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How Cloud Computing Reboots the Channel

by Tom Bittman  |  April 7, 2011  |  9 Comments

In the past two months I’ve spoken to an audience of channel partners, had 6-7 lunch roundtables with channel partners in the U.S. and Canada, and I’ve met with a few channel partners in Europe. Two things are becoming increasingly clear to me: the channel will be critical in broader adoption of cloud computing (and private cloud), and the channel is not ready to do this. The channel needs to be rebooted. Until they are, the midmarket, in particular, will leverage cloud computing in a slipshod and hit-or-miss manner. Likewise, channel partners who don’t reboot and adjust to the new reality (that more and more IT capabilities purchased by the midmarket will be coming from the cloud, and not through hardware and software sales) won’t survive for long.

I see three clear, broad opportunity areas for the channel with respect to cloud computing (I’m sure there are more):

(1) Assessments. Basic education. What is it, and what does it mean to a customer? What could leverage cloud computing, and what can’t? Where should an organization focus their cloud efforts? How do they get started? Private or public or both? The assessment helps put the channel partner into the decision-making process – rather than find themselves disintermediated and locked out.

(2) Transformation. Helping an organization (business and IT) change. Process change, management changes, organization and skills changes, culture, politics – this is a broad area, and one in which goes beyond the skill base of most VARs and resellers. Application re-design fits here, too. And designing private cloud with hybrid in mind. Technology changes are easy, it’s everything else that is very, very hard.

(3) Broker. Assessments and transformation are large areas of opportunity, but once complete, the channel is no longer needed – unless they take on a broker and aggregation role. Most companies leveraging cloud computing will have several – perhaps many – providers. The channel has the opportunity to aggregate those services, provide value-add integration and other services, provide insurance, deal with failures, monitor SLAs, be a single throat to choke. The white box for cloud providers. For private cloud, the channel can smooth the way to hybrid cloud computing, and remain the broker in the equation.

Is the channel ready for any of this? No way! Are the provider and vendor business relationships with the channel making this easy? No way (vendors/providers are completely unclear whether they want to own the customer relationship or not)! Will the midmarket be able to adopt cloud computing in large scale without the channel? I don’t believe so. Cloud is simply too hard, too paradigm-shifting, too “cloudy”.

Time to start rebooting. Or watch the rest of the channel re-invent themselves for cloud computing and leave the rest in the dust clouds.

Category: cloud  

Tags: cloud-computing  private-cloud  virtualization  

Thomas J. Bittman
VP Distinguished Analyst
20 years at Gartner
31 years IT industry

Thomas Bittman is a vice president and distinguished analyst with Gartner Research. Mr. Bittman has led the industry in areas such as private cloud computing and virtualization. Mr. Bittman invented the term "real-time infrastructure," which has been adopted by major vendors and many… Read Full Bio


Thoughts on How Cloud Computing Reboots the Channel


  1. Andi Mann says:

    Hey Tom, great post! I was right there with you until just one line toward the end:

    “Are the provider and vendor business relationships with the channel making this easy? No way (vendors/providers are completely unclear whether they want to own the customer relationship or not)!”

    I do agree that perhaps *most* vendors need to do a whole lot differently. But I do want to point out that CA Technologies is already way ahead of this curve.

    For example, we already provide our virtualization and cloud channel partners with education and methodologies, not just products – just as you recommend. Using the expertise from our 4Base acquisition (see my blog at http://community.ca.com/blogs/automation/archive/2010/08/12/how-virtualization-and-cloud-customers-will-benefit-from-ca-technologies-acquisition-of-4base-technology.aspx), we work with our channel partners on how to deliver readiness assessments, process changes, ‘kickstart’ projects, management changes, and more, based on hundreds of successful virtualization and cloud projects.

    We also provide a range of solutions (like our Nimsoft product line, 3tera AppLogic, or our Arcot security solutions) that let our service provider partners not just deliver cloud, but also manage cloud SLAs, aggregate services, assure performance, secure cloud identity and access, provide value-added integration, deal with failures, etc. AppLogic in particular is all about new ‘cloud-centric’ ways to re-design applications too.

    Plus, CA Technologies is crystal clear with both our direct sales teams and our channel partners on who owns the customer relationship, especially with our new channel partner program, which includes very clear rules of engagement, backed by processes like deal registration. We need to have these very bright lines, because we want both direct and indirect teams to focus on delighting the customer, not squabbling over who has the right to talk to them.

    Then again, perhaps CA Technologies is just not your typical cloud vendor!

    Again, great post, but I did want to make these points about that one short section at the end.

    Thanks Tom.

    (Full disclosure, for those that do not know: CA Technologies is my employer.)

  2. This is such an insightful and well observed article. We recognised this would happen 3 years ago while developing our platform. Cloud4 is a channel model, we focus on working with channel partners allowing them to white label our range of cloud services as their own. And for those who decide they dont want to own it they can sell the cloud4 brand of services.

    We have over 40 UK partners that we work closely with to refine their cloud offering to their client base and provide marketing assistance in developing new markets.

    This experience has given me a very similar feeling about how the channel currently sits with the cloud. Every channel business that speaks to us, seems to be trying to work out when they should, or how they should tackle moving into selling cloud services. We work with them through training and marketing support to develop their offering. In addition to comprehensive solutions, we wanted to provide resellers the opportunity to generate margins they simply dont acheive on hardware or traditional services, on a residual basis, with the growth potential that hasn’t been seen since the mobile phone and the launch of subscriptions to the internet.

    I say to all channel players, learn about which cloud services will compliment your business, and research who can either provide it for you, or how you can develop it, and implement a plan!

    But what ever you do, dont do nothing!

    Phil

  3. adam says:

    This is a very educational post. I’ve started a consultancy to provide cloud computing services , its called get cloud computing . We are only 2 people and work on with SMB’s to educate , promote , communicate/demonstrate the value of cloud computing and make a business case for it on how it can save a company money and reduce cost . Often time i find the problem to be more behaviorial . The business is just used to do things with lagacy old way system so in order to combat that we have started a program consisting of illustrations / infographics/ blog posts to educate SMB’s on what the heck cloud computing is and how it can help your business , Presented in a easy to digest simple way.

    Adam Qureshi

  4. How does your analysis of the channel jibe with the concept of a “cloud service broker” recently called the greatest revenue opportunity in cloud computing by various Gartner analysts?

  5. Alok Misra says:

    Good post Tom. I agree with you:

    “Vendors/providers are completely unclear whether they want to own the customer relationship or not.” For now, their conclusion is that they want to. Which confuses the channel as well as the end customers.

    “Will the midmarket be able to adopt cloud computing in large scale without the channel? I don’t believe so.” I agree.

    Here’s an article that I wrote for InformationWeek, which may be relevant:

    http://www.informationweek.com/news/cloud-computing/software/229218825

    Alok Misra, Principal.
    Navatar Group
    http://www.navatargroup.com
    blog.cloudnavatar.com

  6. Pankaj says:

    We had a done a whitepaper at HyperOffice docussing similar themes – http://www.hyperoffice.com/cloud-collaboration-channel/

    I don’t think the channel is irrelevant once the implementation is effected. Customization and integration are ongoing needs because businesses are constantly evolving. The channel can fill this gap.

  7. […] The channel is not going away, but change is on the horizon.  Cloud will likely drive shrinkage for channel partners.  Shrinkage is usually bad, but this is more of a spring cleaning.  There is a good chance that the non-differentiated VAR’s that have been clinging to razor thin margins on hardware/software must adapt or be assimilated.  Thomas Bittman (Gartner) summed it up in his blog: […]

  8. […] The channel is not going away, but change is on the horizon.  Cloud will likely drive shrinkage for channel partners.  Shrinkage is usually bad, but this is more of a spring cleaning.  There is a good chance that the non-differentiated VAR’s that have been clinging to razor thin margins on hardware/software must adapt or be assimilated.  Thomas Bittman (Gartner) summed it up in his blog: […]



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