AWS Goes After Data Center Providers. How to Fight Back

At the AWS re:Invent conference a few weeks ago, AWS CEO Andrew Jassy made a major announcement outside the norm for the public cloud behemoth.  Jassy said AWS would begin taking on traditional data center hardware vendors with its on-premises service AWS Outposts.  One response called this AWS’s “boldest effort yet” to challenge legacy data center vendors — like Cisco, Dell EMC, Hewlett Packard Enterprise, Microsoft, and NetApp — who make billions building and maintaining traditional on-premises data centers.

Despite the rapid growth in spending on public cloud – growth that has consistently fueled 40%+ YoY growth for quite some time for the now $23.4B cloud giant – the on-prem market has remained elusive to AWS.  Many companies maintain regulatory concerns or privacy issues that limit their ability to use public cloud, while other businesses just aren’t ready to abandon investments made in their own equipment and facilities.

But according to Jassy, customers didn’t want a private cloud experience that attempted to “recreate a stunted version of a cloud”, only on-premises.  So AWS reimagined a solution and, along with a partnership with VMware, AWS Outputs was born.  The service will allow customers to provision physical racks of AWS servers and have them shipped to their own data centers, allowing customers to run compute and storage on-premises, while seamlessly connecting to the rest of AWS’s broad array of services in the cloud.  There’s a lot more to how robust the offering will be…but that’s a BIG deal.

For traditional data center hardware and software providers, it’s time to double-down on developing and delivering new, differentiated go-to-market programs and messaging to the most at risk buyers in their customer base to counter this AWS move – and make that the new normal.  Not doing so now risks additional billions in spending shifting away from Cisco, Dell EMC, HPE, Microsoft (and others) to AWS.

The Clock is Ticking

The good news for competitors? AWS Outposts isn’t scheduled to become available until the second half of 2019.  Additionally, on premises infrastructure providers have deep channel relationships and competitive advantages in the data center.

The bad news, the clock is ticking to identify your most at-risk customers (today and in the future) and engage and then re-engage them from now on with new, refreshed go-to-market programs, value props and messaging unique to competing against AWS Outposts.

If you are one of AWS’s many competitors in the data center space you can capitalize on several challenges that lie ahead for them: First, the same risk-averse companies that previously were resistant to migrating to a public cloud solution are sure to hold skepticism that the largest public cloud solution provider is now a perfect fit for them, even if they were to hold a price advantage.  The positioning and branding that made AWS a rocket ship of growth for public cloud may work against them for highly regulated and/or ultra-privacy sensitive enterprise buyers.  But that messaging will need to be consistently brought to the forefront of communications though marketing tactics and sales channels.

Speaking of sales channels, that’s their second challenge.  The rich network of channel partners that competitors have developed and invested in, and who really own the customer relationship, is a strong barrier to entrance against AWS Outposts.  But developing the content, messaging, and playbooks to enable partners to remain loyal and successfully articulate competitive advantages vis-à-vis AWS will be paramount.

What Now? A 3 Part Recipe for Success

Given AWS’s track record, this is a threat requiring immediate and substantial attention from traditional data center vendors including Cisco, Juniper, Dell EMC, HPE, Lenovo, Microsoft, and many, many, many more.  Andrew Jassy makes an effective case for change when he says “we have hundreds of data centers in lots of places that require all kinds of maintenance and real-time work.  We have a little bit of an idea of how to do it.”  They do indeed.

For the competition in need of upgrading their go-to-market against AWS here are three suggestions to engage the right customer with the right message at the right time:

  1. Market Intelligence: Keep a finger on the pulse of what buyers, partners, AWS themselves, and even your own competitors are doing in response to this. Do customers care? If so (which is likely), what entices them the most?  What are the obstacles that exist that AWS is and is not successfully overcoming?  What do partners need to reinforce their trusted relationship position?  What competitors are delivering messaging that’s best received by private cloud/on-premises buyers?This intelligence can be sourced through a combination of agile digital listening to uncover important micro-trends on an ongoing basis, qualitative customer/partner insights to determine relevant market movements, and even quantitative research to determine where to shift go-to-market program investments.

    For more on Using ‘Digital Intelligence’ to Source Vertical Opportunities, read here >

  1. At-Risk Customer Analytics: Delve into existing and prospective customer data on infrastructure purchase patterns, installed base of data center hardware and software, network usage and utilization patterns, storage and compute demands, “look alike” account behaviors, recent pricing concessions, content consumptions triggers related to public/hybrid cloud vs. on-prem solutions, etc.Your existing customer data is certain to hold clues on which current buyers represent the greatest at-risk of defection to an AWS Outposts solution…and which definitely do not.  Finding and regularly updating those customer sub-segments and customizing corresponding messaging to them allows for nimble, effective customer retention.

    For more on Three Questions to Ensure Your 2019 Go-to-Market Strategy is a Success, read here >

  1. Refreshed Go-to-Market Programs: Without question, marketing messaging, sales enablement content, and the “last mile” communications that deliver effective and differentiated value propositions to buyers will need to change. Direct-to-buyer positioning delivered via web, social, email, events, etc. will require a refresh and the channel partner content needed to equip and enable partners to engage, convert, deliver, and service on-premise data center customers will too.  Just as new content supports new product launches, new playbooks will be needed to arm sales and marketing teams to effectively compete against AWS Outposts.

    For more on The Last Mile Problem: 7 Steps to Closing the Insights-to-Outcomes Gap, read here >

If AWS can continue to grow revenues at its over 40% annual pace, it will double in two years – adding another $20+ billion in revenues.  Will some of your revenue become theirs?  Given the billions in incremental data center revenue at stake here, it pays to respond with go-to-market innovation…and fast.