I don’t want to be disingenuous (or an outright liar) by saying that partners – and I mean you VARs, services firms, and ISVs – are in love with cloud services. It’s probably more accurate to say that you’re approaching it slowly, getting a better look, trying to gauge compatibility. Who can blame you, really? No one wants to end up in a high-maintenance relationship. But when things get going it’s always best to know what you’re in for, especially with regard to how things are going to change. Nothing stays the same forever, but that’s not necessarily a bad thing. So let’s take the notion of change into consideration here as we look at the demands of cloud services, especially on your sales, marketing, and overall business strategy.
Let me get this out of the way first: the growth of cloud services globally will have a profound impact on partner business models, including VARs, services firms, and ISVs. There, I said it. What are you going to do about it? How about looking me straight in the eye while I tell you where, and to what degree, that impact will occur? You know things will look very different depending on where your business is currently focused. I mean, if you’re making your money as a reseller, well, cloud services will play a different role in your life than if you were predominantly a services firm.
In fact, some might say (you can stop looking at me now) that the future of the resale partner business model in the cloud economy is in question. Now why would someone go and say that? How about because cloud services demand more vendor-direct or third-party hosting provider transactions? But even if you did participate as a reseller of cloud services you’re contending more with fees – goodbye margins. So that’s less revenue for you, but, and this is important for you bean counters, you’re expending less energy too, so maybe that’s good for the bottom line. And maybe, just maybe, you can also do a lot more deals – that can’t be a bad thing.
But here’s the million dollar question: are you willing to adapt to this potentially disruptive new model? I’m already hearing boos from the folks in the cheap seats, but it’s only because traditional on-premises software has been so very good to you. Maybe this will help bring you around to my way of thinking – say this after me: recurring revenue. Aren’t those just the sweetest words? Well they’re at least better than feast or famine, which most of you know all too well. So, cloud services, and especially their subscription-based pricing, are disruptive, but there are also fringe benefits.
And, anyway, let’s be up front on this one – the majority of partners are going to retain what you can of on-premises business, using cloud services for customers where it makes the most sense. Sounds simple enough, right? It’s just that you still need to motivate those folks that drive the business, the salespeople, and they’re already making pretty good coin off those on-premises deals, thank you very much. This is a common problem among your peers and it’s starting to look like many are bringing on new and different staff to drive cloud services deals. Otherwise, they run the risk of not generating enough – or any – cloud services revenue to pay anyone anything.
So it’s a spending-money-to-make-money kind of proposition. And outside of sales people there’s other skills and knowledge that will come in handy in the cloud services world. Your value as a partner, your stock in trade, may tilt more in the direction of business process and domain expertise. You will continue to deliver on your technical know-how – it’s still got high value and you’ve made good investments there – but the importance of understanding the implications of technology to the customer’s business needs has to be addressed. Let me then say that again (this time with feeling): the importance of understanding the implications of technology to the customer’s business needs has to be addressed. But, as I’ve been saying, please also don’t underestimate the impact of cloud services on your own business.
To read more – far more – on how cloud services might change your business, feel free to check out the IDC Cloud Transition Series, created specifically for partners.