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Channel Conversations - Musings about the Cloud

When we hosted Channel Focus North America in May you could not take part in any conversation without the topics turning to the Cloud? But how will the Cloud affect the channel?

Clearly a number of threads are emerging.

I’ve spoken to a number of vendors worried about the Channel being left behind. Research we conducted amongst resellers prior to the event and vendors during the event suggests the opposite is true! This research suggests that the Channel is more involved in the ‘Cloud’ and more aware of its ramifications than the vendor community. Should we be surprised? Probably not, after all the cloud is being driven by end-user demand and who is facing these end-users every day – of course it’s the channel.

I believe the key issue with the ‘Cloud’ is not when it will happen but ‘what percentage of the market it will represent and how soon? Ask 35 leading experts this question and you’ll probably get 35 different answers!!

However there are some trends beginning to emerge. Firstly the ‘Cloud’ is likely to create a different type of Channel. I’ve spoken to numerous SME’s looking for a ‘Cloud’ solution. Their traditional reseller is not even considered as an option? Why? Lack of investment? Lack of ability to deliver? Whilst these contribute to the problem,  the biggest issue is that, whilst an SME is only to happy to trust a smaller reseller to come in and look after their equipment, when it comes to placing their data and indeed their future with someone else, they are looking for a financially much more robust organisation. This means larger partner organisations are the desired ‘Cloud’ partner for the SME and needless to say mid sized and enterprise organisations also.

So where does this leave the smaller reseller? They are hampered by size and by the investment needed, but they can have a significant role. Companies such as Salesforce and Net Suites  provide real opportunities for resellers to tailor and resell their cloud offerings. This overcomes the problem of ‘I want size and substance’ whilst providing resellers with a real opportunity to generate immediate revenue from tailoring the system and on-going revenue  from the subscription income.

So, in the ‘Cloud’ I think the channel will divide into a number of camps (and as always many partners will play in multiple camps), firstly those with the size resources and client base to develop their own ‘Cloud’ offerings, secondly those who will create unique applications and services but will use Rackspace, Amazon to host them and finally those who tailor and sell a vendors offering. We also see a new breed of partner emerging, new partners who haven’t been involved in the industry before but who see the opportunity, like technology and want to build their own business. A good example of this is a very successful Net suites reseller in Denver, he was an accountant liked tech, and saw the opportunity with limited investment to start a successful business based on tailoring and delivering Net suites solutions.

So, for these players does the ‘Cloud’ move us to a Channel more akin to that of the insurance industry, where a substantial percentage of the income comes from renewals? With a number of major vendors providing the base solutions and a small percentage of the partner community developing their own ‘cloud’ solutions and the rest operating as ‘brokers’ either dedicated to one offering or offering a number of solutions  I certainly think so – I’d love to hear your comments!

Next week I’ll discuss why I think the ‘Cloud’ also has major implications for the vendor and the importance or not of their brand in the marketplace. 

Meaningful conversations in the Cloud

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