Where In The Cloud Do You Sit?


We keep talking about the journey to cloud computing and the significant changes that it will bring to business models and channel programs as it unfolds in coming months and years.

While there is a lot that has yet to be determined, we are seeing some common attributes among solution providers that fall into the three categories we have identified: vintage, progressive and transformational.

Vintage partners have traditional on-premise, solution-based models with no significant plans to drive recurring revenue through off-premise hosted solutions.

Progressive solution providers are still driving more than half of their business through traditional on-premise solutions, but are growing the off-premise and hosted portions of the business model by greater than 50 percent as they drive the recurring revenue model.

Transformational partners have a pure- or near pure-play business that focuses on cloud type deployments.

The majority of the channel sits in the progressive category, and I don’t see any single business model emerging. The fact is, there are going to be many business models, but essentially all partners can fit into one of these three categories.

So what else do we know about those that sit in these pathways to the future? The progressive partners are far more likely to be larger than their two counterweights and are predicting steady growth over the next 18 months.

Transformational partners tend to be the smallest of the three but also are experiencing a growth spurt.

Only the vintage players are seeing stagnation in revenue growth.

Interestingly, our research also shows that progressive partners are three times more likely to have deployed tablet computers in their customer base. This is something I believe is going to grow exponentially, indicating that the desktop virtualization opportunity is increasing. Individuals inside of the customer base are demanding they be able to access the information they need at any time, from anywhere and on the device of their choice that is most convenient at that moment. Tablets also have lower support costs than traditional laptops, so this is a trend that is getting more interesting.

IT departments may be fighting that trend but line-of-business executives are pushing back, and cloud computing is allowing them to take back more control of technology deployments.

This point is something that is increasingly going to shape the future. Line-of-business executives will increasingly be decision-makers in the world of cloud computing, and solution providers and vendors alike need to work together to attack this change. There are going to be many more customers inside of a customer than there have been traditionally. LOB executives can readily make operating expense decisions, whereas capital expenses need higher levels of approval.

With cloud solutions largely being operating expense payments, the decision point is shifting. This is going to require partners to have a greater proficiency in sales and marketing expertise than they’ve had in the past.

As such, we are going to see changes in the partner program emphasis vendors bring to market. There’s going to have to be more work around joint market development plans and, most importantly, partners are going to have to hire more marketing expertise.

In addition, progressive partners do more midmarket business than any of the others. Transformational do more in large corporations, and vintage do more in the small-business world. But all three tend to have fairly balanced businesses. Only vintage players seem overly weighted in small business, which, on average, accounts for 72 percent of their business.

A couple of other quick stats to leave you with: Progressive and transformative partners are two times more likely to be calling on line-of-business executives and those residing in the C-suite than vintage partners. Progressive partners are also most focused on growing their customer base and see a third of their business in the next two years coming from customers they have yet to touch.

BACKTALK: Make something happen. Robert Faletra
is CEO of Everything Channel. You can contact him via e-mail at robert.faletra@ubm.com.