The channel is living through another era of technological change and needs to adapt quickly if it’s to survive and flourish. The days of making good margins on hardware and software sales are quickly passing by, leading channel partners to adopt a services-led approach, where the focus is less on physical kit and more on providing value-add and additional professional services capabilities in order to deliver a more agile IT environment to the customer.
Selling solutions not just licences
The first foray into cloud for many in the channel is the low-hanging fruit of selling SaaS offerings from the likes of Box, Salesforce and others, adding on a plethora of security options. Yet in this cut-throat space with relatively thin margins, there is both the danger of vendors going direct or rivals undercutting margins to win the deal. Yet the first generation of somewhat ‘cookie cutter’ cloud offerings, are now making way for more flexible alternatives that allow more customisation and third party integration. However, the skill set to meld together disparate cloud offerings around collaborations, telephony and process automation are still in short supply.
Vendors are keen to train up the channel partners that want to insulate themselves from margin erosion and are investing more in cloud solution skills. Software skills around Amazon S3 for storage, and OpenStack for cloud orchestration will pay for themselves as clients start to ask – can we do something a bit more advanced with our cloud?
Migration capability is vital
Although the trend in the data suggests that the majority of production environments will be based around cloud, getting to this nirvana is not as straight forward as vendors would have you believe. The more complex the on-site setup, the more difficult it is to port into a cloud equivalent – and potentially more expensive. Few clients that have invested in bespoke, highly tuned applications will be eager to throw it all away and start again with the next big cloud equivalent. The pattern of travel for most is to carve out the discreet bits that can happily reside in the cloud while saving on licence fees, bumping up reliability or driving down management overheads. For partners that have developed vertical market expertise around particular software stacks or vendor ecosystems, understanding how to move a CRM or ERP platform to the cloud, and the actual best practice steps, is a valuable commodity.
The cloud as an aid to managed services
The cloud is not just a destination for end-clients. The channel can also use the advantages of cloud, including scale and pay-as-you-go pricing, to further enhance parts of their portfolio. In areas like network monitoring, helpdesk, vulnerability scanning and a host of other MSP functions – there is almost certainly a portion that can be improved through the use of a cloud-based tool. In some cases, with the right set of skills, partners can cherry pick different cloud toolsets to build unique and best of provide offerings that allow differentiation.
However, there are few defacto market leaders when it comes to tooling up with a cloud; experimentation and a bit of trial and error is essential to find the mix that works best for your individual needs and respective client pool.
Empower your sales teams or suffer the consequences
With the shift away from the ‘big deal’ commission cheque to the recurring revenue model that is cloud, the channel needs to ensure that sales teams are properly compensated to incentivise growth.
The painful reality is that cloud is having a detrimental impact on the sales of physical hardware and software licences, with margins on both unlikely to ever truly rebound to the levels of earlier years. The big deal mentality needs to give way to an upsell mentality where even a small deal can lead to incremental revenue as a customer; happy with the savings made through one aspect of cloud, they can now consider investment in another.
For example, a cloud-based collaboration platform could be a great enticement to a cloud-based disaster recovery as a service offering. Elsewhere, a cloud-based vulnerability scanning service could be a neat step to a content inspection service. Having a portfolio of complementary and compatible cloud services is a great way of fostering sales teams to think about generating a higher level of commitment from customers.
