The evolution of cloud computing has raised a host of questions on the survivability of traditional VARs and systems integrators (SIs) in a cloud world, but a key executive with one major networking and data center vendor said that the cloud era represents key opportunities for solution providers to build business and grow.
John McHugh, Brocade's chief marketing officer, recently penned a blog post calling VARs "the first mile to the cloud" in which he details the growing importance of VARs and SIs to midmarket companies making the leap to cloud computing.
According to McHugh, as mega cloud providers like Amazon, Google and Microsoft, and carriers like AT&T, BT and Verizon lead the cloud charge, solution providers appear to be getting edged out of the market.
"[T]he value added resellers and small systems integrators are often identified as the most likely victims of the cloud era," he wrote.
McHugh said that the lack of on-side data centers and hardware purchases, coupled with a services-based IT delivery system and "click-through deployment," traditional solution providers could appear to be fading.
"If the cloud model is about virtualized IT models … you don't need that local person to be implementing these systems and services," McHugh said in an interview.
But, according to McHugh, VARs have persisted and will continue to play a dominant, albeit differentiated, role.
"While I agree they may be facing their most significant challenge right now, I am confident that top channel partners will, as they have time and time again, weather this storm and come through it with even greater strategic importance to their customers," McHugh wrote.
According to McHugh, to continue to succeed in a cloud-focused ecosystem, solution providers have to anticipate their customers' needs and work to delivery more precise business value than the larger providers that have taken over the market.
"These channel partners have provided a buffer between the lock-in architectures of some vendors and their customers’ specific business situation," McHugh wrote. "They have been consultants, advisors, dispassionate analysts and genuinely trusted partners to their customers. As a result, their customers have been successful and have enjoyed better solutions because they were able to opt for best-of-breed open architectures from multiple vendors. As the industry moves toward more and more cloud architectures, we are seeing the top VARs and SIs acting as cloud hosters and consultants."
VARs are also well-positioned to deliver a personal touch to midmarket customers that the large providers can't deliver. The result, he said, will be VARs that focus on short-haul, low-latency needs in certain geographical and vertical markets.
"Ultimately, VARs have a relatively simplified model that is hinged on very intimate and trusted direct touch with the customer," he wrote. "It's one thing to create products and solutions, but being able to cultivate a long-term trusted partnership requires capabilities the VAR has excelled at for years."
To prep for that shift, McHugh said some solution providers are building out their own "first mile" data centers, building out racks to provide services. That will likely be a sustainable model for the next few years.
"In general, this isn't a next 12-to 24-months issue," he said.
But that's not to say that a time won't come when VARs need to re-evaluate their business models to accommodate the cloud.
"If you go into denial, you're going to be road kill," McHugh said. "You can't hold back the tide."