Page 3 of 3
Mike Kozel, vice president of partner management at SAP America, added that solution providers should be looking to grow recurring revenue because it's what customers increasingly want.
"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," Kozel said. "We're really seeing .. what I call the focused reseller, someone who has a unique skill, whether it's an industry skill or a solution skill or geographic capabilities that's focused, that's bringing a unique set of solutions, whether it's IP or a unique set of wrap-around offerings to the customer. We're very focused in the marketplace and we're working very closely with those partners."
Ideally, partners will become self-sufficient in terms of offering more services, he said.
"[For] things like demand gen and pre-sale sales -- we're not going to be that crutch. We are going to work with them. We're going to enable them. We're going to go with programs to make them successful. But the ideal partner over time is self-sufficient," he said.
Richard McLeod, senior director of worldwide collaboration channels at Cisco, added that solution providers don't need to transition their entire business to the cloud by tomorrow. A gradual development in line with market demand should work for most.
"We're not going to go to 100 percent cloud tomorrow. The question is, is it 10 percent of the volume or 20 or 30 or how much this year, next year, and the year after? And I think each VAR has to plan what's right for them," McLeod said. "That is a key in terms of how they change this to what is the proper mix of recurring revenue to up-front revenue. How much investment do they want to make to get that greater margin that comes from value-added.?"
How quickly or deliberately VARs make that investment should also drive how they change their compensation programs, McLeod added.
"If you change the compensation program too quickly, to rewarding recurring, then suddenly you don't get the up-front money that you need to pay the bills. So it's a very careful trick in terms of how you plan it. ... Do you have a financial person that's also driving that compensation lever to know how much when and how? At Cisco, we're starting to turn that dial with our internal sales team as well and we're actually compensating our direct salespeople 30 percent greater when they drive channel-oriented cloud solutions."
The real key is working with customers who are looking for partners to help them plan the transition to the cloud too, McLeod added.
"Customers are confused. [They're asking] 'What is this cloud? What do I need to do? When do I need to do it?' And to have a VAR that can provide that architectural and road map planning as well as the transition approximately to the cloud [is good]. Which apps go 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 premise work together, that's an amazing opportunity," he said.
PUBLISHED APRIL 15, 2013