Cloud computing and services offer enterprises numerous opportunities to streamline IT operations, but it also provides a chance for resellers to re-evaluate their own business models and find opportunities to succeed in this emerging market.
For software resellers, providing cloud-based product is an easier shift. They’re already selling software under a licensing structure, and offering it as a service over cloud just represents a new component in their delivery.
Hardware-heavy resellers, where margins are already tight, might be afraid of moving to a cloud model; however, that fear can become their undoing. Cloud is here. It’s not simply buzz. Organizations move to whatever IT architectures best serve their business needs, with or without their current technology partners.
Resellers and system integrators bold enough to move past their fears can find new opportunities for recurring revenue, as well as strengthen their role as trusted advisors. Still, there are a few ways they can work to ensure the greatest success when moving to cloud service offerings.
Unless a reseller is going to put in the heavy investment to build their own cloud infrastructure, they will need to partner with an existing provider. This raises some obvious questions: Who owns the contract? What is the maintenance model? Who serves the customer’s ongoing needs? Obviously, the customer relationship is the most valuable element of the reseller’s business, and losing it would not bode well for its future.
What to look for in a cloud provider
Resellers looking to find a cloud services partner need to look for ones that support an “elastic” business model that parallels the flexibility of the cloud itself. Cloud providers acting as partners to the resellers must be flexible to support the new revenue models and business structures that will serve the reseller.
As with any partnership, they should pay mind to the compensation models with the service provider, but also close attention to who holds the contract.
Resellers should investigate whether the provider offers an opportunity to white label their offering under the reseller’s name, so they can better protect that customer relationship. Cloud then simply becomes another product in the reseller’s portfolio. No infrastructure investment is made and no customer hand off occurs.
In addition, resellers worried about hardware sales should ensure a partner will purchase from them the hardware needed to serve their customers. Does it really matter if the hardware is being sold to go into the customer premises or to the service provider? In the end, probably not, as long as that sale is made and the customer’s business needs are satisfied.
Moving to cloud should be a no-brainer for many resellers, but it does require brain work. As a new business model, resellers must closely consider the impact on revenue and determine the sorts of revenue models that will work. For instance, capital expenditures on hardware might be recouped as a component of an Infrastructure-as-a-Service business, but time must be spent restructuring the business to support such a model.
Make no mistake: new revenue models might be needed, but that doesn’t mean lost revenue.
As well, they should be careful to find partner with a similar business culture, especially around service levels, as themselves and their clients. If a reseller promotes a sense of immediacy with its clients, it had better make sure any cloud partner is as responsive.
Again, the most important reason for resellers to investigate offering cloud services is that enterprises will be moving to cloud whether their resellers like it or not. Consider that organizations will not be moving everything exclusively and entirely to the cloud. Today, cloud is right for some applications, and wrong for others.
This sort of selective outsourcing means a successful reseller will need to focus on where it can provide best service and partner where it makes best sense to serve their customers. Likely new specialists will emerge to serve these needs, and innovative resellers have an opportunity to be among them.
The opportunity for resellers is in helping facilitate cloud services for their customers and offering a full range of products and services.
Efficient enterprises will have a uniquely-balanced mix of IT services running over the public clouds offered by service providers, others on internal private clouds and some on traditional distributed computing architectures.
Partnering with the right service provider, one with a flexible, elastic business model, will make turning on those cloud services for customers nearly as easy as switching on a light.
Resellers who help their clients to transition to the cloud, acting as trusted advisors, will also reap the benefit of serving their off-cloud business needs; those who do not will miss out on the opportunity to take advantage of a growing new market.
Robert Offley is CEO of CentriLogic, a provider of hosting, managed services and cloud computing solutions. He can be reached at [email protected].
