How cloud is rewriting IT market channels

The big C when it comes to Cloud for the Channel is Conflict. I have been presenting and visiting partners around Europe for the past several years and listening to the opinions and input from vendors, Vars, Resellers, MSP’s, ISP’s and a variety of channels by varying name definitions and one things for sure, the Cloud has certainly stimulated debate. 

Whether it be concern, nervousness, confusion or mistrust, a lot of negative feelings have been generated in the channel by the C word. And yet there also are a growing number of channel cloud players, either from the traditional space finding their feet in Cloud solutions or thoroughbred new-born channels who focus only cloud.

Take a look at examples such as Cloudmore from Sweden, Outsourcery in the UK, Jamcracker out of the USA, SaaSplaza from the Netherlands and new entrant SaaSMax from the USA and  you quickly get a vision of a new opportunity that is presenting itself for a regeneration of the channels to market as we have known them.

We also see traditional distributors building cloud divisions, look at Ingram and Tech Data, both strategizing around cloud and formulating aggregation strategies to keep  their hand in as much of the revenue we have known go through as product (software and hardware) sales are combining to be spent on single cloud solutions.

Customers will buy cloud, not because of the term or the hype, but because of the business outcome and benefits it can bring, be they rapid turn it on availability, more resilience, more flexibility in a world of consumerisation and BYOD (Bring Your Own Device) or simply reduced cost of both implementation and on-going usage.

It is therefore important that the channel between the vendors and the customer get to grips with cloud solutions, terminology and the value propositions they can bring and understand what they will need to adapt to in terms of selling, marketing, billing and their value to not only the customer in this new form factor, but also to the vendor.

Shying away from this will leave the customer and vendor with no option but to both court and find each other. The more and longer cloud is resisted by the channel, the more pressure there will be on vendors who have heavily invested in cloud to push directly. 

As cloud solutions move towards more competitive and flexible billing their will of course be challenges for the traditional reseller approach, but these are not insurmountable if the adoption and adaption to these starts now. Leave it too far down the path and the transition will be painful and like jumping off a cliff, rather than going down a gentle gradient as the landscape changes. 

There are already plenty of examples of pure play cloud resellers, oft newly started by employees made redundant and deciding now is the time to make their own path.  They are growing fast with low cost overheads, no legacy renewals or worry about cannibalising existing business. Everything is upside to them and they are showing the example that cloud can be a reseller success and drive profitable revenue, different agreed, but why discount because of form factor and change. 

I still hear it asked often by Cloud Vendors, do we need a channel at all for cloud solutions and also occasionally this is coming from a person with Channel firmly in their job title, a worrying trend. A belief that the world has changed overnight, cloud can only be sold direct, there is no need for a channel . Yes in retail cloud has enamoured change, and consumers are changing buying patterns, particularly the young. But still there is a place for the brick and mortar retailer.

The supermarkets are booming, they have taken on more ranges branching into videos, books, home appliances and even banking and insurance.  Being able to adapt is key to survival and surely us as an educated species is capable of doing this when it comes to Cloud. 

What we will see for sure is a change of the go-to market landscape. Traditional resellers may find themselves having new competitors in this arena. It will not necessarily be one of their reseller peers bidding against them but perhaps a Managed Service Provider (MSP), an Internet Services Provider (ISP) or a telecoms reseller bidding cloud as part of their monthly billing solution set.

The Telco and Xsp type go to market channels are expanding into cloud for many reasons. Key is the fact that they already have the billing models and customer relationships in place. They already have customers who they bill monthly for example for a range of services and much like with mobile phones where the market has expanded from the basic access contract to a variety of additional services such as TXT messaging, video download allowance, web browsing, roaming hotspot service etc  the providers are now seeking additional services which they can offer to their client relationships and billing cycles. 

Contrary to this the IT market in general has been delivered on a supply and pay up front model historically. Cloud is changing the model to one where IT is delivered online in a periodic billing model and the value the channel brings is evolving. Telco’s as part of this have a large base of customer relationships to leverage, the infrastructure and funds to build out cloud services and the billing tools and relationships to handle what customers will expect. IT channels are going to have to adapt to this as they find new competition from the Telco and Xsp space.

Also we are likely to see an increase in Communication providers (those provide telephony and the services and billing around this)  and theoretically anyone who has a large spread of customer billing relationships, perhaps we will even see cloud services being sold through surprising channels down the line such as the supermarkets (perhaps selling cloud units, storage or credits much like mobile phone credits today).  After all, go back 20 years and no one would have believed that you would be banking and insuring through this route to market. 

Cloud is here to stay, under whatever name you wish to call it (SaaS, Public, etc) and customers will increasingly become comfortable with its form factor and delivery and as this happens if you as a channel have not given them enough value to buy it through you, likelihood is they won’t.  Leverage your customer relationships now, talk to your clients about this new arena, educate yourself and work out the sweet spot for you and execute against it.

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