COMDEXvirtual: Ignore Cloud, Virtualization At Your Own Risk

Solution providers should be arming themselves with the latest virtualization technology today to prepare themselves for the adoption of private and public clouds tomorrow, according to Everything Channel CEO Robert Faletra.

"The cloud is going to be a significant part of this industry. It is going to present opportunities, but also challenges to business models," Faletra said during a keynote address Wednesday at COMDEXvirtual, the online conference hosted by CRN parent company Everything Channel. The show takes place November 16 - 17, and sessions are available on-demand until May 17, 2011.

Historically, the IT channel has experienced two kinds of trends: technological and business methodology changes, Faletra said. Examples of each are client/server computing and open-source technology. But cloud is different.

"Cloud is both a technology and a business methodology change. This opportunity can't be ignored. You really need to think hard about how cloud deployment is going to impact your business and you need to have a better business model," Faletra said.

End users expect cloud adoption to occur at a slower rate than solution providers, but the channel still needs to prepare their customers starting now, Faletra said. "The aggressive customers in virtualization today are preparing themselves to adopt public and private clouds tomorrow," he said.

While it's unlikely the cloud will entirely take over the market, its rapid rise is requiring traditional solution providers to transform their business models, Faletra said, even as those VARs can expect increased competition from traditional telco providers as well as new influencers and consultants, "who do not take title to products but will be partners or competitors, depending on where they are in the cycle," he said.

Everything Channel asked VARs why they don't participate in cloud-based solutions and respondents said they need to educate their staffs first and also that they're waiting for vendors to build their own strategies, Faletra said. But solution providers would be smart to develop their own cloud strategy now and not wait for others to catch up, he said.

"A lot of [vendors] talk cloud but not many have built a strategy yet. You need to build that data center and transition to the MSP [model] in some cases and hire the technical staff that can handle the skill base of the future," Faletra said. "Solution providers have to [ask], 'Has my supplier thought out what role they want to play? Are they going to be a cloud enabler or a cloud service provider?' That needs to be thought out. We're working with vendors now, helping them think about how their partner, program and strategy will change."

Next: Fewer VARs, More Competition

Security also continues to drive demand, particularly around mobile solutions, Faletra said. "When you move to mobility and tie into my desktop with virtualization and do all the things that technology can drive, that's going to require more secure devices," he said.

While 2009 was a year of entrenchment and this year offered growth for some but not all companies, 2011 offers unique opportunities, provided that VARs are diligent in positioning themselves for the future, Faletra said. He noted that today there are just under 200,000 solution provider organizations in North America, down from about 248,000 in 2007.

Beyond the cloud, solution providers should drive increasing value from building their customer relationships, Faletra said. Vendors are looking for top solution providers that drive demand, especially by breaking in new markets, he added. Mobility is one example where VARs can drive more value.

"Where is the value of the customer relationship going to drive dollars? Think about mobility. We all want to carry mobile devices. Some carry phones, some carry iPads. Desktop virtualization allows you to do it. Virtualizing onto a mobile device, that drives mobility sales," Faletra said.

While the number of VARs may be fewer, newer companies are emerging from the recession, companies positioned for fast growth and competing against more established solution providers.

"The financial health of the channel is getting reconfigured. Many solution providers are growing. Some partners are significantly challenged while others are performing quite well," Faletra said. "When you move into the cloud, there's lots of opportunity but the recovery will be slow and segmented. You need to focus on what you do well and what your customers ask you for."

Register now to attend COMDEXvirtual or to access on-demand sessions.