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Demystifying the myths of the channel and the cloud

Niko Mykkanen, head of partner channel strategy, Amazon Web Services EMEA, shares some thoughts about the way the channel can approach the cloud

Over the past 10 years, cloud computing has moved from a technology that companies were experimenting with to part of the mainstream and something organisations of all sizes turn to for their technology workloads.  With that in mind, cloud can now be considered the new normal for all companies across Europe and around the world. The ability to access near endless amounts of compute, storage and other technologies over the internet, on a pay as you go basis, is helping organisations to lower the overall cost of their IT and dramatically increase their agility. This is leading companies from start-ups like AirBnB, Spotify and Pinterest to enterprises like Shell, Unilever and NASA to move their technology to the cloud.

Cloud technology is giving businesses a great opportunity to speed up innovation and is also giving channel partners the opportunity to accelerate their own earnings. Despite this, we still see a lot of noise and misunderstanding amongst the channel community. There are a number of “myths” that we have come across in conversations with some channel partners and I wanted to take this time to cut through this noise and demystify a few of the common un-truths we sometimes hear when speaking with partners.

Myth #1 – Partners can’t make money in the cloud.   This could not be further from the truth. Over the last 10 years, we have seen partners of all sizes generate lucrative revenue streams in the cloud, from smaller technology and consulting partners, born in the cloud System Integrators (SIs) and Independent Software Vendors (ISVs), through to some of the world’s largest and oldest technology and consulting partners. For SIs, the cloud gives the opportunity to create new business units. Many customers know cloud is what they want for their organisation but not all of them know how to successfully implement it. Through focusing on cloud, SIs are in a strong position to develop lucrative and new revenue streams. For some this has meant winning large customer accounts from incumbent, old world, vendors. Other SIs have also developed a competency in Managed Services. This has given them skills in cloud infrastructure and application migration and also gives them the opportunity to deliver continued value to customers. This has led to new revenue streams for their business by offering ongoing proactive monitoring, automation, and management of their customer’s environments.

As well as creating new business units to make money, partners also have Channel Reseller Programs to take advantage of. The AWS Channel Reseller Program is for select SIs and Managed Service Providers who provide professional services on the AWS platform and wish to resell and manage AWS services for their customers. Amazon Web Services Partner Network (APN) Partners who qualify as Channel Partners under the program are eligible to receive discounts on standard AWS published pricing and other opportunities to increase their cloud revenues. We also see partners taking advantage of training and certification programmes to deepen their cloud knowledge and skills, differentiate their business, and better serve their customers. This is leading to more revenues as partners bring skills that customers do not have and can add real value to their businesses.

Myth #2 – Channel partners compete with cloud vendors.  This is another big myth we see when engaging with channel partners here in EMEA and around the world. There is a myth that there is no need for a channel with the cloud because customers have the option to work directly with the vendor – this is just plain wrong.

Although customers have the option to work directly with a vendor like AWS, partners are still a key part of the cloud ecosystem. Early on at AWS, we determined that the partner ecosystem was critical to the success of our customers and our business. This is because we understand partners sometimes have relationships, insight and knowledge into customers that technology vendors don’t. As this is the case, SI partners are in a strong position to be the conduit between the cloud vendor and the customer – helping the customer to make the most of the new technologies while maintaining the same strong relationships they have been used to in the past and creating many new business opportunities.

For ISV partners the cloud gives them the opportunity to offer their software to customers all over the world with no need for their own infrastructure or distribution networks in each country. This is opening up new business and new growth opportunities for ISVs as customers around the globe can get started with their software straight away, with a few clicks of a mouse.

At AWS we encourage our customers to take advantage of the APN and the AWS Marketplace where they can work directly with the consulting and technology partner that best suits their needs. We are also seeing a new trend where SI and ISV partners are working together to create a one-stop-shop for customers to get all of their cloud technologies. By taking this approach we believe it enables the whole ecosystem of customers, partners and AWS to grow our businesses together.

Myth #3 – We already have the cloud.  Many large SI partners feel that they already have cloud technology in house. The reality is when you really dig into the details of these private or internal ‘clouds,’ that SI partners are running, they usually don’t have the flexibility, scalability or global reach customers are looking for.  They are also very expensive to run for SI partners where they still own all the capital expense at the data centers and incur high, ongoing maintenance costs. This is a high overhead for SI partners to incur. By offloading the running of the infrastructure to a cloud provider like AWS, partners can focus on innovating for their customers and adding value to their own businesses. SI partners should consider the notion of what cloud really is, just because they own a datacenter it doesn’t automatically make it a ‘cloud’ as it probably lacks all the key benefits customers are after. We are already starting to see many SI partners understand this. SI partners we work with are shutting down their datacenters and focusing on creating world class services and applications for their customers. This focuses them back on their core competency, which is creating game changing technologies, and not on keeping the lights on in a datacenter.

Myth #4 – Cloud is too broad to learn about every technology.   One aspect of the cloud that attracts many organisations to the technology is the vast number of services and the rapid pace of innovation. We find that by working directly with the services, using cloud internally for their own technology infrastructure, our partners can keep up with the pace of innovation and also be trusted guides for customers. This allows SIs to become familiar with the technologies and concepts behind the cloud before rolling it out to their customer’s businesses. For those that don’t want to do this, we also see many partners creating lucrative revenue streams by building competencies in specialised cloud technology areas. Some SI partners are building specialisms in solution areas such as DevOps, Big Data Internet of Things or Mobile, as well as technology areas such as SAP, Oracle or Microsoft. This is leading to lucrative customer wins for these SI partners with global Fortune 500 customers as they are moving enterprise applications and large parts of their infrastructure to the cloud. It also serves another need that we are seeing where customers are asking for ‘best of breed’ partners where having a competency can be a great advantage to SIs.

Don’t fight gravity

Starting out in the cloud requires a mind-set change for partners. Understanding that cloud poses an opportunity for their organisation from the start helps to unearth its full potential.

Cloud is becoming the new normal, both in the channel and for customers. Not using cloud is just like fighting gravity - it is inevitable. If partners are not using cloud themselves or looking at where it fits into their strategy, they run the risk of being overtaken by others using the platform.

This was last published in November 2016

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