Cloud jumps the chasm

As with any emerging technology, there’s an important market maturity point where the technology crosses the chasm and there’s as much actual customer traction and spending as there is market hype.  We are there today with cloud infrastructure and application services. According to 2011 IBM Annual CIO study, more than 60 per cent of global CIOs have cloud adoption plans. But, the average solution provider isn’t as enthusiastic and investing in their cloud practices as the vendor community would hope them to be.

Vendors are quickly refining their expectations for their partners’ role in evangelizing and implementing cloud solutions too. Market leaders such as IBM, Cisco, HP and Microsoft and VMware have  developed tangible channel programs, allowing partners to take a variety of roles in the sale and delivery process of their cloud offerings. Large service providers are also making a big play to build their own partner ecosystems. And distributors, rumored to be made obsolete in the world of cloud services, have developed new cloud marketplace where the average VAR has access to a broad set of cloud applications and services and can manage the whole customer trial-to-provisioning process.

In PartnerPath’s 2012 State of Partnering Study, surprising results point to solution providers lacking a sense of urgency or interest in building cloud practices in 2012.  In fact, on average, 65 per cent of solution providers with <$50m in annual revenues said they were “unlikely” or “not at all likely” to invest in a cloud practice in 2012 time.  Partners cite a lack of fit with their business model, lack of customer demand, data security concerns and finally lack of technical and sales expertise as their biggest barriers to cloud service delivery today.  So, while vendors and distributors invest and go all-in with cloud investments, solution providers are still buying their time.

What has changed over the past couple years is the vendors’ vision for solution providers to be relegated to the role of sales agents for the vendors’ own direct–delivered services. Vendors’ understand the power and pervasiveness of the IT-as-a-service promise, and, as a result, they also understand how critical it is for partners with varying business models each to find their niche. Here’s their top-ranked roles for their partners in the cloud:

  1. Resell the vendors’ cloud services;
  2. Manage customer relationships;
  3. Offer pre- and post-sale professional services;
  4. Refer sales to vendors;
  5. Sell services for large service providers; and
  6. Build SaaS apps.

Compulink Technologies, Inc., a full service solution provider of IT services, serving both the public sector and commercial organizations, reported 2011 as its most profitable year in the company’s 24-year history. Like most of the solution providers in the 2012 State of Partnering Study, Compulink is not itching to jump into a full cloud services practice in 2012, even though it projects 2012 to be another year of record growth.

“The word ‘cloud’ is such a convoluted term in our industry right now,” claims Aimee Messina, Account Manager for Compulink. “When someone comes to us asking if we do cloud services, we first have to define that term to figure out what they are looking for. We are not currently involved with hosted services, but rather cloud-managed services, where we secure a network and create a virtual cloud for a company so they can have access anywhere, any time, from any device.”

Messina adds, “Unless you are a cloud service provider, I don’t see it being a profitable engagement for us. And, for our clients, there is still too much security risk for putting their data on live servers. The public cloud is just not an option for a lot of our client base who are under compliance regulations.”

Enter the larger carriers or telco service providers. These experienced service-selling organizations expect their highest IT-as-a-service growth rates to come from their indirect channel development efforts – some nearly double their direct growth expectations.  They recognize that leveraging a broad network of local IT solution providers with close, long-standing customer relationships and the ability to do pre- and post-sale professional services is critical to their success.  And, there’s many vendors actively encouraging their service providers to help the broader reseller community by actively recruiting them to sell and build on top of their cloud infrastructure.  In fact, more than half (57 per cent) of IT vendors we surveyed are already working with the leading global and national service providers on their channel programs.

So, cloud computing is gaining wide and rapid customer awareness and adoption. But, there is still a disconnect in the vendors’ market vision and investment and the emotional and financial readiness level of the average regional solution provider to help create or meet that anticipated demand. We agree that solution providers without a strong relationship with an MSP or service provider, some strong pre-sales architecture and consulting skills and/or application development expertise will be put out to pasture sooner than later. What isn’t clear is to what extent the partner ecosystem will ride this technology revolution wave by turning inward and collaborating with each other in more sophisticated ways than in past periods of disruptive technology innovation.  Cloud technology has crossed the chasm, but that very gap may be the black hole that becomes the death-knoll for channel partners lacking in technology vision, capital to invest and intimate customer relationships.

Beth Vanni is a San Francisco-baesd IT partnering expert. She was formerly the Vice President of PartnerPath (formerly Amazon Consulting) when she wrote this column. 


Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Related Tech News

Featured Tech Jobs


CDN in your inbox

CDN delivers a critical analysis of the competitive landscape detailing both the challenges and opportunities facing solution providers. CDN's email newsletter details the most important news and commentary from the channel.