INGRAM MICRO CLOUD SUMMIT — Technology and partner economics took center stage – literally – on the final day of the Ingram Micro Cloud Summit 2014 event underway this week in Hollywood, Fla.
On Wednesday, Scott Collison, vice president of Hybrid Platform, VMware, told attendees that public cloud technology was unreliable and advised them to deliver hybrid cloud technology to their customers, instead — clouds with VMware software at the heart of them, in other words.
Public clouds, he said, have been optimized for only new applications and require separate management tools. VMware, he said, is “focused on fixing that.”
With Amazon Web Services (AWS), you’re essentially “jumping off a cliff naked into the dark,” he said. With VMware, technology, you can move your existing applications to the cloud, with seamless networking, common management and one place to call for support.
Before finishing, Collison said that VMware will unveil a new disaster recovery solution on April 14. The news will be important to partners, he added, because disaster recovery “is a gateway drug to the cloud for small-to-medium customers.”
Afer Collison spoke, Judy Smolski, vice president, midmarket, with IBM, made the case for Big Blue technology to the assembled Ingram Micro partners. The company, she noted, has spent spent $7 billion since 2007 on 16 acquisitions to get ready for this “new frontier.” Like Collison, she focused on the opportunities partners have to help customers adopt hybrid clouds.
Mike Fouts, vice president, Americas Channel at Citrix, meanwhile, pointed out that Gartner said Citrix in 2013 had one of most competitive portfolios for the cloud.
“We think there’s an immediate $1.5 billion opportunity for partners in Data as a Service (DaaS),” he said, adding that “Citrix was in cloud business before it cool to call it cloud.”
“We are on a journey to be the best software company in the world. With the best products, partners and solutions,” he said.
In addition to technology, partner economics also dominated discussions on the final day of the event. Gartner Vice President and Distinguished Analyst Tiffany Bova delivered a keynote address during which she challenged solution providers to transform their businesses more quickly. The reason certain vendors have increased their direct sales, she said afterward, is because partners are not moving quickly enough to embrace new market realities. These include the rise of cloud computing, of course, and the diminished control that traditional information technology (IT) departments have in many organizations.
Both trends, Bova has emphasized for several years, are upending the business models of traditional value-added technology resellers. The cloud, of course, challenges resellers to make money from service annuities instead of product sales, while the diminished control over decision-making within IT forces technology partners to sell customers outside their traditional comfort zone.
“Even if we assume the market will be 85 percent on-premise and the balance cloud-based, it doesn’t logically follow that we will need the same number of solution providers selling in the market that we have today,” Bova said.
Instead of products, she said, business partners must sell outcomes. As an illustration, she pointed to Dutch electronics giant Philips as one example of an organization that has repositioned its business successfully. Philips, she noted, now sells a $59 light bulb that can be programmed to match a consumer’s mood. Philips, she added, isn’t selling products, but an experience instead. The same is true of disruptive innovators including Airbnb and Uber.
To provide outcomes like these companies do, partners must change their business processes and models, she said. “Your job is to change the moment.”
After Bova’s presentation, Nimesh Davé, executive vice president of global business process and cloud computing, Ingram Micro, hosted a main-stage presentation with Brian Alexander, managing director and director of technology research at Raymond James & Associates, and Joe Estes, managing director and co-head of technical services investment banking at Raymond James & Associates. Like Bova, the guest speakers provided some sober insights on what makes some partners more successful that others. Hint: it’s not sales so much as profits.
“Given the more mature state of this sector within the technology industry, EBITDA multiples, rather than revenue multiples, tend to drive valuation,” said Estes. “There is a direct relationship between valuation and margins. Run away from areas where you are not differentiated and not adding value. Add value and then outsource the rest,” he advised.