Delivering the Higher Cloud

Khali Henderson**Editor’s Note: You can download the three-part Digital Issue series that explores the shift to Higher Cloud from the Higher Cloud Immersion Center.**

Business adoption of cloud services is moving to the next level. Early cloud use was opportunistic — to meet short time frames, limited compute requirements or line-of-business buying. Going forward, it is becoming more strategic, enabling business process transformation and driven by collaboration between business, finance and IT leaders. This shift to a “higher cloud” strategy fundamentally will change the way businesses leverage technology to achieve business value — from efficiency to agility to profitability.

For most organizations, the transition is just beginning. And it can’t be done without a lot of planning — a prime opportunity for savvy cloud partners.

However, capitalizing on the demand for strategic cloud solutions that deliver value across an organization means cloud partners must take a more holistic approach, beginning with a needs assessment and a cloud migration road map and ending with a fully integrated cloud or hybrid solution. This, in turn, demands that cloud partners position cloud services to meet the objectives of key decision-makers in business and finance as well as IT; they must be equally conversant about business outcomes, capex vs. opex comparisons, and integration and migration processes.

And so, the transition to strategic cloud solutions is rigorous but potentially rewarding for both technology buyers and channel partners. That’s why “Delivering the Higher Cloud” is the focus of Cloud Partners, a Channel Partners event, Sept. 8-10, in New Orleans.  Channel Partners has put together more than 30 hours of programming that will help partners understand this transition and retool their practices to take on a strategic advisory role. To gear up for the live event, we also published a three-part Digital Issue series that is available online. We’ll hit the highlights in this excerpt.

What Is the Higher Cloud?

Every market study on any cloud-based service shows accelerating adoption. It’s no longer a question of whether cloud is being used but how.

“Cloud was introduced into businesses as an opportunistic investment, as a means of reducing capex and/or overall IT costs,” said Anurag Agrawal, CEO of research firm Techaisle, which covers channels serving small and medium businesses (SMBs). “Today, it is viewed by many as a means of increasing business agility and of introducing capabilities that would have been cost- or time-prohibitive to deploy on traditional technology — in other words, strategic.”


Indeed, 80 percent of U.S. SMBs view cloud computing as a solution that contributes to business growth, according to Techaisle’s 2014 U.S. SMB Cloud Computing Adoption Trends Study. “This is a huge departure from previous years when reducing cost used to be the overarching objective,” he said.

Researchers at Frost & Sullivan have found similar changes in priorities. “In the past year, we have seen a significant increase in the number of businesses that consider the cloud to be more than a way for IT to save money,” said Lynda Stadtmueller, vice president – cloud computing services for Frost & Sullivan. In its annual Cloud User Survey of IT decision-makers, the research firm asked respondents to describe their company’s mindset regarding the cloud. In 2013, just 9 percent said, “Cloud is strategic to us, and we are accelerating our cloud adoption.” In 2014, that number jumped to 23 percent. Similarly, in 2013, only 8 percent said, “The cloud is helping us transform IT to be more service-centric,” while in 2014, 23 percent said the same.

So what is a strategic cloud initiative? Channel Partners’ defini­tion is that it enables business process transformation throughout an organization to achieve efficiency, agility and profitability. Many experts Channel Partners consulted agreed with that definition. However, they also argued that strategic initiatives could occur within a business unit (particularly in very large companies) or within a department (e.g., sales and marketing) or within a discipline (e.g., business continuity and disaster recovery).

Certainly, any cloud service that achieves business objectives could be considered strategic — at least by the individual buyer or department. What differentiates strategic spend is that it takes a more holistic approach that requires the agreement of business, finance and IT leaders that cloud platforms can deliver on core business objectives.

“What has been happening to this point is we’ve been treating a cloud acquisition or a cloud purchase as a one-off or opportunistic engagement that doesn’t actually change the way that we do business but it may make a certain aspect or task a little easier or more affordable,” said Larry Walsh, CEO of The 2112 Group, a channel consulting firm. “What we are seeing now … is increasing amounts of workloads being pushed into cloud contexts — whether it’s private, hybrid or pubic cloud — and more of this being built around what needs to be done, not what has to be done now.”

So it’s not just fringe applications, but infrastructure (i.e., compute, storage, security) and core production workloads (e.g., ERP and SCM) that characterize strategic cloud initiatives.

“IT leaders have realized that dabbling in the cloud — placing a few, primarily new workloads into a cloud environ­ment — isn’t going to fix key IT-wide challenges regarding security, compliance, storage growth, rogue apps,” said Frost & Sullivan’s Stadtmueller. “Nor will dabbling help the business meet its goals for marketplace agility and innovation. And, in many cases, IT doesn’t actually realize cost savings from dabbling. Instead, IT leaders are recognizing that they need a holistic approach to service delivery, and the cloud will be an important enabler.”

Indeed, business agility and innovation are top drivers for adopting a Higher Cloud strategy.

In Frost & Sullivan’s 2014 Cloud User Survey, 68 percent of businesses cited the ability to “better support business needs” as “very important” to the decision to use the cloud. The same percentage indicated that the ability to “better position my company to take advantage of new technologies” is a very impor­tant driver. In addition, 61 percent strongly agreed with the statement, “adopting cloud services will allow our company to enter new markets more quickly and easily,” while 58 percent strongly agreed that “companies that use the cloud are more innovative than others in their industry.”

Techiasle’s 2014 U.S. SMB Cloud Adoption Trends Study also showed similar sentiments. Small businesses (1-99 employees) cited increasing agility as the most compelling benefit of cloud. This was followed by obtaining capabilities that would have been cost/time prohibitive, reducing business process-related costs and improving business staff productivity. Midsized businesses (100-999 employees) also appreciated these outcomes, but 60 percent said increasing IT staff productivity was the most compelling benefit of cloud.

How Can Channel Partners Play?

The channel is positioned to not only facilitate but accelerate businesses’ transition to strategic cloud spend. This requires a seismic shift of their own, including investments in systems, talent and training required by truly service-focused businesses.

Indeed, “partners must undergo the same cloud transformative process that they are trying to help their customers work through,” said Rohan Bose, senior associate at AMI Partners. The research firm has identified a few key steps partners must take in order to successfully transition:

  • Install a separate cloud services business unit
  • Train multiple employees to achieve cloud certifications
  • Mainstream cloud into primary sales and marketing motions
  • Create a dedicated cloud sales and marketing team with specific goals and benchmarks

“We have found that partners who have been able to take these key steps are the partners who are most successful in the cloud,” Bose said.

Experts said adding cloud to your portfolio is not like adding another product line. This is particularly true if you want to tap into increasing spend on strategic cloud initiatives.

“There are too many partners, too many solutions providers or agents that want to say they are in the cloud because they resell Office 365 or hosted email or hosted PBX,” said Walsh. “That is a product and the medium of delivery is being changed; it’s not effectuating anything different in the customer environment.”

Walsh said the most successful channel partners are the ones that are building their cloud practices based on helping customers make their businesses better through improvements in processes or resource utilization.

Selling strategic cloud services, then, requires you to retool skills with business outcomes in mind.

To start, you must be able to have more strategic conversations with your customers. “Top-performing channel partners need to be able to challenge decision-makers to a new level of thinking,” said Andrew Pryfogle, senior vice president – cloud transformation for Intelisys Communications, a distributor of carrier and cloud services. “Who is the channel partner who will win the day? A technically sound, business-minded, strategic professional, who can quarterback key supplier and engineering resources while leading the C-suite through business transformation.”

Tiffani Bova, vice president and distinguished analyst covering sales strategies and channel innovation for Gartner Inc., agreed that partners must become much better at higher-end business transformation consulting services. But she also adds to the list custom application development, mobility and faster sales and delivery capabilities. “Skills throughout the organization should be rationalized against a new set of business goals,” Bova said.

And it’s important that partners add value. There are a number of ways that a partner can add value. The 2112 Group’s Walsh prompts partners by asking the the following question: If you made no money off the cloud services you represent (i.e., the cloud provider gave no commissions or discounts), then how would you make money?

“You can get very creative once you take the vendor contribution to your profitability out of the equation,” he said, noting that more often than not, the answer is some sort of professional or managed service that’s attached to the cloud service. “It’s everything from assessing needs to designing cloud architectures to integrating disparate cloud applications and resources to monitoring and managing and troubleshooting cloud activity and performance to even administrative work, (e.g., becoming the master biller of multiple cloud services),” he said.

While he acknowledged the ability to partner with suppliers that can deliver some of these value-added capabilities, he said bringing them in-house is a strategic play. “It’s a huge driver of not only revenue and profits for them, but a determiner of their value proposition,” Walsh said.  “Whenever you are too beholden on another company’s technology to define your value, you are exposed to disruption.”

Khali Henderson is editor-in-chief of Channel Partners.
Twitter: @khalihenderson


Learn more in the keynote address, “The Higher Cloud: Enabling Agile Businesses With Strategic Solutions,” and meet execs from BTG, Entisys and StrataScape in the keynote roundtable, “Taking Your Cloud Practice to the Next Level,” at Cloud Partners, a Channel Partners event, Sept. 8-10, in New Orleans.

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