Can the channel ride the second cloud wave?

Can the channel ride the second cloud wave?

This ARN roundtable outlined the new technologies coming to play and the strategies required for ongoing success.

James Henderson (ARN); James Ormesher (VMtech); Rhys Shannon (Westcon-Comstor); Cornelius Mare (Fortinet); Steve Rutter (Staples); James King (Fujitsu); Denis Valente (Exclusive Networks); Richard Tomkinson (Cloudten Industries); Matthew Kates (Zerto); Iain Elliott (Viatek Technology); Jamie Warner (eNerds); Nathan Steiner (Veeam) and Marina Brook (StorageCraft)

James Henderson (ARN); James Ormesher (VMtech); Rhys Shannon (Westcon-Comstor); Cornelius Mare (Fortinet); Steve Rutter (Staples); James King (Fujitsu); Denis Valente (Exclusive Networks); Richard Tomkinson (Cloudten Industries); Matthew Kates (Zerto); Iain Elliott (Viatek Technology); Jamie Warner (eNerds); Nathan Steiner (Veeam) and Marina Brook (StorageCraft)

“They are constantly looking outside of the box and are focusing on where the customer wants to be in two years time, rather than two years ago,” he added.

For Elliott, the industry as a whole remains in a “race to the bottom” through the move to cloud.

“Realistically, if you can make seven per cent out of reselling a cloud service then you’re doing well,” he said. “Then everything is the value you can add on top of the platform. It’s now a business conversation and as a partner we are selling value.”

In the channel, resellers have always lived or died by the extra value they bring around support and services, with cloud providing another opportunity to create incremental revenue streams going forward.

Partner leverage

In looking ahead, and as more leading-edge IT capabilities become available only in the cloud, reluctant organisations will edge closer to cloud adoption.

Change will not only arrive at the door of the customer however, but also the partner, with rigid resellers incapable of producing agile IT solutions.

Spanning technology and business challenges, transitioning from a transactional player to a leading cloud provider is a transition fraught with difficulties, creating a need for partners to leverage the wider capabilities of the channel — which includes distribution.

While the critics continue to think of distributors as pick-pack-ship operations with “order fulfilment” as a primary function, history shows that wherever technology goes, distribution follows, with cloud proving no exception for the channel.

“The key in distribution is to navigate very complex vendor processes and simplify them for our partners,” Valente said. “Some of the processes and compliance issues in place are very complicated and for resellers, complication equals cost. Our role is to take the cost out of their business.

“Yes, there’s the usual throw away line that distributors are just a bank, or a credit provider or a warehouse — but the warehouse in particular doesn’t come into play when we’re talking about cloud.”

Traditionally, distribution survived to support the partner through engagement and enablement. In 2017 however, cloud has rewritten reseller and distributor relations.

“We place a lot of value on distribution even through the cloud,” Brook said. “Lots of distributors have a cloud marketplace but unless the back-ends become more sophisticated, it’s still a manual process from a billing perspective for partners.

Denis Valente (Exclusive Networks)
Denis Valente (Exclusive Networks)

“On the whole, there is still a lot of work to be done because billing must be seamless, less manual and less time consuming.”

As explained by Brook however, the conversations with partners are changing, reflecting the evolving role of distribution in cloud.

“Before it was just about providing a price on X, Y and Z, but distributors are having deep conversations and helping resellers transition from VARs to MSPs,” Brook added.

Following a historic focus on transaction management, partner recruitment, training, on-boarding and longer-term sales support however, cloud-focused partners can sometimes struggle to see the future value of wholesale distributors.

“It’s a historical artefact,” Elliott said. “If you’re starting out in the market today why would you use a distributor? As a business, if I know what I need and I can buy it straight from the vendor then what value does a distributor add if it’s just download and off I go?”

According to Elliott, success in the cloud is defined by agility, with partners better placed to go direct over leveraging distribution.

“I’m not disputing the historical role of the distributor but in the context of cloud and in a digital economy, I don’t need distribution,” he said.

Through time, there have been numerous transitions in the IT products and services market that put the role of the distributor in question.

Yet in 2017, distribution continues to show its strength, providing cloud services and support to a blend of traditional, transitioning and born-in- the-cloud partners.

“Value-add is an over-used term and comments around distribution aren’t new,” Shannon acknowledged. “From a vendor perspective, we provide scale and make it simpler to sell into areas of the market previously unattainable.

“From the partner perspective, our value proposition doesn’t change in the cloud because we are still normalising technologies and processes and making it easier for resellers to do business. Cloud simply makes our role different, but not irrelevant.”

For distribution to remain relevant in the cloud, Shannon said the industry is innovating faster, investing in tools and processes to ensure platforms are up-to-speed with the market demands of the channel.

Rhys Shannon (Westcon-Comstor) and Richard Tomkinson (Cloudten Industries)
Rhys Shannon (Westcon-Comstor) and Richard Tomkinson (Cloudten Industries)

“We’re opening millions every year on our infrastructure and platforms just to keep up,” he said. “Distribution as a whole wasn’t doing that 5-10 years ago but now the industry is investing millions to stay at the leading edge of the market.

“We’re moving past the conversation of whether distribution is relevant in the cloud, it clearly is but we understand that we face an ongoing process to remain relevant to our partners.”

The emergence of cloud has transformed distribution, with the role of the vendor also evolving as new players enter the market.

“Vendor selection is a crucial part of our decision making process in the cloud,” Ormesher said. “We examine what vendors are doing in the market and crucially, what they are offering that is different in cloud.

“We have a mix of traditional vendors and an emerging, new breed of vendors. We categorise vendors on technology, billing methods, consumption models and whether they fit in how we deal with our customers.”

Echoing Ormesher’s observations, Kates said billing remains a key part of any vendor offering for the channel in the context of cloud.

“It’s crucial to be able to provide and deliver elastic cost models,” he said. “Partners don’t want vendor lock-in and they want flexible billing which are key deliverables in the cloud.”

In looking ahead, Australian businesses continue to embrace cloud offerings at pace, and while usage maturity levels are low, the hybrid model is seen as the best route to gaining the full benefits of cloud.

On paper, the market opportunity is widening for partners keen to capitalise on the potential of cloud. But as the channel edges towards the skies, they should do so with caution.

“IT is becoming harder,” Steiner observed. “But things getting harder shouldn’t be perceived as a threat, it offers opportunities for the channel. It’s a very competitive landscape and if you look at the world’s largest public cloud provider, they were born selling books.

“And from a customer perspective, cloud has disrupted decision making processes. Businesses have a cloud- first strategy but what does that mean? Does that mean a half, a quarter or all in? Partners that can make sense of this and advise customers along the way will succeed.”

This roundtable was sponsored by Exclusive Networks, Fortinet, StorageCraft, Westcon-Comstor, Veeam and Zerto. Photos by Maria Stefina.

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