Doug Allen Blog: The Cloud - A Double-Edged Sword for SMB Partners

As Mark Twain would say, “reports of my demise have been greatly exaggerated.” In this case, I’m talking about SMB channel partners, who have lately been the target of gloom-and-doom predictions as the Age of Cloud Services descends upon us. As a recent AMI-Partners report put it, these SMB channel partners could lose more than 200,000 IT jobs over the next decade due to new “efficiencies” in cloud services, specifically in automation and centralized management. The upshot? Even though these partners will be forced to hire additional IT staff to handle sales and account management, an estimated 200,000 to 250,000 SMB partner jobs, out of a current base of 1.3 million, could be lost.

A pretty sobering conclusion by any measure. I expected a wide range of reader responses to such dire predictions, from denial to bold proclamations of “that’s the price of progress.” But that’s not what happened.

Instead, I found the few agents who responded to the posting to be pretty much on board with AMI’s findings — and not particularly worried. Why? Perhaps because of the resiliency of these SMB partners, and their ability to cope with changing job descriptions.

As Clark Atwood, vice president of master agency Concierge Communications put it, “The train has left the station when it comes to cloud computing … Change is not always a bad thing. Those IT services personnel that want to continue helping the SMB space will establish an agency with a master agent like us, receive the training on cloud offerings, and build themselves a residual income to replace the IT income lost to the cloud. Those that ‘get it’ have the potential to do better than before.”

To be sure, Atwood sees a lot of denial about the inevitability of cloud services out there among these partners, but does find a small number of VARs slowly moving over to the agent space.

“There is probably only 20-30 percent of the VAR space that wants to shift to an agency model,” said Atwood. "The reason is that they have built their business on product sales (one time commissions), labor support (one time commissions) and monthly support contracts (residual, but requiring they perform the services). They are not used to becoming a technical sales organization where someone else turns the wrenches. Those that can make the change to a technical sales organization from a technical sales and support organization will do well.”

It’s a conclusion shared by Justin Chugg, partner development manager at another master agency, Telarus, who reports many of their recent agent applications come from IT professionals, who are concerned about ever-falling margins on equipment and the other services they traditionally offer. Furthermore, most of these IT professionals have worked with or for carriers in the past, possibly even in a sales capacity, so crossing back over to a more provider-dominated line of work isn’t so intimidating for these IT veterans.

Not every SMB partner will be able to transition so easily, and as Atwood makes clear, many if not most will need to seek agent alliances for training, lead-generation and organizational support. But as these IT veterans begin to find ways to accommodate new, cloud-based support service models, cloud services could prove to be an opportunity of sorts and a way out of the lower-profit, sagging equipment sales market.