No doubt cloud services and SaaS have forced us all to rethink and remodel our current approach to the market and our customers. VARs, SIs, ISVs, LARs, and hosting providers are all undergoing a business model transformation. But where does the distributor fit into all of this? Do they fit in? Are there any roles for the distributor to play when the consumption of IT becomes a “battle of the clouds”? These are questions I’ve been asked many times over the last four years.
Is There Room for Distributors in a Cloud-Based World?
My short answer to all of them is yes. But the distributor needs to earn the right to participate in the future cloud services supply chain—not just be a transactional partner.
So how can distributors do this? By capitalizing on present vendor and partner relationships. Then creating routes to market for cloud service providers using existing supply chain processes. Distributors are great at moving products from A to B and at automating processes. They’re excellent marketers and they’re known for their strong sales support for both partners and end-customers. All of this means one thing: distributors help IT vendors bring their products to market.
Can this be done using cloud services? Sure. Service and hosting providers need a channel to reach out to end customers. And they need help building sales and marketing support programs so that resellers can better understand how to reach customers.
This is definitely a challenge. After all, cloud services are now “delivered” directly from the cloud service provider to the end customer. There’s no “product” handling by the distributor. But is this any different than your cable company providing you 100+ TV channels to watch? None of us would be able to watch TV today unless a seamless and efficient supply chain was in place—with each part of the chain adding value.
And even though the “product” is now consumed directly from the producer (the cloud service provider), the buyer still needs to turn to a trusted advisor to be convinced. And in this case, the trusted advisor is the traditional IT reseller, who then turns to the distributor to source the product. In addition to sourcing the product, the distributor will be called upon to fulfill the customer’s service needs. For all this to work, the distributor must be willing to take on this new role, becoming a wholesaler of cloud services without actually producing the services. This means the distributor becomes the SaaS/cloud eco-system facilitator, ensuring that cloud service providers can sell and market their products through the existing distributor channel.
I recently met Stephanie Browne of partner company, Express Data. Stephanie, who’s leading the cloud services initiative of the Australia-based company, said, “Express Data identified an opportunity in the Australian market of partners servicing SMB customers looking to resell locally hosted cloud solutions. We partnered with Australia’s leading cloud provider, BlueFire, to deliver a suite of services to partners. These included BlueFire Cloud Servers, Exchange and Files. Our simplified distribution model lets partners sell services free of charge. Partners can use an intuitive self-service portal to sell services on demand. These services are then billed to the partner each month based on consumption, which means the partner has total control over the customer relationship and billing process.”
So as you can see, there’s certainly room for the traditional IT distributor in the new supply chain of cloud services. But it will require developing new skills and new partnerships. The distributors’ vendor supply needs to include service and hosting providers and, of course, cloud services from traditional vendors like Microsoft and others.