The Channel Company CEO Bob Skelley: Public Cloud Is Having A Big Impact On Channel Landscape

Skyrocketing Public Cloud Sales Are Transforming Channel Landscape

The astronomical sales growth from cloud behemoths Microsoft, Amazon Web Services and Google is having a "positive impact" on solution providers, said The Channel Company CEO Bob Skelley.

In fact, more than 50 percent of solution providers say that Microsoft Azure, AWS and Google Cloud are having a "positive impact" across all areas of their business both last year and this year, according to a survey of 639 solution providers conducted by The Channel Company's IPED Consulting group.

Skelley disclosed the research Tuesday during a keynote address at The Channel Company’s XChange 2019 conference in Las Vegas.

That sanguine outlook includes a positive public cloud impact on sales growth, profits, new customers, professional services and market differentiation. "All of these are being impacted in a positive way by public cloud," Skelley said.

Ultimately, solution providers are acting as trusted advisers to help customers decide which workloads should move to public cloud, which workloads should be moved to private cloud and which workloads should remain on-premises, said Skelley.

Cloud Behemoths Are Seeing Astronomical Sales Growth

Microsoft Azure, AWS and Google Cloud are all enjoying dramatic increases in revenue, helped by the sales muscle of channel partners.

"The public cloud providers are now as big or bigger than any of the legacy infrastructure companies," said Skelley. "These companies are posting big growth numbers, tons of revenue and growing really fast."

Microsoft's commercial cloud business is now a $32.2 billion business, with Azure growing at an estimated 91 percent clip, said Skelley. "We estimate that at least one-third of Microsoft's $32.2 billion in commercial cloud is Azure services," he said.

AWS is now a mind-boggling $25.6 billion business growing at 47 percent, said Skelley.

Google Cloud, including G-Suite, is now a $4 billion business. The Channel Company sees the Google Cloud business growing at more than 100 percent year over year, said Skelley.

Solution Providers See Public Cloud Providers As 'Strategic Suppliers'

Microsoft Azure, AWS and Google Cloud are being viewed as "strategic suppliers" engaged at all levels of their go-to-market strategies including sales, marketing and technical programs, and certifications, according to the IPED survey.

Forty-four percent of partners view Microsoft Azure as a strategic supplier for their business, compared with 34 percent for AWS and 17 percent for Google Cloud, according to The Channel Company's research.

"Microsoft has been a channel-centric organization forever," said Skelley. "There are a lot of Microsoft legacy relationships in the channel. That is reflected in the strategic relationship Microsoft has with partners."

AWS, a relative newcomer into the channel, is also seeing strong strategic supplier traction, said Skelley.

Although Google Cloud is trailing at 17 percent, Skelley predicted that Google's investment in channel talent, strategy and leadership is set to drive big channel gains. "Google is going to really start closing that gap with Microsoft and AWS very fast," he said. "Google has channel talent in key roles that understand how to work with solution providers and build a business model that is going to be very rewarding for partners."

Solution Providers Experience Soaring Public Cloud Sales

Forty-five percent of solution providers said they have seen "moderate to high growth" for public cloud services over the past 12 months, said Skelley.

That robust demand is expected to grow even more over the next 12 months, with 52 percent of solution providers expecting to see "moderate to high growth” for public cloud services.

"We know the public cloud business is growing fast, and we are seeing solution providers seeing a sharp increase in demand for those public cloud services," said Skelley.

Public-Cloud-Savvy Solution Providers Find Big Payoff On Multiple Fronts

Public-cloud-savvy solution providers are seeing a wide range of profit opportunities from recommending/referring to reselling to implementing/integrating, building applications and managing and running public cloud for customers, said Skelley.

One of the most profitable consulting opportunities centers on where customers should be placing corporate workloads with regard to public cloud, private cloud and on-premises.

"What is really driving all the public cloud activity is cloud migration services," said Skelley. "Skills in cloud migration services are the catalyst and the entry point. A lot of customers don't really have a public cloud strategy. Partners are helping them determine what they should put into public cloud, what should be on-prem, and what should be put into a private cloud. That ability to help customers through that decision on which workloads need to move and which don't is a big consulting and professional services opportunity."

Another big professional services opportunity is the managing and running of that public cloud for customers, said Skelley.

Solution Provider Transformation Continues To Shift To 'As A Service'

Fifty percent of solution providers identify "managed service provider" as their primary or secondary business model. Meanwhile, 70 percent of solution providers see recurring revenue as a significant part of their go-to-market strategy, according to The Channel Company's research.

"The number of MSPs continues to go up," said Skelley. "We are seeing the solution provider transformation to 'as-a-service' business models continuing in the channel."

MSPs are driving a higher percentage of sales based on solving business problems with nearly double the percentage of cloud and managed services sales than solution providers that have not moved to the MSP model.

Services Now Account For 65 Percent Of Overall Revenue

Services sales are skyrocketing for solution providers, accounting for 65 percent of total revenue, up from 48 percent of sales six years ago, said Skelley.

The services increase runs the gamut from cloud consulting on where to place business workloads, professional services, project management and a wide variety of Software-as-a-Service offerings like Office 365.

"Partners are evolving and adapting to remain relevant to their customers and as a result are seeing strong growth in public cloud and cloud services," he said.