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Is Channel Distribution Merging in the Cloud?

By Khali Henderson
January 07, 2013 - Article
Continued from page 3

While Thompson's observations may reflect the state of the master agency model today, some forward-looking master agencies are building internal organizations to handle more complex pre-sales engineering and post-sales integration requirements for cloud customers.

Even with master agents' expanding to include these capabilities, the distributors' traditional model of providing hardware and software for deployment in a data center better aligns with cloud-building opportunities that many VARs want to pursue. These include becoming a cloud provider, building the platforms for other cloud services providers or building private clouds for their business customers.

That said, master agencies have a leg up on distributors when it comes to understanding the recurring revenue model of cloud-based services, said Jessica Mayo-Pike, business development leader for advanced services at IPLogic Inc., a Cisco Gold Partner, and Intelisys subagent. "They have expertise to guide channel partners in understanding how to achieve their targets, how to best compensate their sales forces and other best practices associated with a subscription-based revenue model," she said.

Cloud Road Map

The inherent differences in the core business models of master agents and distributors may influence the suppliers and partners that they align with such that their cloud ecosystems may not necessarily mirror each other's.

On the supplier side, most master agents interviewed for this article said they were sourcing cloud services primarily from their existing carrier suppliers, which have developed their own cloud services or acquired data center providers with cloud services offerings. One of the key reasons was to ensure fair contracts from companies unfamiliar with compensating sales partners for subscription services. Another is that startup cloud service providers pose a greater risk of folding, leaving the customer stranded and the partner unpaid.

As noted, distributors most likely will corner the market on cloud-enabling gear/software, but most sources predicted that there would be commonality between the cloud services suppliers served by master agents and distributors. Examples include leading carriers and data centers/hosters as well as companies like Mitel Networks Corp. and ShoreTel Inc., which each have premises and cloud services offers that are sold through distribution.

"I do think master agents and distributors will represent the same suppliers," said Jeff Nolan, vice president North American channel development for Mitel. "Competition will force them to differentiate their offerings based on logistics, financing, market/branding and combine them with other offerings that they have today."

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