IDC: Australian resellers must change for the cloud

IDC: Australian resellers must change for the cloud

Analysts call for major reseller re-think on cloud investment, business plans

Australian channel partners will have to change the way they do business because of the cloud, according to IDC research director of channels, Phillip Carter.

Carter said resellers would have to transform their business models to a subscription-based pricing model, while building up strategy consulting, application architecture, migration tools and service skills. But one of the analyst’s biggest predictions was that reseller will have to shift their return on investment timeframes from six to 12 months to a much longer 2-3 years.

“Channels have to move away from just 'clipping a ticket' as they resell a product or service and getting a referral fee as a result,” Carter said. “Channel partners who just view cloud services as another stock-keeping unit [SKU] to resell will struggle.

“They will have to recognise that the cloud provides an opportunity to bring more to the table.”

Carter’s predictions were presented as part of a regional report into the IT channel ecosystem and the impact of cloud technologies and services. He said the cloud was rapidly becoming more successful and causing more vendors to jump on-board.

But IDC associate director for channels research, Sureshpal Singh, said it threatened to take plenty of resellers out of business.

“Over the last five years, margins have been shrinking for the channel,” he said. “The public cloud could disintermediate the channel as the services are essentially ‘self-service’ and delivered through the Internet.”

The analysts predicted public cloud services will make up 10 per cent of Asia-Pacific’s ICT spending by 2013.

According to its broader Asia-Pacific 2009 IT Services Survey, the IT channel needs to find ongoing ways to develop higher-margin services to offset declining resale dollars. The analyst group found resale margins across hardware, software and services deteriorated significantly over the past five years, with over 80 per cent of respondents reaping just 1-15 per cent gross profit today.

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