Customers that have turned from a trusted technology provider to the cloud directly for a specific or discrete set of computing capabilities are likely to shift that spending back to a solution provider eventually, says Terry Wise, general manager of global alliances, ecosystem and channels at Amazon Web Services.
Once customers decide to integrate a cloud service purchased directly with legacy and/or other managed capabilities, they will need additional support and guidance from a trusted advisor, Wise said in a recent interview with Channel Partners. The opportunity for third-party solutions providers, at least as far as he is concerned, remains much as it always had for nimble IT professionals. What Wise wrestles with, however, is whom these customers will turn to after experiencing the benefits of cloud: their traditional supplier who missed the initial cloud opportunity, or some newcomer who can take that business from them.
The implications for traditional solution providers could not be more clear: With so many new options for securing information and communications technology assets, traditional solution providers are likely to find holding onto customers more difficult than at any time since the rise of the Internet in the mid 1990s. To wit, studies now show that one-third to one-half of IT spending is now being led by someone who works outside of a traditional IT department that is typically serviced by a VAR or solution provider. A significant percent of this spending is going to cloud technology providers directly, or newer partner organizations who focus on cloud services exclusively. This includes companies such as Cloudreach, which simply didn’t exist five years ago.
Founded in 2009, Cloudreach helps companies modernize their businesses through the use of cloud computing. In November 2013, the company became an AWS Premier Consulting Partner. Today, it serves a wide range of customers, including Liverpool FC and Kempinski Hotels, which Cloudreach helped move to AWS in 2012. Switching from on-promise servers to AWS capabilities is expected to free up the hotelier’s IT staff to focus on higher valued-added projects while saving the organization as much as 40 percent annually in total IT spending.
While it has benefitted handsomely from the ad hoc, departmental buying that has propelled the cloud market thus far, Cloudreach is hoping to make even bigger gains now that customers are looking at ways to integrated their cloud purchases with the rest of their IT investments.
“2014 will be a big year for cloud computing as it makes the transition from standalone IT strategy to becoming embedded in existing IT portfolios,” the company wrote in a blog published in December.
To make sure they do not get left behind, Wise recommends traditional solution providers embrace the annuity business model as fully as possible, retrain their business and technical people as quickly as possible, and craft value-added cloud solutions as precisely as possible.
“The cloud opportunity is here and it’s huge,” he says. “The key is not allowing it to disrupt your momentum but leveraging it fully, instead.”
Based on Amazon’s experience, enterprise and government customers are embracing the cloud more quickly than customers in other fields. Their chief reason for turning to the cloud: business and Web applications, and additional computing cycles and storage.