Channel Adaptation to Cloud Services
By Jon Clark
When it comes to selling cloud services, the channel is a critical component to the broader adoption of cloud computing since the channel provides the essential connection that matches a deep understanding of their clients’ requirements with the best solution, whether it be a cloud or a premises-based model. While the majority of IT projects continue to be based on premises deployed systems, the number of companies choosing the cloud is growing fast.
Regardless of which solution is chosen, the end user needs a trusted partner to guide them through design, implementation, training and ongoing development of the solution. Channel players who embrace the cloud as a vital part of their product mix will be more successful than those who hesitate to get on board.
The Cloud – The Good, the Bad and the Channel
The primary negative effect of the cloud is slow adoption of the cloud by the channel. One factor we see slowing channel cloud adoption is the difference in revenue models. Premises-based systems represent a larger initial sale for the channel, whereas with cloud solutions, revenue is recurring. Accounting for recurring revenue presents challenges in paying salespeople and impacts the bottom line in the short-term. However, there is a definite upside to the recurring cloud model. Over time, recurring revenue will surpass revenue generated with premise-based systems. As the channel helps more of their customers deploy cloud solutions, revenue will steadily increase and eliminate the peaks and dips inherent to selling only premises-based systems. Resellers who are focused primarily on servers and other hardware may see the cloud as a threat, because the initial investment in this type of infrastructure is much lower with cloud offerings. Application consulting revenue from cloud and premise-based systems should be essentially the same, so this vital source of revenue should remain the same with either type of sale.
Building Applications for the Cloud – Pros and Cons
When building applications for the cloud, the biggest pro is the ability to more easily integrate security and disaster recovery capabilities, and to make the system more scalable for the end user. This means that when putting together a cloud solution, software companies can deploy current hardware and software solutions to meet the performance requirements of their system. With a premise-based system, it is up to each end user to build their own infrastructure to take care of backup, disaster recovery, scalability, etc.
On the other end, creating a trust factor with end users that the cloud application does indeed address their key concerns (be it security or otherwise) is a major con. Many companies prefer to invest in building their own application infrastructure, which is why it is critical for the channel to offer both cloud and premise solutions so that they can best fit requirements of each of their clients. It’s also important that the channel is educated on the similarities and differences between the cloud and premise-based solutions by the service provider. There is a learning curve in understanding the ins and outs of how the cloud solution works. Knowing how to sell the solution, will help you sell the end user the most satisfying solution.
Jon Clark is vice president of channel sales at Cabinet , a document management and workflow provider, based in Madison, Ala.