When cloud technology was first emerging, it may have made some business in the channel nervous that they’d be cut out as a direct-access model became more dominant. Worry not, says Frank Gens, chief analyst at IDC Canada.
“A lot of people thought the cloud was going to kill the channel, because you could go right to the offering,” he said at IDC’s Directions event in Toronto on Tuesday. “But the channel is making a comeback. We need the channel in the cloud and IoT world.”
In fact, IDC is predicting that channel players will be helping to deliver 70 per cent of cloud services by 2020. That’s good news if you’re in the channel business, because cloud spending is on a hockey-stick curve upwards in Canada while spending on traditional IT infrastructure is falling. By that same year of 2020, IDC projects that two-thirds of IT spending for infrastructure and software will be on the cloud.
“Adoption is at a pivot point, where it’s cloud first,” Gens says. That pivot point is best shown by a survey of CIOs showing that 70 per cent now have a cloud-first strategy.
While this all seems like good news for channel players, Gens strikes a bit of a cautionary note as well. Cloud is evolving to version 2.0, he says, and the channel partners that are involved will look different from the typical partner does today.
“Think about Amazon Lambda or Google Functions, this micro-services architecture,” he says. “It’s the launch pad for not only software innovation, but also hardware innovation. You have an idea, you try one instance, and then you can scale the hell out of it.”
The new breed of channel partner that can help their customers succeed in the cloud era will deliver specialized services targeted to different verticals, Gens says. Digital services firm Globant is a good example of what that looks like. The firm has 34 offices around the world and brings together engineering, coding, and design talent together to help customers improve their software development capabilities. It has an arm to create and publish research that helps customers stay relevant, and another platform-based arm that helps clients build better software. All with a subscription-based pricing model.
“That’s what a channel player in the new economy looks like,” Gens says.
For those channel players that do manage to position themselves for the new cloud-driven economy, the reward is there. IDC expects $2.1 trillion in spending on digital transformation initiatives over the next two years. A healthy portion of that will be into Cloud 2.0 technologies such as microservices architecture as well as compute being pushed out to the edge of organizations with the Internet of Things.
“We’re talking about building the next generation of operating systems underneath most of the large corporations of the world,” Gens says. “Customers and service providers need channel players that can help them put this together.”