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Don't Put All Your Cloud Eggs Into One Basket
By Mark Del Bianco
The business world is moving to the cloud, slowly but surely. Which businesses and processes will make the shift and how long it will take — five 10 or 15 years — is open to debate. But the way to the future is clear.
This trend is disruptive for both traditional telecom agents and VARs. The move to the cloud changes the business strategy and model for both groups. It mixes their formerly separate sales channels, and it will make them both competitors and cooperators.
Both groups will need to learn a whole new language and way of selling. They will no longer just be bringing a menu of resold communications services or IT products. Instead, they must recognize the need to become a trusted adviser that can recommend business solutions to clients’ real-world business problems.
The move to the cloud presents both opportunities and challenges for traditional channel partners. (A future post will address the challenges for VARs.) New and smaller channel partners have long had an “eggs in one basket" problem. I often counsel such clients (not always successfully) about the need to diversify their product portfolios and their business relationships from the outset. In the past, the risk has focused on overreliance on one service provider or master agent. Both of those still exist.
But with the move to the cloud, in a sense all channel partners are once again “new," and will have a new “eggs in one basket" problem — a need to avoid reliance on one or a small set of products/services for future business. This is will require a delicate balance between breadth and depth. Learning about (much less selling) cloud services — particularly cloud technologies that go beyond plain vanilla IaaS, SaaS, PaaS and related “XaaSes" — will require a large and ongoing investment of time and effort. Smaller channel partners can’t become experts on all the varieties of cloud services available. The temptation for them will be to try to pick the cloud equivalents of long-distance voice, T1s and rack space. The problem is that nobody knows what those cloud equivalents are — or even if they will ever exist. If a partner makes a bet on the wrong services and does not offer others, it may quickly find itself obsolete and unprofitable.
Already, some cloud services — such as Amazon Web Services (AWS) — are commoditized and provide little opportunity for partner growth or value add. The real opportunities will come as traditional or new service providers introduce services that target specific verticals or customer needs in order to differentiate their offerings. Partners will need to understand and advise about new issues ranging from compliance and security requirements for a given vertical (think health care, finance or law) to business continuity (backup and disaster recovery) and service level agreements (SLAs).
The transition to the cloud will not be easy for channel partners. It will require a continued commitment to acquiring and offering knowledge about how the new services can solve the problems that keep clients up at night. But there’s really no choice. The world is changing quickly, and the number of T1s and servers businesses are buying is dropping fast.
Mark Del Bianco, principal, Law Office of Mark C. Del Bianco , is based in the metropolitan Washington, D.C., area. His practice focuses on domestic and international telecom clients, particularly those implementing new technologies such as WiMax, Gigabit Ethernet and FTTH. Other clients include applications providers, channel sales agents and enterprise customers. Del Bianco is a member of the 2012-13 Channel Partners Advisory Board.