Get Your Head in the Clouds: Growing Pains Bring Opportunity

Cloud Computing

Heather TenutoBy Heather Tenuto

Growing adoption of cloud technology is compelling partners to think about how they can enhance their portfolios and deepen customer relationships. While this transformation has been happening over the last 10 years, it’s achieved critical mass in the unified communications (UC) space in the last 24 months, as indicated by the rapid pace of supplier consolidation. Many large, established vendors like Microsoft, Cisco and Oracle have recently acquired cloud-based software companies in order to jump-start or enhance their cloud offerings. Technologies tend to catapult when vendors start buying others vendors, and that M&A mania is a sign that the tech is here to stay.

Meanwhile, the move from selling on-premises technology to delivering cloud-based services is redefining the value chain for partners, causing some growing pains, but also allowing deeper relationships with customers.

I understand that the shift from selling products to offering cloud-based services, and the subscription model that comes with it, has been jarring for many partners. VARs, used to the upfront revenue that comes with the reselling of on-premises hardware and software, must now consider how to optimize around monthly recurring revenues. The complexity of this transition held some partners back from putting cloud services in their portfolios, causing tension with vendors who were trying to make the transition themselves. In light of this, much of the channel first ventured into cloud only lightly, to placate vendors and have an answer for customers who would only consider cloud.

As cloud technology improved, and the demand for services increased, partners began to operationalize their businesses around monthly recurring revenues afforded by reselling or referring cloud. This was important, but it was just the beginning. Partners who are creating and delivering services to complement what’s offered by cloud technologies are reaping the most benefits.

And the possibilities here are endless.

As more cloud technologies come to market and the need for robust application integrations increases, channel partners have a resurgent opportunity to position themselves as a valued resource in the selection, procurement, implementation, adoption and support of cloud solutions. Your ability to define your value proposition and ideal customer profile and then market to prospects early in the consideration cycle will be “make or break.” And, when end users engage the channel early, that allows partners to make good technology decisions and act as trusted business advisers for implementation and on-going support.

Opening for the Channel

Historically, cloud vendors have been successful in creating demand for their services, so cloud technology didn’t always embrace the value a channel partner can bring to the table. Subscription-model technologies typically have a low bar of entry, which lends itself to shorter sales cycles and easier customer onboarding.

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However, there is a downside to the as-a-service model: churn. Customers can exit as easily as they entered, leaving vendors searching for ways to keep customers longer. The channel provides a solution. Channel partners tend to have a better understanding of the customers’ business needs and drivers, and overall lay of the land. Vendors are finding that the partner ecosystem and their participation in the implementation, adoption and support of their solutions has the potential to create a customer who buys more services and stays longer. The channel is beginning to realize its foothold here, evidenced by new investments cloud vendors are making in channel programs.

Your ability to market yourself effectively in this new ecosystem cannot be overstated. Finding prospects while they are still in the technology consideration phase is crucial. This requires partners to define their niches, where their expertise is most pronounced. The end user wants to know why considering cloud technologies through the channel is the best option for them, and partners are using new sales and marketing engines to tell that story while differentiating their services.

All of these changes have redefined the value chain for the entire partner ecosystem. Instead of providing value upfront with the initial purchase, partners are inserting themselves into multiple points of the chain — purchase, implementation, adoption and support. You can bring new value to your customers by becoming not only a trusted adviser, but a true business partner in an increasingly complex cloud landscape.

You do have some work to do. Forging a new type of consultative relationship means providing guidance and advice on how to effectively leverage different types of cloud technologies and services. And, you may need to change your internal mindset. Competing in a cloud marketplace has been a bumpy road for many channel partners, especially those who also want to continue to provide on-premises solutions, for which there is still significant demand. The vendor landscape can also be tricky, as cloud providers are just coming up to speed on how to best leverage the channel.

Right now, partners are in varying sections of the cloud-adoption spectrum. Some have significantly shifted their businesses, while others have made small, subtle changes. The partners finding the most success are building practices that compliment cloud technologies, helping end users get real business impact from their as-a-service investments. From consideration through support, there are many places where you can provide value to end users and vendors. Today, it is no longer a question whether the channel will take on cloud, it’s all about how.

Heather Tenuto is vice president, Global GTM Strategy and Programs, at ShoreTel.

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