As the notion of cloud computing continues to loom large over the channel, partners are navigating new waters in Australia, based on business transformation agendas.
No longer merely a technical conversation or a product centric pitch, the true test of the channel’s character in the months and years ahead will be around its ability to instigate internal change.
With Australian organisations increasing cloud investments in a local market forecast to reach $1 billion by 2020, the spotlight has shifted from the customer to the reseller, highlighting the need to switch business strategies to succeed.
For the new world of cloud creates challenges outside of the traditional channel remit, specifically around sales and marketing capabilities.
In short, it requires a channel business makeover, prompting the roll-out of Microsoft Partner Next Program, an Australian initiative designed to assist the channel as it embarks on business transformation strategies.
Through superseding Cloud Champs - a previous Microsoft Australia partner initiative - the Next Program focuses on helping partners transition to the cloud, alongside explaining the fundamentals required to be successful in the evolving IT landscape.
Launched in response to market demand, Next Program currently has over 3,000 organisations signed up nationwide, with content split to cover four core areas based on functions within a partner organisation, spanning business owner and executives; sales teams; marketing teams and Microsoft product and Platform content such as Office 365, CRM Online and Azure to get Partners started.
The program is delivered virtually through online content - tailored to specific partner requirements - Next Program is delivered by the local Microsoft team, alongside external business consultations such as Incredibleresults and Mogrify, focusing on business strategy, sales and marketing processes.
Historically under-utilised and under-valued, the conventional channel has seldom appreciated the art of marketing.
Driven by either a lack of understanding or appreciation, the concept of communicating with the customer, has for a long time, challenged a market built off referrals and word of mouth.
As the buyer becomes more informed, more digitally savvy and more aware of the options available, partners are recognising the need to prioritise and modernise end-user engagement to drive new revenue streams and leads.
“Through the Microsoft Partner Next Program, we’re helping partners realise that the marketing activities and approaches of the past are no longer relevant in the future,” said Melanie Unwin, Co-founder and Director of Mogrify, a B2B marketing organisation based in Sydney.
“Our role is to educate partners by highlighting new areas and ways they can transform their marketing in the new world, focusing on modern marketing strategies.”
Focusing on building tailored content to reach both existing and new customers, Unwin said the Next Program highlights the importance of maximising marketing for partners, an area traditionally cast to one side.
“Marketing knowledge in the channel varies,” Unwin observed. “Some partners have a website and view that as a credible marketing strategy.
“Others have a website and relatively strong social media skills but their messaging is off point so they’re not talking about anything that is unique or different.
“It’s crucial for partners to understand who they are selling to, which market they are targeting and who their buyer is. Once they understand this, they can then build content to reach these areas.”
As the business landscape changes, value-added resellers are realising the need to readjust and react to a market that is advancing rapidly towards a new way of doing business.
Irrespective of size of stature however, partners remain challenged nationwide by mixed marketing messages and cold customer leads.
“Every organisation is being challenged from a business transformation perspective as they struggle how to find new leads and build their business,” Unwin cautioned.
“Larger organisations may invest in branding but they still fundamentally don’t know who they are selling to. Lots of traditional resellers are still selling to everyone and anyone, that’s what they have always done.
“But now they are understanding the need for unique messaging and the importance of understanding the buyer to avoid saying the same thing as their competitors.”
In housing expertise across marketing leadership, strategy, content creation and social media management, Unwin said the aim of the Next Program is to help partners build a long-term, sustainable marketing engine that is always-on.
“Rather than running ad-hoc campaigns or relying on referrals, partners can become more strategic in how they approach marketing,” Unwin explained.
“Through the Next program, we provide advice on how to build out a marketing engine that is always-on but to achieve this, partners need a strong message and proposition.”
With a need to have both marketing sales capabilities aligned, the Next Program also deep dives into the selling techniques required in the new world, unlocking how partners can bolster cloud credentials across the board.
In light of growing Australian cloud investments - in a market viewed as a world leader in adoption - the race is on for resellers to embrace selling cloud to customers, as the risk of being frozen out heightens.
Central to this embrace is the sales function of an organisation, a function that has traditionally been coin-operated and driven by traditional goals.
Yet as cloud changes the game around buying patterns, contracts and compensation plans, partners must recognise and respond to the changing requirements of the workforce.
“When we ask partners where the biggest challenges lie, it’s always around sales, marketing and leadership,” Incredibleresults Co-founding Partner, Luke Debono, observed.
“These are areas the channel naturally struggles with because the majority are technologists who understand the technical aspect and enjoy building solutions and offerings.”
Working alongside vendor and partner organisations, Incredibleresults is a business coaching specialist focused on developing strategic sales and leadership plans, advising the channel both locally in Australia, and globally.
“As a partner, can you imagine what business might be like in two years’ time?” Debono asked. “Because the model you have today might not be right for tomorrow.
“Our approach, methodology and IP focuses on how partners can build successful and sustainable businesses for the future with increasing equity value.”
From a partner perspective, Debono acknowledged that while the make-up of the channel varies in size and financial capabilities, core challenges remain.
“Multi-national organisations often have financial securities that underpin their business model, but the smaller partners don’t all have that luxury,” Debono added.
“Many are running a business based on month to month cash flow without external funding yet still encounter the same challenges. How to effectively sell cloud based services, differentiate from the competition and continually add value to new and existing customers in a landscape where the pace of innovation is so rapid.”
“It points to how you look to break the link between headcount and profit and create innovate business models that monetise new opportunities.”
Driven by the mission-critical need to remain profitable, Debono said that in a competing cloud marketplace - where differentiation is slim – some partners are primarily competing on price, signalling a “race to the bottom”.
As reported by ARN, in light of striking business and technological shifts, the channel is churning at a rapid rate, with partners tasked with learning from the past to prepare for the future.
“Partners are challenged with the legacy of running their business in the old way,” Debono added. “They’ve got infrastructure and a business model that is the taxi driver to an Uber driver.
“The reality is that the channel is finding it difficult to move because they have a strong dependency on their existing business. They have to pay existing staff and existing overheads and because of this they can’t just switch to a new model overnight.
“The cloud model of monthly payments compared to a hefty upfront lump sum requires a new way of thinking.”
Shifting business models
As reported by ARN, globally, the channel has suffered a 30 per cent decline in the number of partners serving the market since the recession of 2008.
Take Microsoft as a core example - ten years ago the tech giant controlled an ecosystem that represented over a million partners worldwide, but today, it’s around the 600,000 mark as channel margins continue to be challenged due to eroding hardware, software and services resell opportunities.
As the large cash injections wane, Debono said value can be found in responsibly shifting business models, moving away from legacy to rapidly acquire new customers in the cloud.
“There was an initial view that partners could simply move from one business to the other, but that isn’t possible,” he advised. “It takes time to invent new business models, compensate staff and to run an organisation differently.
"Most partners are continuing to run their existing business and are spinning off a separate division or practice. It’s a business that looks completely different to the old one and crucially, doesn’t have the same overheads, legacy or underlining business model.”
Through starting a fresh in parallel, Debono said such a move allows partners to “break the rules” with greater security and freedom, triggering new revenue streams and exposing new customer bases.
“There’s value in building a brand new business with a new brand,” Unwin added.
“But partners must keep the old business running and not turn off the tap otherwise they’ll encounter a period where they won’t have enough revenue to pay their staff.”
As the dynamics of the market shift, the Next Program is focused around helping partners build a more sustainable business that capitalises on the changing dynamics of the market.
But as the industry evolves at a rapid rate, the onus is now on the channel to change tact.