Channel Chiefs: 12 Tips For Taking On The Cloud10:00 AM EST Mon. Apr. 15, 2013
Cloud computing -- and how solution providers can add these services to their offerings -- was a key topic during the Channel Chief Roundtable at the XChange Solution Provider event in Orlando, Fla., last month.
Channel executives had advice on everything from getting started in cloud computing, to deciding what cloud services to offer, to developing cloud expertise and credentials, to the best way to sell cloud services. Here are a dozen top takeaways from the discussion.
Adopting cloud computing represents a major change in IT practices for businesses, but it can be an even bigger shift for solution providers, given that their business is IT services. The business model, the required skill sets, the finances and cash flow are all different when providing cloud-based services. So it's no surprise that solution providers are often at a loss about the best way to get started.
During the roundtable Richard McLeod, senior director of worldwide collaboration channel sales at Cisco, suggested that solution providers take an incremental approach to transitioning their business by adding a focused cloud service such as Cisco's WebEx to their existing product service offerings. That will help them learn cloud skills and begin the transition to a recurring revenue business model.
Few solution providers can do it all when it comes to cloud computing. Some are building out their own cloud service capabilities while others prefer to resell cloud services from vendors such as Verizon, Comcast and others and then add their own value-added services and applications around those services.
"We've developed a cloud partner program and it has multiple ways for partners to play. You can be a cloud builder. You could be a cloud service provider or a cloud reseller," said Cisco's McLeod.
Obtaining vendor certification in cloud computing is a solid way to obtain credentials that can be used to demonstrate cloud competency to prospective customers. It's also a way to establish tight relationships with key vendors.
"We want a partner who's engaged with us. We want to make sure that they have the certifications and the capabilities. For us, I think it's selling across the portfolio and making sure that we offer such a broad mix of products and services," said Tony Anderson, director of indirect marketing, Enterprise Group Americas, at Hewlett-Packard.
Some vendors recognize each other's certifications. Verizon, for example, grants Gold partner status to Cisco certified Gold partners.
"It's a different skill set than buying boxes, installing boxes and maintaining boxes. If you're only going to sell boxes and deploy boxes, it can be all downside," Cisco's McLeod said.
"We think at the end of the day there are still going to be people that have to install, deploy, support. [But] those margins are going to continue to shrink. And the more you can add value on top of that -- putting the value around services that perhaps someone else is providing but you have your own intellectual property, your own value-add, your own business consulting -- the more margin you'll make," McLeod said.
McLeod said integrating cloud and on-premise applications is one skill that is in high demand.
Developing expertise in cloud computing technology is just part of the challenge. As they subscribe to cloud services, many businesses and organizations are looking for applications and expertise for their specific industries.
"What do you sell to a health-care company? You don't sell them a regular cloud. You've got to sell them a HIPAA-compliant cloud," said Janet Schijns, vice president, medium business and channels, Verizon Enterprise Solutions. Solution providers "need the technical competency and they need to be able to go in there and take ownership of an owner of a business, an operations manager, a health-care clinic provider. It's a different sale."
With the increasing adoption of cloud computing, line-of-business managers are playing bigger roles in IT purchasing decisions. "The consumption model, [IT] as a service, really starts to empower the line-of-business decision-maker," Cisco's McLeod said. "I think we'd probably all agree that this is probably the biggest shift of budget since mainframe to PC."
And line-of-business managers are looking for business functionality rather than IT speeds and feeds. "I think the line-of-business leaders will be open to a cloud solution or a more point-solution if you will," said Mike Kozel, vice president of partner management at SAP America.
Transitioning to cloud services can be difficult. One challenge -- and big opportunity -- for solution providers is to offer architectural and technology road map services to help customers make that transition.
"I think what customers are looking for is someone to help them plan the transition," said Cisco's McLeod. "Customers are confused. What is this cloud? What do I need to do? When do I need to do it? Which apps [need to be moved] to the cloud? Which ones not? When, how and with who? To package that all up under a white-label offering and to provide also the professional consulting of transition and integration, and make the cloud and the old on-premise [IT] work together. That's an amazing opportunity."
And don't make the mistake of thinking cloud customers will be new customers, said Frank Rauch, vice president, Americas Partner Organization, VMware. "What they need to be able to do is value capture the install base that they have," he said. "They really need to help their customers evolve. There are so many opportunities right now."
"It's all about giving the customer a choice as to how they want to consume [SAP] software," said SAP's Kozel. "It's giving our channel the ability to offer those choices to their customers. I believe over time it will be a blend. I don't think it's going to be one way or the other, you know, turn a switch and you're going from an on-premise to a cloud solution. I think there will be a mix."
"There are some applications [that are] great to have in a public cloud. There are other applications that, quite frankly, you want on-premise in a private cloud," Cisco's McLeod said. "It gets back to what is the proper mix. I think the opportunity for the VARs is to consult with the [customer] about what belongs where -- what the pros and cons are, and how to make hybrid clouds and the Internet of everything work together properly in a secure, policy-oriented environment."
Some IT managers see cloud computing as a cost-cutting measure. But those who do are missing the big picture. Cloud computing in many ways offers more value and it's up to solution providers to make customers understand that.
"I think there's a perception among customers that cloud is cheaper. We've all heard that. Cloud is cheaper. Cloud is cheaper," Cisco's McLeod said. "So how does a VAR shift the conversation from cloud is cheaper to cloud is more flexible? Cloud is more resilient and, therefore, cloud is of more value. Therefore, it's something that I should charge more for."
One reason some businesses are hesitant to move to the cloud is because they remain wary of potential security and availability problems. That means solution providers must keep security in mind when choosing a cloud service provider to work with.
"You've got to look at the security. You've got to look at the availability. Public or private, science project, pictures or critical business, you've got to make the decision on what's the best cloud, but it should be reliable," said Verizon's Schijns.
With millions of sensors, RFID tags, Web-enabled appliances and other devices collecting information for analysis, what some call "machine-to-machine" computing could provide one route for solution providers to expand into cloud computing.
Verizon's Schijns described a recent cloud computing project with an alarm company to provide technology and services for 180,000 machine-to-machine connections, a system to store data, Cisco networking equipment and "a massive amount of data analytics around what those machines and devices were doing."
Many solution providers only have dozens, some maybe hundreds of customers. That's because nearly every customer sale, every project, is a onetime deal. But the beauty of cloud services is that they are repeatable and drive recurring revenue streams. Craig Schlaugbaum, Comcast vice president of indirect channels, said that gives solution providers the opportunity to scale their business "to handle thousands of customers" and potentially millions of dollars in revenue.
"That's what you can do in a cloud world that you cannot do in an on-premise world," Schlaugbaum said. "I think it involves enormous opportunity for any partner out there. And the ones that are most successful with us today see that vision already."