… offer one-click installations, 30-day free trials and pay-as-you-go on a variety of business applications. Customers need disaster recovery? Carbonite, Datto, Veeam, Zerto and others provide as-a-service options with fulfillment by the supplier.
IoT bundles from AT&T, CenturyLink, Verizon and other familiar providers let digital services providers sell what WTG CEO Vince Bradley calls “probably the most important initiative for our industry today.” SD-WAN has exploded, with cloud-first and channel-focused providers like Bigleaf Networks working closely with partners to facilitate the “X-as-a-service” trend.
“It’s not SD-WAN to replace or augment MPLS networks,” says Bigleaf co-founder Jeff Burchett. “Rather, it’s SD-WAN specifically purpose-built for connectivity to public-facing cloud and SaaS applications. It’s less about building a more resilient hub-and-spoke private WAN. It’s more about ensuring that the voice in your UCaaS service is crystal clear and your desktop-as-a-service application and all your SaaS applications are available and performing the way you want.”
In other words, DSPs sell business outcomes leading to digital transformation, not just speeds and feeds. Distributor Tech Data even offers “Tech as a Service,” allowing partners to bundle endpoint hardware, software and services into a single monthly subscription. Everything from raw CPU cycles to wireless LANs, security, business continuity, storage, desktops and enterprise mobility management can be delivered in a subscription model — which is exactly how customer CFOs want to pay for IT.
IDC expects spending on public-cloud services and infrastructure to grow 23 percent this year, to $160 billion, on the way to $266 billion in 2021, reflecting the ongoing shift from capex to opex among enterprises. The analyst firm also says that by mid-2020, SD-WAN will be a mainstream technology — one that represents more than $6 billion in spending.
“Midmarket and enterprise customers are now running to the cloud at an accelerated rate; the question is, are they running to it with you or away from you?” says Patrick Sheehan, director of channel development at 8×8. “Partners that embrace this shift and proactively lead their customers to it are the ones that are retaining and growing their customer base while increasing revenues.”
Conventional wisdom is that the VAR financial model, built around selling premises-based solutions in a capex model where revenue is received and commissions to reps are paid upfront when the job is complete, isn’t sustainable. Larger VARs also draw significant revenue from selling maintenance contracts for those premises-based systems, and as customers move rapidly to the cloud for a variety of IT needs, this cash stream is also declining. It’s a perfect storm.
“The shift to selling cloud services, thus moving to annuity model, is a challenge for these VARs,” says 8×8’s Sheehan.
But which way should they go? Some are pursuing an MSP model predicated on remotely managing a full slate of customer IT assets from a limited number of vendor partners. MSPs face headwinds around the cost of hiring talent to manage …