How To Cash In On the Cloud Through Collaboration12:00 PM EST Fri. Oct. 12, 2012
Demand for cloud services is expected to grow exponentially: Gartner predicts the market for cloud services to grow from $2.7 billion to $10.5 billion in the next two years. Looking to cash in on the opportunity, many solution providers are adding cloud services to their offerings.
[Related: How To Sell Cloud Storage In Five Steps]
However, many are discovering that, rather than building and managing their own clouds, it's much smarter and easier to partner with a hosting provider to resell already-established cloud services. Why? Although the cloud is a virtual environment, there is a great deal of underlying physical infrastructure that costs a considerable amount of money to build, maintain and keep up to date. For many companies, it simply makes better sense to “share” infrastructure that’s already been built than to build your own. After all, cloud, by definition, is a pool of shared resources. And, in many cases, it’s much more efficient and economical to share those resources for mutual benefit than to start from scratch.
Yet, according to Microsoft’s report, “SMB Business in the Cloud 2012,” Feb. 8, 2012, more than half of all SMB end-users looking to take advantage of cloud services want the simplicity and convenience of dealing with a single IT solution provider. So, how do you bridge the gap between what your company can reasonably offer, and what your customers want?
The key is to select a partner whose goals, strategies and approach align with your own. A focus on developing mutual opportunities for sustainable growth and scalability—both for tactical deployment and strategic development—should be part of the deal.
Specifically, a cloud partner should offer:
• Complementary skills and offerings to your own. Look for a partner that supplements your existing portfolio with very little overlap to avoid a situation where the partner may cannibalize your business.
• A solid reputation for service and success. Don’t be afraid to ask for a list of other successful partners and check references.
• A network of contacts to leverage. Partnership is a two-way street, and you should both be invested in mutual growth.
• Flexibility on who owns the client. Some partners require joint ownership, while others are happy to let you own the relationship. Whichever you choose, just be sure you know the parameters up front to avoid any surprises.
• A mutual understanding on the business opportunity. Agree on what your business is capable and willing to do, and choose a partner that can help you fill in the gaps.
As you begin evaluating options, it also helps to have a solid understanding of the exact type of business model being offered by potential partners—and which works best for your own strategy. Cloud partnerships most often fall into one of five types of programs:
• Resellers: The cloud provider offers you a discount, and you own the end customer. Cloud services are billed to you by the hosting provider; you add a markup and bill the end-user.
• Referral Partners: In this arrangement, you simply refer the end-user to the cloud provider in a direct hand-off of the business. The cloud provider pays you a commission, which can very often include residual payments over the lifetime of the relationship.
• Private/White Label Resellers: A somewhat more advanced reseller relationship, a white-label program enables you to attach your own brand to the user-facing cloud platform, and in many cases, you provide 1st-line support, with 2nd-level support from the partner.
• Affiliate Programs: A more hands-off approach, this is a simple website referral commissions program, whereby you collect payment for click-throughs and new business for the cloud provider generated through the use of banner ads on your Web site, for example.
• Third-Party Agents: A much less common approach, this arrangement leverages an on-site person, typically in another country, to generate new business and service customers in targeted regions.
During the past two years, the number of “aaSes” (“[fill in the blank] as a Service”s) created in technology boggles the mind, and it can be difficult to discern one from another—from Platform to Infrastructure to Database, and even HP’s recent “Everything as a Service” approach. There is obviously a demand for these services, and marketing teams are working hard to differentiate their offerings from others.
However, as a company new to the cloud market, it’s important to not get in over your head trying to be all things to all customers. Stick to what you know – your clients and the uses they have for your solutions. Businesses of all sizes are clearly interested in changing the way traditional IT is purchased, moving toward a more consumptive model. And, there are plenty of competitive options to satisfy their desires.
Yet, making the leap can be overwhelming for both you and your customers. The key is to listen to your customers’ concerns—their needs will tell you where to start. Then, select a partner that delivers solutions to meet those needs in a method that suits your overall business strategy.