Synnex has set out a path for Cloud profitability in the Australian channel, as partners prepare to execute on the promise of as-a-service models.
Outlined during the Synnex Alliance 2016 roadshow - spanning Brisbane, Melbourne, Sydney and Perth - the distributor detailed how traditional resellers can tap into the predictability of managed services and Cloud, and move away from legacy on-premise technologies.
“It’s been a long road and has taken two years in terms of building an automation platform that our channel partners can leverage,” Synnex general manager of e-commerce and Cloud services, Michael Tea, said.
Since officially rolling out its Synnex Cloud Automation platform in March, the distributor has secured a range of regional and global agreements during the past six months, bringing on board new complimentary Cloud vendors such as MYOB, Barracuda and Act-On.
“We can leverage the new solutions we now have in our marketplace to provide different value propositions to allow partners to move from a CAPEX to an OPEX type business model,” Tea added.
“That’s based around Infrastructure-as-a-Service, Software-as-a-Service and managed services wrapped around that also.”
As reported by ARN in October 2014, the demand for Cloud-based services in Australia is expected to soar in the years ahead, growing from $1.23 billion in 2013 to $4.55 billion by 2018.
Frost and Sullivan findings state that demand continues to be driven by data intensive applications required for back-end Cloud applications needed to store and analyse the data.
Backed up by fellow analyst firm IDC, at present Australian organisations are strongly moving in the direction of hybrid Cloud, with a range of businesses already utilising one or two small applications or workloads.
But despite 67 percent of all companies embracing Cloud in the form of either public or private across the country, only 13 percent have an "optimised" Cloud strategy in place.
“The market has changed dramatically during the past few years,” Synnex business manager of Cloud services, Salil Arora, added.
“Cloud is no longer an option and resellers must ensure it’s part of both their own and their customer’s business.”
Yet in Australia, Arora questioned as to how many partners actually consider themselves Cloud resellers in the fully-fledged sense of the word.
“And that’s the big opportunity,” he explained. “There’s so much potential for resellers to make the change and capitalise on Cloud, but they do need clear requirements in terms of how to move to a recurring revenue model to boost profitability levels.”
For Arora, there was a time in the Australian market when business budgets were kept aside for IT spend, with customers seeking regular upgrades of new servers and software.
“But today the infrastructure and software is available through a subscription model meaning partners can introduce pay-as-you-go type agreements with end-users,” he added.
As the need for up front CAPEX style payments diminishes, Arora said channel value can be derived from staying close to current customers, as opposed to the common transactional practice of partners.
“There’s no need to sell something and then move onto a new customer,” he said. “Yes new customers are a valuable source of new revenue but partners can now hook current customers through new revenue models which allows the reseller to identify and sell more opportunities after the initial sale.”
As Cloud adoption continues to accelerate across the country, Arora said the approach of “identifying an issue, providing a solution and walking away” is becoming outdated as customers seek ongoing consultative advice and input.
“There’s an opportunity within your existing customer base to offer more value through the Cloud,” he said. “Staying closer to your customers is more important that ever before because end-user expectations are higher.
“They no longer require a reseller who just sells them a laptop, they require business enablers and trusted advisors who understand the potential of Cloud.”
Akin to the old adage of ‘all good things must come to an end’, traditional resellers today are faced with the harsh reality of having to walk away from the chunky upfront payments of yesteryear.
While the art of out and out reselling isn’t going away overnight, the overall revenue it provides is decreasing, with IDC findings showing that in 2015, 41 percent of partner revenue came through resell, as opposed to 53 percent in 2014.
Consequently, the direction of travel is clear, but as transition time arrives in the Australian channel, challenges still remain.
“Absolutely resellers are being challenged,” Arora acknowledged. “The resellers we cater to are on different stages of the Cloud journey, and some are already up and running.
“But for those who have been more focused on the OEM side of the business, letting go of that upfront revenue is a difficult concept to grasp.
“Moving away from selling on-premise solutions compared to Cloud on a monthly basis requires a strong mind shift, but the customers and the market is forcing resellers to rethink. Customer demand is pressurising the channel to consider Cloud.”
In outlining the key pillars of the modern channel, Arora said a Cloud partner must “stand out and differentiate”, creating tailored solutions to meet customer needs.
“Selling Office 365 for example is not enough, partners must put other services on top and create a unique bundle for the customer,” he advised.
“But there’s also a need to modernise your sales and marketing approaches to ensure your customers see you as a leading provider of Cloud services in the market.
“Finally, partners must optimise and deliver customer lifetime value, which is crucial to ensure they stay relevant not just today, but also tomorrow.”
Following the distributor’s recent appointment as a Mainstream Indirect Partner within the Microsoft Cloud Solution Provider (CSP) program in Australia, Arora said partners can utilise the example of Office 365 as a way to add new layers of value in a Cloud context.
“Office 365 is a conversation starter,” he said. “The key play is around the add-ons and how partners can wrap services around to create new value.”
Citing Synnex’s line-up of Cloud vendors, Arora said Office 365 partners must also look at migration services, backup, security, marketing, accounting, scanning and the like to maximise the potential of the sale, as well as introducing Infrastructure-as-a-Service and Hardware-as-a-Service offerings to the mix.
Currently, Synnex distributes Microsoft Azure, IBM SoftLayer, Rackspace, SkyKick, BitTitan, Barracuda, Cirrus solutions, Act-On, MYOB, UDOCX, ABBYY through its Cloud portal, as well as hardware vendors in the form of HP, Lenovo, Acer, Huawei and Samsung.
“And the final piece is around managed services and what the reseller can add on top,” he said. “In this whole Cloud world, the truth is that customers are ready, but partners need to be ready as well.”