CONSULTING ROOM: Cloud adoption at risk without big channel investments

CONSULTING ROOM: Cloud adoption at risk without big channel investments

"The channel will need to catch up to market demands quickly or be left behind"- Gartner's Tiffani Bova

With cloud dominating CIO conversations globally, one hurdle looms over the market that could have tremendous impact on how quickly adoption will happen. That being the capability of the indirect channel to position the value of cloud services, as well as sell, deliver and support integrated cloud solutions.

A typical enterprise won’t have a single cloud provider relationship, it will have several. Some services require integration with other services or on-premises capabilities, with the service relationships each needing to be managed. When the delivery model changes from an exclusive onsite implementation to a mixture of private cloud/on-premises and public cloud services, many traditional wraparound services associated with installation, integration and infrastructure upgrades disappear.

This has been the mainstay channel business for the past 20 years and disconnecting from existing business models is not easy. At the same time, cloud computing threatens to become another scenario in which the channel is disintermediated from customers and another point of potential tension that needs to be managed between supplier and partner.

Although cloud adoption has been growing rapidly, it is still unclear where and how the channel can and will add value. As a result, channel companies have been hesitant to invest, leaving end users with limited access to help when they need it.

Similar to what happened with systems integration, the channel will need to catch up to market demands quickly or be left behind.

As new service models emerge, the IT channel will need to make signifi cant investments in acquiring new skills and capabilities to integrate cloud-based offering. This investment ahead of the curve goes completely against what the channel has done historically, creating a gap between IT provider requirements and channel readiness.

Cloud computing presents not only a fundamental challenge to the existing channel business model, but also an increasing opportunity to leverage relationships with customers and fill a “broker” or “aggregator” role between enterprises and the many cloud services, emerging as it has done in the traditional models for years.

Early indication is that many IT services providers are bypassing the indirect channel in the initial sale and are billing end users in some cases. This could work if the end user requires only a single service and if there are no integration issues. But the reality is that most enterprises will use many cloud services – integration and vendor management issues will be very real.

Gartner believes cloud service brokerage (CSB) will represent the single largest revenue growth opportunity in cloud computing between now and 2015. The channel has an opportunity to play a significant role in aggregation and brokerage services, yet few have begun to invest in becoming a CSB.

Any company that relies on the product transaction (hardware or software) to drive attached services revenue supported by ongoing maintenance contracts will have to rethink how and what it offers its customers today and in two or three years.

Successful channel partners will start building the skills and expertise to fi ll the gaps, and start shifting their own business models to capture the new opportunities.

Tiffani Bova is vice-president with Gartner, covering IT sales and channel strategies

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Tags cloud computingGartnerCloud Provider

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