Shifting business model to benefit from the rise in cloud

Channel partners will need to undergo their own version of digital transformation to take full advantage of the shift to cloud

Digital transformation is a huge opportunity for resellers working in the cloud space to develop their role in the IT ecosystem and deepen their relationship with the end-user. But it won’t be easy.

Helping customers to digitally transform is very different from selling an individual product or solution, as the majority of channel partners do today. This means channel partners will have to adopt an entirely new approach to suit the changed demands of their customers.

In a way, channel partners will undergo their own version of digital transformation. By this, we mean business models will change, with a focus placed on partnerships and guiding customers through their complex business challenges, as well as developing the technical expertise needed to guide end-users.

We investigated this topic in our whitepaper, The intelligent future of cloud, which revealed the thoughts and attitudes of 50 cloud resellers and 250 UK-based cloud end-users from a variety of mid-market and enterprise organisations.

The results were intriguing. As it stands today, the majority of organisations are leaning towards buying their cloud solutions directly from the vendor. Half of our respondents told us this is the only way they buy solutions, compared with the 8% that buy only from a channel partner.

Based on our findings, it appears this is caused by the mismatch between what the customer wants and what resellers are offering.

But it needn’t spell doom for channel partners. Those who can successfully make the shift into a partnership model stand to gain hugely. Looking at it this way, these statistics illustrate the opportunity that will be available for resellers to grow their share of the market once they update their business models.

Some are already getting it right. According to our survey, 68% of businesses that choose to work with a channel partner on their cloud solutions do so because they offer 24/7 continuous customer support. A further 60% do so because of the support the channel partner provides during the implementation process.

These were customers’ top two reasons for opting to buy from a reseller instead of a vendor. It clearly highlights that the USP of channel partner organisations lies in the depth of support they can offer. Almost half (47%) of end-user respondents pointed to their relationship with a vendor as a reason for relying on them completely for their cloud solutions. Currently, resellers are failing to nurture similarly strong relationships with their customers – and, consequently, they are missing out.

Deeper relationship

This is largely a result of the reseller business model, which for most is set up for single sales and one-off transactions. To find success in the future, channel partners will need to prepare themselves for deeper relationships with their customers.

The final piece of the puzzle comes with expertise: 94% of end-user organisations report having experienced difficulties when making the shift to cloud. Faced with such challenges, businesses are looking for some guidance – and they look for it from the technology expert who sells them their cloud product or service. Successful channel partners are stepping up to meet this responsibility and have the ability to apply their expertise to the real-world business problems their customers have.

This goes beyond simply selling tech products – it means becoming a full partner in the end-user’s digital transformation process. Obviously, this will not be an overnight transition – such complex offerings will take time to adjust to. The same goes for upskilling staff, as end-users look for consultancy and advice from across the business from the very first contact they make. But the potential rewards that lie on the other side of the transition make it worth it.

Ultimately, channel partners, like the rest of the tech ecosystem, need to prepare themselves for transformation. It is time to transition from “reseller” to “channel partner” and begin to really live up to that name by collaborating and offering a valuable partnership to customers.

This was last published in June 2019

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