From new on-going revenue streams to deeper customer relationships, the benefits of cloud computing for the channel have been well documented.
Despite initial fears within the industry around the impact on traditional business models, some resellers have woken up to the opportunities it offers and are now capitalising on this fast-growing market. For businesses of all sizes, cloud computing spend is growing six times faster than traditional IT, predicted to represent 80 percent of the global IT market by 2020[1]. Indeed, if resellers are finding that their hardware and software sales are flat, it probably means their customers are already discovering cloud services and perhaps these resellers aren’t involved in this new spend.
The question now is how can resellers ensure they’re positioned to take advantage of the benefits that cloud-based services offer? And indeed, are they ready to do this? Those in the channel need to define their role, develop a clear strategy and build a solid value proposition around cloud if they are to see success in this area.
Colt suggests that there are several dominant factors which those in the channel need to take into account in order to drive real tangible value from the cloud.
The importance of being a trusted advisor
Firstly, resellers need to capitalise on their role as a trusted advisor to their customers. End-users will be looking to their IT provider to help guide them through their IT decisions and this will be no different for cloud-based solutions. Of course, they could go online and purchase services they require directly, but most will still need excellent advice from people they trust. Cloud services, especially in mid-sized companies, don’t manage themselves. A typical purchase is most likely still to come via a reseller, putting the reseller on point for support, further advice and incremental purchase.
Experience is already showing that there are few ‘revolutions’ in customer estates. People want low-risk ways into the cloud paradigm, maximising the investment in their existing systems while gaining experience with the new business model. Resellers who have already built solid customer relationships through selling these existing systems will be perfectly placed to help in proposing solutions which help customers through this migration.
Adding value through your cloud portfolio
Secondly, resellers should ensure their portfolio of cloud-based services and vendors is matched to their own level of expertise.
While many resellers may not have the technical expertise to build their own cloud-based services, they can still capitalise on demand for cloud-based solutions by leveraging a portfolio of cloud-based service offerings provided by a trusted technology partner.
This can be compatible with the reseller’s role as trusted advisors to their customers. Because cloud-based services very often involve migration services from legacy systems, this is a key area where resellers are well-positioned to insert themselves in the value chain. In these instances, resellers can focus on providing the right infrastructure offers to their customers, which those customers then operate themselves with minimal support from the reseller. If the customer currently maintains his own servers and SAN, he may well choose to continue managing his own estate in a cloud environment.
On the other hand, resellers with more advanced capabilities can also decide to design, plan and deliver their own bespoke cloud-based propositions (manufacturing their own managed services). In order to do this, they will need access to the right building blocks including the right architecture, skills and services along with best-in-class technologies and solutions. These resellers will be able to add even more value by combining their technology expertise with vendors’ cloud-based platforms to build complex cloud-based solutions that meet the specific needs of their end-customers.
Choosing the right cloud partner
Third, when embarking on their cloud journey, resellers should look towards working with a vendor partner capable of delivering all the processes, services and solutions they need in order to ensure a successful go-to-market strategy for their new cloud-based solutions. Resellers need to affiliate themselves with vendor partners who are able to provide the support their channel partners need to build a profitable portfolio of cloud-based services. This includes access to in-depth training, best-in-class service, tried and tested cloud-based platforms as well as operational expertise.
Although cloud business models do make consumption much less financially risky for customers, there are still significant complexities associated with creating “real world” customer solutions around cloud infrastructure. Resellers need to have confidence that their cloud vendors will support them during these deliveries. With Colt for example, channel partners gain access to class-leading infrastructure, supported by a channel-friendly sales and support environment.
Don’t forget the back-office
By selling IT services, resellers can often integrate with their customers much more effectively than with hardware sales. However, in addition to exploiting on-going sales opportunities, resellers must also be prepared to offer the on-going support and advice which their cloud customers require.
Further areas of a reseller’s business model that need consideration include helpdesk services, accurate billing and sales commission models. Many cloud-based services are associated with variable billing per month, as opposed to more predictable revenues from traditional sources. Resellers must ensure their billing systems will be able to manage this variable billing accurately and efficiently.
Cloud services will radically alter most reseller sales commission models, and will therefore need to be updated. Resellers should ensure they are ready to reward their sales teams appropriately in this new landscape: undoubtedly there will be some migration from up-front reward to revenue-based reward throughout the industry. Furthermore, helpdesk services need to be adequately equipped, both in terms of expertise, and access to the right information and tools, to cope with the new types of support required by the long lifespan and continual evolution that are a key benefit of cloud-based solutions. You should expect your vendor to provide adequate training opportunities for your support people.
Finally – be bold
You do not want to be the last to hear that one of your primary customers has just decided not to renew his SAN, because another reseller has just put him on a fantastic new cloud storage solution. Resellers need to position themselves as thought leaders in their customer base, helping customers to compare extensions of traditional IT with cloud or off-site alternatives.
In conclusion, there is no doubt cloud computing is fundamentally changing the IT channel, and many resellers are embracing the new market opportunities available. However, without a clear understanding of their own roles within this environment, and no clear strategy developed to earn end-user trust and provide end-user customers with the benefits cloud-based services can bring, they will lose out to stiff competition from cloud specialists. With the New Year having just begun, resellers should consider actively including cloud-based services in their offer and business model as their first 2013 resolution.
[1] IDC, 2012 - The demand of Cloud Computing in Europe: drivers, barriers, market estimates
Gary Moore is channel director at Colt.
