XChange 2015: Picking The Right Cloud Provider Is Only Half The Battle

For solution providers adding cloud services to their portfolio, picking the right cloud provider to partner with is only half the battle. More important for solution providers is the ability to take the cloud offering up a notch by adding their own value, according to David Powell, vice president of managed and cloud services at TekLinks.

During a session at the XChange 2015 conference in Washington, D.C., hosted by The Channel Company, publisher of CRN, Powell told attendees how TekLinks made the transition and added value that set it apart in the market.

Birmingham, Ala.-based TekLinks offers a mix of professional services and hardware. "When I first started at TekLinks six and a half years ago, we were doing $300,000 a month in recurring revenue, now we do $3.5 million a month. But we still do hardware so we didn't throw the baby out with the bath water," he said.

[Related: Oracle Channel Exec: Cloud Is A Midmarket Partner Goldmine]

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But the transition wasn't easy, according to Powell. It required partnerships with cloud providers with good partner programs and plans to wrap TekLinks' unique value around existing cloud offerings.

For Numa Networks, an Orange, Calif.-based MSP, the decision around which cloud provider to partner with is based on identifying the provider with products that fit customers' needs and one that has the right channel partner program, said Jason Berg, vice president of operations for Numa Networks.

"There are so many players in this space, so it comes down to looking at the [provider] with the right programs that can make us a more productive sales force and IT staff for our clients," Berg said.

Solution providers shouldn't strive to do what a large cloud player is doing. "Ask yourself, what can we do better than the big guys?" How is my Office 365 going to be different than anyone else's?" Powell said.

TekLinks is a Microsoft partner. When Microsoft came out with its Cloud Solution Provider program, TekLinks immediately decided it didn't want to offer the entire Office 365 portfolio but began looking at ways to boost the platform's effectiveness, Powell said.

"We added advanced email filtering, better archiving and email continuity, so now there is additional value to what we can offer beyond what just the typical price point is," he said. "If you're buying from Microsoft, you're not getting those things, and that's where we differentiate ourselves."

If solution providers want to grow their recurring revenue, they have to find a cloud provider that lets partners own the invoice. "If you are partnering with a provider that sends [customers] the invoice directly, that takes you out of the middle. If you own the invoice, you own that customer, he said.

In addition to Microsoft, TekLinks partners with Amazon Web Services. Solution providers should always keep an eye on partnering with larger cloud players that customers are asking about, Powell said. "You cannot stand at the roulette table and watch the wheel continuously land on black and not put chips on black," Powell said. TekLinks owns the invoice piece as part of its partnership with Amazon.

While embracing the cloud is critical to success, moving too fast won't be the right move for many solution providers, Powell said. Changing to a recurring revenue model from a capex model can be challenging, he said.

"Many [solution providers] have this idea they are going to get out of the VAR side of the business, and then there is a cash flow dip that many can't make it through." Solution providers need to build up their recurring revenue stream in the cloud slowly so they'll be prepared when hardware sales start to plateau or slump, he said.

Solution providers aren't the only ones that need time to adjust, according to Berg. Cloud providers are also just ramping up partner programs. "It's a constantly moving and changing landscape, so everyone is still trying to figure things out, including a lot of those cloud providers. A lot of it is giving them the time to settle in," Berg said.