While solution providers are increasingly aware of the imperative of moving to a cloud-first business model, recognizing the need to transform and actually doing it are two very different things.
Speaking at the Canadian Channel Chiefs Council’s (C4) first education seminar – From Cloud Illusions to Cloud Realities: Cutting through the Hype in September, IDC analyst Darren Bibby outlined some of the key challenges solution providers looking to make that shift will face.
In fact, Bibby, vice-president of channels and alliances research at IDC Corp., identified seven key challenges: technology, time horizon, customer, sales motion, marketing, activities and competition.
- The technology is the shift to the third platform. The first platform was main frame terminals and the second client servers; the third platform is IDC’s term for mobility, big data analytics, social business and the cloud.
- The time horizon is shifting from a short-term focus (chasing that big licensing deal) to a long-term focus, building a steady base of incremental, recurring revenue business.
- The customer, as the solution provider needs to shift from selling to the IT department to selling to line of business. Bibby recommends hiring people from the vertical you’re looking to sell to that speak the language of the business, and focus on usage by offering training, change management and advisory services.
- The sales motion needs to change from one-time license revenue to a recurring model, which means reorienting your sales team to either traditional and cloud teams to eliminate conflict, or integrated teams that offer choice. Bibby recommends continuing to compensate your sales team as you did under the on premise license sale model to keep them motivated. “You need hunters … you need folks to go out and get the deals; pay them as much compensation as you can in year one,” he said. “The salesman wins in year one; the owner wins ongoing.”
- Marketing needs to shift from traditional tactics to digital ones. Lots of partners are doing interesting things with video, and guerilla online marketing can be very effective. Whatever form it takes, marketing will need to deliver a much higher volume of quality leads to the sales team.
- Partner activities will need to shift from resale to service, from professional services to managed services, from services to creating intellectual property that can be replicated and monetized.
- Finally, competition is shifting from traditional to non-traditional. Where value-added resellers (VARs) used to compete with other VARs, now there are also managed service providers, independent software vendors, and new partner types such as born in the cloud partners that don’t need to transition a legacy business. Even non-traditional competitors such as law firms or banks may develop a product for internal use, and then create a division around selling it to their peers.
For the partner that navigates these transformations, the rewards can be fruitful.