Strategic Business Unit - On-premise or Traditional vs. Cloud Based

Here are two organizational charts that indicate how product business units have evolved in line with business strategy. [These organizational charts are based on conversations with clients and people in the industry, but do not represent any actual business unit]

The cloud business unit is mainly about the product

The traditional business unit was about the complete Marketing Mix, including the 4 Ps or sometimes the 7Ps.

This change has also impacted the way other departments now engage with the new SBU structure. Some points to note:

1. Finance, HR, Ops are usually centralized functions in a cloud SBU
2. Service delivery, configuration, customization, support, integration and other monetization possibilities have changed dramatically in the cloud. It is no longer possible to have year long delays in installation and configuration contracts, which did occur in on-premise installations. These teams now get fixed contracts and upgrades occur automatically.

3. Subscription pricing is very different from pricing for on-premise or app type products. Unless you are very careful in your pricing models, it is easy to occur losses. In fact, pricing is also getting centralized and moved under finance or corporate strategy teams.
4. Marketing is another function impacted significantly, with SEO/SEM gaining a big share of marketing spend.

In my next post, we will see how these, and other changes, have impacted the role of Product Manager and the Director, PM.

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