Cloud services’ gravitational attraction as a business opportunity has been well realised in the channel. However, traditional IT providers are not the only organisations to be able to offer cloud services, and those providers are going to need to work out how to deal with some significant new competitors.
Telstra has been steadily building a cloud solution. Japanese monolith, NTT Data, acquired Dimension Data last year for a massive sum with the sole intent of developing a cloud capacity within Australia. Smaller players, such as iiNet, have also been building up hosted solutions and services for the consumer and small end of town.
The question is, are organisations from this side of the fence able to coexist in a new world where Telstra might be ready to leap on any opportunity?
IPL Communications general manager, Paul Scanlan, said the growing telco presence in the cloud services arena, while challenging, does present bundling opportunities for the reseller.
“The big telco guys are offering a blunt instrument – they can’t be all things to all people. They offer a big, scalable, robust system, but it’s the resellers who can be the ones that offer a certain set of features on top of it,” Scanlan said. “The little guy can add value to the mix. If Telstra, for example, is offering $25 per end port, the dealer can offer $26 and can add a whole bunch of functionality like Outlook integrator, CRM integration and Microsoft Lync.”
The ability to bundle and foster relationships with customers are top areas of differentiation for partners, he said.
“The telcos don’t have the arms and legs to install the handsets. They need the reach, especially in a place like Australia,” Scanlan said.
“It’s definitely an opportunity,” he said, acknowledging there are tough times ahead. “This typifies the trauma the channel is going through.”
Traditional dealers have to transition their business models from simply relying on “selling tin on the wall” to selling services and getting involved in hosting (whether they put it on-premise themselves or get it wholesale from the vendor or distributor).
“There is a fair bit of pain, but resellers realise they will lose customers if they don’t transition.”
Cloud services are not only more cost-effective for the customer, but they can offer dealers a continuous annuity revenue stream.
He said many dealers are looking to the distributor ranks, such as an IPL, in order to get skilled up in specific areas like engineering.
In bundling services, Scanlan said partners need to skill up in the art of sales. Resellers need to differentiate by taking on a more sales-oriented approach and offer full-featured products and services.
“Be prepared to go outside of just selling the phone – sell the switch. Dealers look at you cross-eyed and say, ‘I’ll do that in my spare time.’ But they need to get savvy on selling mobility, videoconferencing and tell the collaboration story.”
Brennan IT managing director, David Stevens, is likewise confident on the viability of more niche markets. As a medium-sized organisation, Brennan IT has an audience that Stevens claimed Telstra and the multinationals would find difficult to crack into.
“Mid-market companies are looking to deal with mid-market companies that understand them,” Stevens said. “And the competition from other mid-market organisations is welcome - it’s validation that this is a viable market.”
The core cloud product will go through a commoditisation stage, Stevens added, at which point it will be the additional value in services and new products to meet customer demand that will be the point of differentiation.
However, Stevens did warn organisations not to overstep their reach and aim for markets they won’t service better than their competition. “We’re a 50-500 seat organisation, servicing the 50-500 seat customers,” he said.
“The adjacent market - 500-1500, is of interest to us, but we’re not going to let it sway us from our focus.”
While optimistic about the cloud services opportunities for the channel, telco analyst, Paul Budde, said he’s worried the average Australian IT consultant is lagging behind international counterparts because of a lack of flexibility and innovation in the cloud computing arena.
“If the IT companies aren’t innovative and flexible, then others will be, and they don’t have to be in the next village to do so. Australians tend to be a bit isolated and have a ‘she’ll be right attitude’, but are they lean and mean enough like companies overseas – particularly in places like Korea, China and Europe – in order to be successful.”
Like Scanlan, Budde agreed the large carriers and content providers need help from the smaller players to act as the trusted advisor and reach the customer, particularly in the SMB arena.
“Follow the big players because the crumbs falling off the table could be the big meals for the smaller players," he said.
