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7 Challenges to Building a Cloud Practice

By Kelly Teal
January 31, 2012 - Article

Is the opportunity for selling cloud computing living up to the hype? What products are partners actually selling? What is stopping some partners from getting on board? Is the investment worth the return? Channel Partners wanted to know, so we asked partners about their real-world experiences. Our survey, fielded Nov. 17-Dec. 16, polled telecom agents, VARs, dealers and managed services providers on a number of topics from business model changes to cloud service provider commissions. Among the most intriguing results were partners' views on the hurdles they face as they consider adding cloud services to their portfolios. Respondents cited 20 major obstacles, seven of which we preview here.

To read all 20 challenges in building a cloud practice, download your copy of Channel Partners report, "Cloud Computing & The Channel: A Reality Check."

1. Choosing the right cloud service provider(s). Eighty percent of poll respondents cited choosing the right cloud service provider(s) as a key obstacle to implementing a cloud practice. Another 12 percent remained neutral on the matter, while 8 percent disagreed or strongly disagreed. Among the reasons this task is difficult are the large number of market entrants, including startups and brand names, and a variety of channel strategies. Among these certainly is compensation, which was cited as challenge No. 2.

2. Finding sustainable commissions from suppliers. Commissions are a key sticking point for partners adding cloud services to their portfolios. There seems to be little consistency among suppliers when it comes to recurring revenue rates, and the margins typically are lower than other products and services. Indeed, 74 percent of respondents either agreed or strongly agreed that sustainable commissions are a major challenge. One respondent said it's necessary to set up long-term contracts to ensure minimum revenue streams. The challenge is to find clients willing to sign multiyear agreements for services that still are proving themselves.

3. Educating customers about cloud services. Nearly three-quarters (72 percent) of respondents agree or strongly agree that educating customers about cloud services is a challenge. While business executives often understand the basic concept of cloud, they don't always understand how it can help their businesses as well as how to evaluate the risks and costs of switching. Channel partners need to devise curricula that explain cloud services advantages and disadvantages, without inundating prospects with the arcane details of how the technology works.

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