely to subside. When asked what customer service applications they expected to be in the cloud by 2014, the majority expected to shift their customer order entry, archives of past customer records, post-sales inquiries and online customer communities from on-premises to cloud-based applications.
In looking at marketing applications, we found such hesitation to put customer data in the cloud looks like it will decline by 2014. At least half of U.S. companies plan to shift customer research, e-commerce, customer analytics and social media data to the cloud by then. And even 39% of companies say they’ll shift customer loyalty systems to the cloud by 2014. (See Exhibit VI-4.)
Dell: Riding a Tsunami of New Cloud-Based Marketing Tools
As the computer company that became known worldwide for its direct model, Dell Inc. has had to master the Web, email and other online marketing tools to get customers in the fold and keep them there. Of course, the company has much to boast about, growing from a concept in the University of Texas dorm room of founder Michael Dell to a multibillion-dollar juggernaut of the global technology industry in less than 30 years.
But now comes the cloud. It ushers in a whole new set of online tools that serious online marketers such as Dell must experiment with. In fact, Dell has adopted a marketing strategy for public and large enterprises that puts cloud applications at the center of its channels to customers. “The cloud is very appealing to us,” says Rishi Dave, executive director of online marketing for Dell’s large corporate, public and government enterprise division. “I live in constant paranoia of innovation overtaking us in the online space. So we constantly are reviewing, evaluating, and testing new offerings from cloud providers to see who is at the leading edge so that we are using the latest, greatest marketing tools.”
Online marketing has become a blood sport, especially in the computer industry. Competition in the IT market has become so fierce that products are quickly commoditized and margins rapidly squeezed. Hundreds of millions of dollars ride every week on whether a technology company can troll the vast World Wide Web looking for enterprise customers ready to change vendors. A snarky comment in a LinkedIn or Facebook group, a complaint Tweeted for all to see, and other digital droppings can lead a company like Dell to identify a ripe prospect – or a customer ready to defect.
Before the advent of social media, the ways companies like Dell used software to track what was being said about them on the Web, in calls with customer reps, and in emails. But the world of marketing applications has changed dramatically. Dell uses Salesforce.com to manage its CRM efforts. And now the Round Rock, Texas-based IT giant is also using other cloud vendors’ marketing-related applications. “This means we can innovate more quickly,” says Dave.
He is experimenting with cloud-based gamification — as Wikipedia defines it, “the use of game design techniques and mechanics to solve problems and engage audiences” — to both entertain and enlighten current and prospective customers. The company sees gamification as important for getting rapid feedback on new products and marketing collateral.
Gamification Delivered in the Cloud: The New Dell Marketing Tool
A great example of how Dell drove results fast with cloud-based marketing applications came at its first annual conference for global customers, Dell World, held last October in Austin. Four months prior to the conference, Dave and other online marketers at Dell decided they needed a novel way of interacting with attendees, one that would engage them more deeply and give Dell a deeper understanding of what solutions customers cared about. Working with a cloud-based gamification vendor, Dell used mobile gamification to reward attendees for downloading Dell content at the event, sharing it with their peers, and letting others know about it through sending out Tweets, visiting physical locations at the conference, and exchanging contact information.
A big advantage of working with a cloud vendor for the game application was that Dell’s online marketing group didn’t have to request a system that would touch the company’s internal IT infrastructure.
The Biggest Barriers to Adopting Whole New Cloud Applications: Giving Up Control and Changing the Way Dell Markets
In working with vendors of cloud-based marketing applications, Dell has had to learn how to deal with a new set of business partners – many of which are small startup companies that need to handle a large, global firm. “When you no longer own the technology, you have to be much better at managing cloud vendors and developing partnerships,” explains Dave, who says the firm evaluates as many as a dozen cloud marketing application vendors at any one time. “You have to have a process to identify the right partners, and you have to learn to relinquish total control.” In contrast to marketing applications built internally (over which Dell can determine every feature, function and interface aspect of the software), using cloud vendors’ marketing applications means Dell must give up control of product features, look and feel.
This, in turn, means Dave and his team must carefully evaluate whether Dell can change its marketing processes to take advantage of a promising new cloud-based marketing application. “It is relatively easy to identify new tools but a big challenge lies in absorbing them,” he says. “This requires looking at it from an internal business process perspective.” Cloud applications that require too many internal changes – or vast amounts of training to master it – have a much higher barrier to adoption. “A limiting factor is how much training, additional resources, and process changes are needed. Also, providers must eventually be able to scale their capabilities as their organizations grow.”
Of course, one of the big attractions of cloud marketing applications to Dell (and many, many other companies) is turning a fixed cost (licensing marketing applications software and the purchase of servers to run it) into a variable cost. If the company doesn’t like a particular cloud application that it has been using to sort out sentiments aired about the firm through social media, it simply stops using the service. Dell doesn’t have to remove the software from servers in its data center – and most of all, it doesn’t have to buy the extra servers need to run the software in the first place. Those applications run on a cloud vendor’s software.
All in all, Dell sees cloud-based marketing tools as critical to effective marketing in the present and future. Online marketing chief Dave believes that cloud vendors selling applications for mobile phones, tablet computers and other highly portable digital devices will be especially important to Dell given that its large-company customers do a large and increasing share of their daily tasks through such devices.
“We constantly trial cloud providers to see who is developing the latest tools,” Dave says. “Our use of such tools will absolutely grow. And as we ramp up our mobile strategy, cloud becomes critical.” As a case in point, he and his team are already thinking about creating games for the next Dell World conference that can be played on any digital interface – smartphones, tablets and PCs.