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Cloud Driving Need for Multidimensional Channels

August 17, 2012 - Article
By Lawrence M. Walsh

Saying cloud computing is the future is becoming passé. Channel partners and end-user organizations have spent much of the last four years virtualizing environments and migrating non-mission-critical servers, storage and applications to private, hybrid and public clouds. The future is the optimization of IT performance and the operationalizing of all assets for better revenue-producing results.

In other words, going cloud will soon no longer be about saving money, but producing better outcomes for the subscribing businesses. Often, that better outcome will be in the form of revenue generation through greater productivity or processes, and/or better use experiences. And that’s where the challenge emerges for the channel.

If the first cloud wave was development and testing of virtualized infrastructure and hosted assets, and the second wave was adoption of hosted servers and storage, the third wave will be the adoption and migration of mission-critical assets and applications. When that happens, end-user organizations will see suppliers who can do more than just provide a cloud asset, but also optimize and manage assets.

The cloud challenge emerging in the channel is that few solution providers have the business acumen, technology capacity or financial backing to transform into a one-stop shop or comprehensive source of cloud services. This means channel partners will increasingly miss out on the growing adoption and expansion of cloud services because they cannot meet the increasing demand for sophisticated application, infrastructure and workload services.

Despite the channel’s best efforts, cloud computing remains a developing and immature segment. According to Cloud & Technology Transformation Alliance (CTTA) research, the average channel partner describes its cloud practices as either “developing" or “implemented and evolving." Much of the channel’s cloud focus is on less-sophisticated services with a high probability for rapid commoditization, including hosted VoIP, storage, backup and productivity applications.

The immature state of the cloud is a reflection of the channel’s relatively poor performance in cloud sales and services. According to the CTTA, the average channel partner earns less than 10 percent of its revenue and profitability from the sale of cloud computing products and services. Conversely, 65 percent of channel partners report they lost or probably lost a sales opportunity because they could not fulfill a customer’s cloud need.

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