Amazon.com has become a substantial player in the world of cloud computing. Amazon (yes, the online book seller) provides cloud offerings to host web services, storage, and computing cycles for companies of all sizes.
Recently, Amazon announced new pricing related to their support services:
When you read the article, it sure feels like a race to the bottom for what cloud computing companies plan to charge for support services. However, the technology industry currently has a model where significant revenues are achieved by providing value added support services to customers. In the TSIA Service 50 data, we know that enterprise software companies, on average, receive over 60% of their revenues from services. Hardware companies receive over 30% of their revenue from services. If cloud computing companies are going to give “premium” service away for free, will these service revenues simply evaporate in the world of cloud computing?
What Amazon Does Offer
Before we say goodbye to all those lovely service revenues, we need to pause. Julia Stegman is TSIA’s VP of Research in the area of Service Revenue Generation. She lives and dies around the best practices for attaching and renewing service contracts to product customers. And she is convinced, more than ever, that attaching value added services will continue to be the lifeblood of economic health for technology companies.
After reading Amazon’s announcement, Julia tried to contact Amazon by phone to ask questions about their new support service offerings. She summarized the following experience:
- There’s no phone number on their website
- You have to enter an account number to receive the phone number
- Even a “sales question” doesn’t have a phone number — you fill out a web form and it gets routed to someone
Frustrated with the lack of response, she read the information provided by Amazon on their web site regarding their premium support offering deliverables: http://aws.amazon.com/premiumsupport/
After reading the document, she sent me the following summary observations:
The Basic Level Support
- Customer service/billing questions (that’s a cost of doing business)
- Support forums (power users do the work + 1:Many creates scale)
- White papers, best practice guides (1:Many creates scale)
- Access to Technical Support appears very limited.
- Seems you are invited to place a case JUST to resolve an error message through their proactive monitoring capabilities.
Support for Health Checks
- “Health Checks monitors the health and status of AWS Services and the status of these checks are displayed within the AWS Management Console.
- When a check does not pass, customers will be given the option to open a high priority ticket with Technical Support for assistance.”
- Email only and local business hours with 12 hr response time (industry average is 4 hours)
- Where the deliverables start looking like traditional tech companies with access to Technical Spt via phone, chat & email 24X7.
- 1-hr response.
Best Practice Guidance
- Offered via white papers at the Basic Level and via the Technical Spt team on the “pay for” service levels.
Premium is not Premium
At the beginning of this year, TSIA began benchmarking the service revenue generation practices of technology companies. Part of this benchmarking includes data related to what hardware and software companies provide in level 1 (basic) and level 2 fee based support contracts. The graphs below from Julia compare industry averages to the Amazon offerings.
As you can clearly see, Amazon “free support” and “premium support” look nothing like the basic and premium support offerings of enterprise class technology companies. This is truly an apples and oranges comparison. Enterprise class technology companies are providing a host of capabilities that Amazon is clearly not putting on the table.
Perception Becomes Reality
Even though the support offerings of cloud based providers like Amazon do not look anything like support offerings of enterprise technology providers, TSIA is cautioning all of its members to track these industry comparisons. As more customers move IT infrastructure to the cloud, their service expectations are being reset by the Amazon’s of the world. And what service capabilities they value are being reset. Enterprise technology companies will need to be expert at defining and defending the value proposition of their services. That is, if they want to maintain those services based revenue streams!