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Partners have a strong role to play in helping customers to transition to the cloud, and the margins can be good. But they’re taking their time. VMware UK channel boss Alanzo Blackstock recently admitted it would “like partners to help speed up the journey to cloud for us”. But moving to a cloud and subscription-revenue based model is not easy for partners to do. What can vendors and distributors do to help partners – and what can partners do to help themselves?
Alex Hilton, CEO of the Cloud Industry Forum (CIF), describes the IT channel’s relationship with cloud computing as “complicated”. There are tremendous opportunities for channel organisations that have adapted their business models to make a success of cloud but they have to make the move first. Recent research from CIF found 99% of the channel recognised the potential benefits of cloud but only 65% were offering cloud services (having increased just four percentage points since 2010), and those that did derived only a relatively small proportion of their revenues from the delivery model.
“We would have expected these figures to be much higher,” Hilton says, “but the research clearly showed many were facing operational and skills barriers that were preventing them from being able to offer cloud services.” He makes the point that selling IT-as-a-service “is fundamentally different to selling products” and requires resellers to redefine process, SLAs, contractual terms, remuneration, sales skills, income, profitability and cash flow.
Nevertheless, partners are “in a unique position in the cloud supply chain to advise users on the most appropriate infrastructures for different applications and aggregate disparate cloud technologies”. But vendors need to step up too and take a greater role in educating and supporting resellers through the entire sales cycle.
Christian Curtis, director for next generation technologies and strategy at Azlan UK, acknowledges many partners are still concerned about the obstacles they need to overcome to sell cloud services. Moving from a traditional IT delivery model to cloud-based services “represents a significant cultural change for many and raises questions such as the availability of in-house skills to sell, support and invoice cloud services”.
But he believes that, “rather than usurping the channel, cloud has amplified the importance of partners and their relationship as long term trusted advisors to customers. A knowledgeable and educated channel is essential to vendors, distributors and customers alike in helping each entity to realise their cloud plans”.
To make things easier, Curtis suggests that vendors and distributors need to “play a major role in educating and supporting partners throughout the entire sales cycle including at a practical level such as invoicing and finance”. He adds that partners can speed up the move to cloud “by adopting an ‘enhance and protect strategy’ which means enhancing services to customers on an ongoing basis while protecting existing relationships with a regular reason for contact. Offering cloud services isn’t as difficult as may first appear with support from vendors and distribution.”
Chris Hill, director of cloud and business development at Barracuda, lists a number of key areas that vendors need to focus on to help partners move their customers to the cloud. In a world where businesses are adding more locations and SaaS applications at an incredible rate, as well as adopting public cloud platforms like Azure and AWS, vendors have a “responsibility to educate partners in the areas most affected by the move to cloud, including security (as most traditional firewalls are not cloud-ready), traffic regulation, connectivity and management”.
Vendors also need to ensure that partners know how to provide access to the cloud from all locations, he adds, to safely move workloads in the cloud and to control costs in this area. “Once partners understand this paradigm shift, they will be able to create solutions that fit the new requirements of organisations with confidence,” Hill claims.
When it comes to pricing, vendors need to use platforms that offer flexible cloud pricing models, such as metered billing and pay as you go. This allows partners to give users a choice over how they would like to pay for their service and align better with cloud consumption models. “This needs to be used in conjunction with training for partners around how best to price products and services,” he notes.
Hill believes partners should investigate the area of cloud managed services offerings, because it will allow them to manage larger projects and become a trusted advisor, while enabling the customer to save costs in more areas than hardware. “By approaching customers with a solution mind-set as opposed to selling a point product, partners can configure a model that allows customers to easily and confidently expand their footprint as their needs grow and, in turn, increase the business for the partner.
He agrees with Curtis that vendors need to take the time to train technical and pre-sales staff on cloud ready solutions. “This will dramatically improve partners' revenue, as there remains a skills gap in the industry, particularly around cloud,” he argues. “Being able to run proof of concepts and help customers adopt cloud services will elevate partners from being a simple hardware supplier.”
That may be true, but Brian Murray, head of service development at IT services supplier ECS, points out that vendors often focus on technical training but partners need business education to talk to customers about the benefits of cloud and provide comparative assessments. “Vendors need to recognise that partners will deliver the most value when they are supported well,” he remarks. “This has little to do with technical design or implementation but involves strategic business assessment, proof of concept, operating model review, building the business case and forming the migration roadmap.”
Murray notes that moving to the cloud “is a requirements-driven situation, whereas vendors are more focused on technology and solutions. By engaging with partners in a trusted advisor role, customers can ensure their strategy is clear, there is a sound business case and a roadmap to maximise value”.
He adds that partners need to be aware that any cloud programme “cannot happen in isolation but has to consider the customer’s broader environment or portfolio. A trusted partner has an independent view of the bigger picture”.
Neil Whitelock, director for cloud and SI alliances at Avaya, warns that customers making the move to cloud “want partners to understand their business, provide local customer support and have knowledge of exactly which staged applications will best improve their operational performance. Not only does a tailored service need to suit the individual needs of each business, the solution must also be built seamlessly into the business growth plan”.
Partners and vendors need to understand that a “one size fits all” approach does not work for cloud migrations, he warns, and leading to restricted performance and costly repercussions further down the line. “Making the transformation from on-site services to the cloud is not simply a binary switch and vendors must be able to provide a hybrid deployment to underpin their customers’ journey to the cloud”.
Vendors can help partners “by collaborating on a well-defined strategy that pinpoints the exact requirements of a customer and users, not just in the present but for the future”.
Alex Raistrick, director WEUR at Rubrik, says that partners need to build up their cloud skills and knowledge to stay aligned with their customers’ need for help and advice when transitioning to cloud. “These skills will include the ability to manage data in the cloud, orchestrate the movement of data and help customers to protect that data,” he states. "The channel will develop these skills with the help of modern vendors.”
As for vendors, they need to help partners understand how to make the change from appliance sale to cloud and shared services models - “it’s very much in the interest of vendors to ensure that their partners are fully enabled”.
From a distribution point of view, Mark Charleton, CEO at Blue Solutions, argues that most of the value distributors can add “is in choosing to work with vendors that have made real efforts to simplify the management of cloud services, so that the perceived upheaval of moving to them is offset”.
He gives the example of Trend Micro “which has worked really hard to develop and improve centralised consoles that put critical cloud processes like licence management under a single pane of glass that’s easy to use and keeps admin overheads down”.
Craig Joseph, COO at intY, says the onus is on vendors and distributors “to make it as easy as possible for their partners to move to a cloud and subscription revenue-based model”, because it offers a number of long-term business benefits, including generating stable revenue streams and developing productive relationships with customers.
But resellers and partners need to have a convincing proposition to accelerate the transition to the cloud and persuade customers “that now is the time to embrace cloud technology”. They need to offer the full spectrum of cloud services that users need to successfully manage their IT estate in the cloud, including security, data backup and storage, and application development. “Distributors must ensure that they are delivering this full range of services to their partners if they are to help them grow their business and encourage their customers to move to the cloud,” he adds.
The tools that distributors and vendors provide to resellers can play a crucial role in helping partners make the transition. While the move to cloud technology has prompted partners and resellers to adopt new subscription-revenue based business models, it has not been an easy transition for them. “It is critical for distributors to develop tools and platforms, such as online sales portals, to help partners and resellers transition smoothly to a cloud revenue-based business, track their sales and revenue from the products they’re selling, as well as provide the products quickly and efficiently to their customers,” Joseph concludes.