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Broker vs. Reseller: Commercial Channel Models Are Changing

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Craig SchlagbaumBy Craig Schlagbaum

Winds of change are blowing into the channel, creating a paradigm shift from on-premise hardware and software to a cloud computing model. This point has been made many times over the last several years, but it’s one that cannot be understated, as no other change in the IT channel’s history will prove as disruptive. 

More and more companies today are moving their mission-critical business applications to the cloud, and they want assurance from an industry expert that their cloud service provider is reputable, reliable and a proven industry leader.

The channel has an opportunity to become this industry expert. To do this, they need to start selling in an entirely new way and with new supplier partners that are service providers rather than the same technology software and hardware companies they have historically worked with.  The early adopter VARs that realize this is the way the IT industry and the channel are moving will stay ahead of the competition and achieve great success using this new model.

For VARs, the core component of this “new model" is evolving from a “reseller" of on-premise solutions they created to a “broker or agent" by selling cloud solutions built by service providers. Their new role will be to serve as an adviser to their customers, helping them to identify the best cloud solutions for their unique environments, as well as the best connectivity services to ensure availability to cloud applications anytime, anywhere. Much like financial advisers receive a commission for consulting with their customers and advising them on which mutual funds, stocks, bonds, etc. to invest in, VARs’ remuneration will come from the commission they derive from the recurring revenue they generate — paid to them by the service provider.

There are inherent benefits to this type of model: VARs are no longer hit with costly upfront investments to build a managed service offering of their own; they no longer need to worry about handling technical customer service issues, as the responsibility falls on the service provider; and they can use the power of the service provider’s brand to instill confidence in their existing and prospective customers. Aligning with organizations that are “front and center" in cloud services and network delivery and those who have established agent/broker programs can help traditional VARs get started down this road. 

The future is upon us. Within the next few years we expect to see a larger shift from “reselling/rebilling" VARs to “agent/broker" VARs.  This model will ultimately open the door to thousands of new channel partners that go beyond the traditional IT solutions provider world.

Craig Schlagbaum is the vice president of indirect channel sales for Comcast Business Class. In this role, he manages Comcast's indirect channel partner team and the overall indirect channel programs for business services. Prior to Comcast, Schlagbaum managed the indirect channel team for Level 3 Communications. He has spent more than 21 years in various indirect channel roles in sales, marketing and business development, and has been recognized as a top channel executive by Channel Partners magazine. He also is a member of the 2012-13 Channel Partners Advisory Board.

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