7 Cloud Bridge Building Blocks

CLOUD PARTNERS — Cisco made news earlier this year with its Open Pay variable pricing, where 30 percent of the cost of gear can fall under a flexible consumption model. But that’s not all it takes to bridge the gap from a “one and done” to a subscription-based recurring revenue business. Left to right: Moderator Mike Healey of Yeoman Technology Group and panelists Rick Ribas of Intelisys, Susan Penevolpe of WTG, Stacy Nethercoat of Tech Data and Jason Bystrak of Ingram Micro at Cloud Partners' Thursday breakfast keynote discussion.

At Cloud Partners this week, Mike Healey, president of Yeoman Technology Group, sat down with Jason Bystrak, executive director, cloud, the Americas for Ingram Micro; Stacy Nethercoat, vice president, cloud, the Americas, for Tech Data; Susan Penevolpe, vice president, sales, for WTG; and Rick Ribas, Vice President, Partner Sales-East, Intelysis.

Bystrak stressed that there must be alignment with the partner organization in terms of direction. Revenue may be cannibalized, and the calculation of where to make new investments will change, as will compensation models. Skill sets need to be adjusted. The entire team must be on the same page, and that includes technical experts who may balk at cloud adoption.

“When the lead salesperson leaves, some people worry,” said Healey. “When the lead engineer leaves, everyone panics. What happens when that guy resists cloud?”

Part of the answer is education, which Bystrak says can quickly raise comfort levels. “The ironic thing is, once you go through training with partners, some no longer want the bridge,” he said. “They realize they can do it.”

The other consideration is playing to your strengths — and knowing your weaknesses. Some partners will manage the cloud transition better than others, said Nethercoat. “MSPs typically go all in, while solutions providers or VARs start with a dedicated unit,” she said. Her advice is to decide, What is our core strength? Then stay close to what you’re good at. The fact is, conventional “one and done” salespeople may not make good cloud salespeople. “It’s no longer a product sale, it’s a solution sale,” she said.

The transition may be easier for engineers. “Tech folks don’t have a comp plan that needs to be adjusted,” she said.

Healey asked how the panel would help a traditional sales rep who’s made numbers for 25 years make the leap. Ribas acknowledges that the conversation can’t be, “Hey, thanks for the sale, we’ll pay you in five months.” Intelisys does make some payments upfront, but Ribas said that, eventually, the residual model will be better for partners.

Healey’s advice was to compare apples to apples. Normalize dollar values. Reps are all about the “million dollar sale” he said, but the actual profit from a big hardware buy may not match the revenue from an ongoing contract. Figure out your margin on hardware or telecom, then calculate for cloud over time. He said the numbers may surprise you.

From a customer perspective,

expectations are evolving.

“End-user customer businesses are demanding that they not shoulder the entire risk of a solution,” said Nethercoat. Where a few years ago you made a sale and transferred responsibility, with cloud, “we all own that risk,” she said.

Their advice for bridging the cloud revenue gap:

  1. Break training into functional areas. “You can’t have a rogue sales engineer,”  said Penevolpe.
  2. Know what value, and value-added services, you bring to the table. “If you’re selling based on price, you’re making a big mistake,” said Bystrak. “Consumption-based IT is the future.” Package your value on the front end.
  3. Develop a formal business plan rather than being reactionary. All the panelists said some of their agents lack strategies. A sales plan is not a business plan. If you need to start small, prioritize marketing that highlights cloud offerings.
  4. Penevolpe said to really know your clients: Do they need PCI or HIPAA compliance? Do they have a global workforce? “That will guide your choice of cloud offerings,” she said. “It’s becoming more of a company conversation at a variety of levels.” Agents are talking to CEOs, not telecom guys. She acknowledged that the business-case conversation may be difficult at first, but it’s critical.
  5. Instill internal accountability. Nethercoat advised constant follow-up for various stakeholders.
  6. Penvelope said to break down silos, be brutally honest about your client and talent bases, and trust but verify when you forge partnerships to fill gaps. “You’ll see people being a bit naive about the competition” she said. Don’t shy away from partnering, but “you need a formal agreement, not just a handshake,” she said. Ribas agreed on using outside consultants. “Don’t be afraid to bring in business coach,” he said.
  7. Healey said partners need a sophisticated digital presence. Advanced  buyers want to research and explore online. “The more complex the product, the more likely they are to engage in live chat,” he said.

Finally, don’t underestimate operational complexity. “Have the right platforms and systems in place,” said Bystrak. “Invest in the right systems.” Healey added that project management is definitely a growing field. “It’s another revenue stream and another way of endorsing cloud services,” he said.

In closing, Healey asked for one top takeaway:

Ribas said don’t be afraid to ask questions or bring in an expert. If you don’t have all the answers, it’s better to say “I’ll get back to you” than to wing it.

Penevolpe agreed and recommended starting close to home. Talk to existing clients about their business pain points. “Listen and take notes, research vendors, then come back,” she said.

Nethercoat advised taking time to educate yourself on new cloud market entrants. Do your due diligence. “Many are good; many look profitable but won’t be around in a year,” she said.

Bystrak was all about the internal metrics. “What’s driving revenue?” he said. “Watch lead indicators.”

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