Top Ingram Micro Execs: What's Next For Its Cloud?

What Does The Future Hold For Ingram Micro Cloud?

Five Ingram Micro executives took to the stage or spoke with CRN at the company's 2015 Cloud Summit in Phoenix to discuss the distributor's vendor relationships, service offerings and partner programs in the cloud.

The leaders touched on everything from how commoditization threatens hosted cloud to the enduring role of hybrid IT to the outsized role SMBs will play in cloud adoption.

The leaders who spoke were: Alain Monie, Ingram Micro CEO; Paul Bay, president of North America Technology Solutions; Nimesh Dave, executive vice president of global cloud computing; Renee Bergeron, vice president of global cloud computing; and Jason Bystrak, executive director of The Americas for Ingram Micro Cloud.

Monie: Eroding Margins Make Hosting Cloud 'Non-Starter'

Ingram Micro was considering becoming a cloud host after acquiring SoftCom in September 2013, Monie said. That would have required the distributor to invest heavily in infrastructure to power its own data center.

But Ingram Micro's leadership eventually determined that the hosting ecosystem was going to commoditize pretty quickly. So instead of building its own cloud data centers, Monie said Ingram Micro has opted to leverage other companies' cloud infrastructure, treating it like a utility or commodity.

At last year's cloud summit, Ingram Micro announced that it would be rolling out virtual private servers, web hosting and hosted Exchange housed in its own data centers.

Monie: Partners Need Three Years For Cloud Transition

Partners who are most successful in the cloud enter without any hesitation or hedging and are, therefore, able to attract the talent they need to build a proficient practice.

But shifting from a legacy IT financial model – which involves a one-time payment at the beginning of the transaction – to a recurring revenue cloud model will result in weaker financials for roughly three years, Monie said.

Eventually, though, Monie said attaching services and value-added activities atop a recurring revenue stream will result in larger profits.

"The traditional way of doing business is clear – you end up with very, very tight margins," Monie said. "This is the beginning of something much, much more rich."

Monie: Cloud Won't Kill On-Premise Infrastructure

Cloud may eventually be a big business for Ingram Micro, but it's still in its infancy, Monie said. Of the $46 billion in revenue generated by the distributor in 2014, just $100 million of it came from cloud.

The shift will be gradual, though, Monie said, since cloud is expected to co-exist with on-premise infrastructure rather than killing it off.

Ingram Micro is well-positioned to succeed in the world of hybrid IT because it knows how to meet customers' traditional IT needs and has a cloud offering no other distributor can equal, he said.

"I think we're at the very beginning of something that's going to be very big."

Monie: How To Sell Cloud And Attract Talent

Monie told solution providers that successful sales require both trust and technical competency.

The best way of transitioning to a fully cloud-enabled team, Monie said, is by co-locating a traditional salesperson with a cloud expert so that they can address the customer in tandem. The traditional salesperson establishes trust, he said, while the cloud expert supplies the subject-specific knowledge.

Cloud-component workers exist, Monie said, but it is difficult to convince them to work for a distributor rather than going to Google or Amazon. An appealing vision and crystal-clear intent are, therefore, absolute musts when it comes to attracting people with cloud savvy, Monie said.

Bay: Distribution Has Evolved From Cloud Loser To Cloud Winner

Three to five years ago, Bay said conventional wisdom dictated that distribution was going to be disintermediated in the cloud, leaving few opportunities for Ingram Micro to support its partners.

But it turns out that the cloud is more complex than most people anticipated, Bay said, with distribution still needed to wrap around professional services or provide on-premise offerings.

Cloud migration has been a particular fertile area, Bay said, with Ingram involved in training partners to ensure that the process is seamless for end users.

Other low-hanging fruit for solution providers in the cloud include wireless assessments, application development and mobility services, Bay said.

Bay: Services Are The Focal Point Of Ingram's Cloud Investment

Ingram Micro's biggest cloud investment will be in professional services, Bay said, spanning the gamut from wireless assessments and security threats assessments to managed services, virtualization and deployment. This service base should help support recurring monthly revenue, Bay said.

Ingram Micro is focused on helping its partners shorten the cloud sales cycle and wrap a complete solution around a vendor's cloud product to ensure stickiness.

The distributor is seeing a whole slew of traditional end users moving into the cloud, Bay said, meaning solution providers must have access to services to assist their clients no matter where they stand in the process.

Dave: Channel Must Become Stronger, Faster For Cloud

The cloud has accelerated business and made end users more efficient and productive, Dave said, prompting customers to expect more from their IT service providers.

"The channel will be here forever," Dave said. "The channel will thrive in this new world we live in."

Cloud has the added benefit of being sticky, Dave said, since it's extremely difficult to remove things from the cloud once they're already up there.

Although the transition to cloud isn't going to happen overnight, the solution providers who get there first will likely be the winners.

"If you don't start, you never have the customer relationship, you're never on that journey," he said.

Dave: Team Of 300 Dedicated To Strengthening Ingram's Cloud Offering

Ingram Micro has a team of more than 300 people focused specifically on cloud technology to ensure that the distributor is well-positioned no matter how customers ultimately decide they want to consume cloud.

"You will need to be able to service customers around the world with a click," Dave said.

The distributor has been working very hard over the past year to enhance its Cloud Marketplace with the intent of helping partners monetize the cloud for the long haul.

"Cloud is something that will transform the way that all of us work," Dave said.

Dave: Small Firms Fueling Cloud Growth

Dave expects to see most of the cloud innovation happen not at the world's largest companies, but rather for solution providers serving the smallest of businesses.

"The apex has inverted; it has flipped upside down," Dave said.

The biggest companies are getting eaten by their smaller competitors one piece at a time, Dave said, due to their misguided view of IT as a cost center. Top technical talent has been opting to work for smaller firms, facilitating their addition of more cloud seats and licenses.

Cloud has prompted the move from a capital expenditure to an operational expenditure model, Dave said, lowering the barriers to entry for smaller firms and minimizing the risk of failure.

Dave: Connected Devices Next Big Cloud Opportunity

Changing mindsets is the first step to solution provider success in the cloud, Dave said, meaning partners must first figure out which client problems they're solving.

Dave expects the next big cloud opportunity to be monitoring and collecting data from connected devices as they transmit information.

At the same time, Dave doesn't think demand for legacy IT offerings will falter because he expects end users to leave mission-critical applications in verticals such as banking and manufacturing on premise.

"There's still a big refresh cycle happening on premise," he said.

Dave: Social Media Puts Premium On Customer Service

Customer service has become even more important as end users increasingly express their experiences, emotions and feelings online.

"We have turned into a world of immediate feedback through social media," Dave said.

Customers are expecting better services and staffing as the marketplace becomes more competitive and new technologies proliferate. Therefore, the work force of the future cannot behave like the work force of the past, he said.

Ultimately, people will know more quickly if a solution provider does something badly than if they do everything correctly.

"It's not OK to be just OK anymore," Dave said. "You have to be great at what you do."

Dave: We're Moving Into A Self-Service Economy

Automation has become so pervasive that customers already accept self service as a norm, said Dave, pointing to the transition from end users visiting a bank teller to conducting mobile deposits on their own.

Cloud can make it easier for businesses and governments to scale without constraints to meet growing demand, Dave said.

"You don't have to be big to succeed anymore. You just have to work differently."

Dave said the interconnectivity fueled by cloud is making it easier for people to work or learn anywhere in the world without having to move.

"We're living in a time of unprecedented change," he said.

Bergeron: Cloud Sales Can Increase Partner Valuations

The market rewards companies that derive revenue from recurring items, Bergeron said, valuing these firms at four to eight times their annual sales figures, while companies that derive revenue from one-time transactions are valued at only the amount of yearly sales.

Companies need not derive all of their revenue from recurring items to receive a favorable valuation, Bergeron said, noting that solution providers that obtain just 30 percent to 40 percent of sales from cloud subscriptions can qualify.

Cloud shouldn't be too hard for any solution provider to tap into, Bergeron said, since IDC found that 50 percent of end users have already adopted cloud and 70 percent plan to have a cloud-first strategy by 2016.

Bergeron: Cloud Shifting Marketplace From Enterprise To SMBs

IT spending for small and midsize business is enjoying a 32 percent compound annual growth rate and is expected to reach $1 trillion by 2016, Bergeron said.

The lack of significant up-front investment needed today to start a business has resulted in fewer large enterprises and many more SMBs for solution providers to service, Bergeron said.

"Today, anyone with a great idea can start a biz from anywhere, so long as you have a mobile device and Internet connection."

With cloud expected to usher in lots of small deals with more end users, Bergeron said channel partners must figure out a way to automate services and shorten the sales cycle.

Bergeron: Ingram Looking To Unlock Hyperscale Selling

Ingram Micro is looking to enable hyperscale selling, which Bergeron said is a brand-new concept focused on shortening the sales cycle to increase customer acquisitions in a cost-effective manner.

Hyperscale selling will allow solution providers to get to revenue more quickly, Bergeron said, accelerating the growth of their businesses. Plus it will empower channel partners to reach new levels of sales productivity without adding sales associates.

The distributor also will spend a huge amount of time ensuring its cloud offerings are integrated, Bergeron said, because solution providers don't have the time to do that individually for thousands of customers.

Bergeron: Ingram Micro First Distributor To Automate Office 365

Ingram Micro has added Microsoft Office 365 to its Cloud Marketplace, allowing partners to provision, invoice, manage and support the software in realtime.

Solution providers can bundle Office 365 with other services and still provide their customers with a single invoice, Bergeron said. Without the automation, partners would have to manually invoice each separate item.

"That simplicity in the cloud is realized at the end-customer level," Bergeron said. "The complexity is at the channel level, and that's how we all make money."

The project also will make it possible for partners to scale Office 365 subscriptions in realtime, Bergeron told CRN, as opposed to waiting up to 48 hours.

Bergeron: Vendors, Health-Care Suite Added To Cloud Marketplace

Just a year after launching, Bergeron said Ingram Micro's Cloud Marketplace is up to 55 different offerings from 10 vendors. Vendors added in recent months include Acronis, Cirius, RingCentral and Trend Micro.

Bergeron expects hybrid IT to be a better fit for large or midsize customers, but noted that it poses reliability and business-continuity challenges.

Ingram Micro also in December introduced a vertical offering for the health-care industry. The secure communication bundle is fully HIPAA-compliant, Bergeron said, and leverages McAfee for email security, encryption and archiving.

"If the customer isn't using your solution, you aren't making any money," Bergeron said. "In the cloud, it's all about consumption and usage."

Bergeron: Ingram Rolls Out Cloud Partner Loyalty Program

Ingram Micro recently launched Cloud Elevate, a partner loyalty program for the distributor's 2,000 cloud resellers aimed at accelerating sales and profitability. Cloud Elevate includes promotions for specific solutions, discounts and educational programming, Bergeron said.

Cloud Elevate is open to all current Ingram Micro partners, regardless of how much revenue -- if any -- they generate in the cloud, Bergeron said. Cloud Elevate is currently just a single tier, but Bergeron said the distributor plans to add more tiers.

Partners that sign up for Cloud Elevate by March 31 will get $150 in Cloud Marketplace credits to be used when ordering or provisioning any Ingram Micro offering over the next six months.

Bergeron: Ingram Strengthens Support For Partners And End Users

Ingram Micro has launched Cloud Ignite to give cloud service providers (CSPs) a single point of contact for technical support or assistance. Cloud Ignite also provides channel partners with migration and on-boarding assistance, Bergeron said.

Ingram Micro also has a Service Desk that solution providers can leverage to support their end users. Channel partners can use their own service staff during the day and switch to Ingram Micro's desk after hours, or lean on the distributor's staff 24/7, Bergeron said.

The Service Desk can be fully white-labeled and offers integration with AutoTask and ConnectWise. Ingram Micro operates its Service Desk out of Bulgaria, Canada and the Philippines, Bergeron said.

Bystrak: Ingram Never Wanted To Become Full-Service Provider

Ingram Micro had never intended to become a full-service cloud provider despite last year's announcement about hosted cloud services, Bystrak said.

Ingram Micro has some hosted cloud solutions as a result of its 2013 SoftCom acquisition, and was thinking about building some practice bundles around that. Ingram Micro's leadership had to approve the concept, Bystrak said, and the distribution is now getting the marketplace up and running.

But Ingram Micro never lost sight of its desire to work with channel partners, Bystrak said, as demonstrated by offering solution providers the opportunity to white-label any of the distributor's in-house offerings.

Bystrak: Cloud Vendors, Services To Watch

Partners should keep an eye out for Acronis, Ring Central and Box as under-the-radar vendors expected to make a big imprint in the cloud, Bystrak said.

Acronis and Ring Central -- which provides hosted voice services -- were both recently introduced in Ingram Micro's Cloud Marketplace, while Box offers stellar hosted collaboration and back-end integration.

Ingram Micro also has made investments around endpoint and migration services to accelerate the profitability curve for solution providers moving into the cloud, Bystrak said. Applications, professional and training services represent a core cloud opportunity as well.

Bystrak: Service Desk Will Bring New Partners To Cloud

Bystrak expects large Microsoft partners to initially drive usage of Ingram Micro's automated Office 365, but he expects other offerings such as the Service Desk will eventually attract new types of partners that could take business away from existing CSPs.

Bystrak said many partners lack the internal capabilities to support Office 365 in the cloud, making Ingram Micro's technical support offerings extremely valuable.

Bystrak also lauded Microsoft for its shift to a cloud-first, mobile-first mindset.