Cloud Nine or Getting All Cloudy?
- Cherry B
- Jun 20, 2016
- 3 min read
If you are active on social media, almost everywhere you turn, flip and refresh, news and launches of cloud related products are seen. It is for certain, that the transition of the next engine that drives collaboration and solutions is underway.
As a vendor and distributor, this transition would also mean a re-look into the business strategy, the supporting infrastructure, and the channel eco-systems. The success or failure of these components would determine if the choice is a cloud nine or it gets more cloudy.
In today's article., we offer to look at some of the key aspects of transformation from a distributor's perspective.
Product Offerings
Meeting revenues will more likely be a lot tougher with the usual go-to-market strategy. After all, the street price of a cloud-based product is only a fraction of a on-premise perpetual license. The traditional hardware plus software bundling would need to fine-tuned.
The focus on more complimentary products like security, analytics and collaboration platforms will be more viable and thus be more prominent.
A distributor could not afford to play the waiting game and do nothing, if they are looking to be a leader in the distribution space.
"complimentary products like security, analytics and collaboration platforms will be more viable"
Channel Eco-System
Take count of the types of channel resellers you have in your current eco-system. How many application partners, system integrators, education and services partners do you currently have? And how many of your partners are cloud-ready?
What is the company's anticipation of the number of portfolios that are cloud related?
Do you have an intentional channel recruitment or incubation program to groom cloud-ready or to-be partners? How many more such partners would you need in your organisation against the company's forecast of cloud-based products in the coming years? Do you take a reactive or proactive approach in recruiting such cloud partners?
What would be the ideal ratio of cloud versus non-cloud partners in the future eco-system? Clearly, the different types of partner breed will consume different portfolios of yours at different rates.
Being proactive in channel management in relations to cloud transition would be needed for the future survival of a distributor.
"Do you take a reactive or proactive approach in recruiting such cloud partners?"
Backend Infrastructure
An effective transformation involves People, Process, Product and Technology. While we
make transition in resellers (People) and portfolios (Product), there is a need to improve and align the Process and Technology part of it as well. It would be useless to own a brand new and trendy electric car when there are no service centers and battery charging stations to support it.
Backend supporting processes need to be tweaked to make ordering and reseller recognition of cloud products seamless and effortless.
The system that you have will need to be robust and scaleable to take in the increasing volume of cloud-based products, each with different expiry datelines.
A perfect frontend strategy will be useless is there is a weakness of backend process and systems.
"A perfect frontend strategy will be useless is there is a weakness of backend process and systems."
Annuity
Due to the growth of cloud services, the channel partner of the future will have a business model that differs significantly from the traditional hardware reseller. One aspect of this new model is a greater dependence on recurring revenue. Some call it subscription. Others named it maintenance.
As channel partners evolve their business models, both vendors and distributors must rethink their channel programs to keep stride. Channel partner performance will be measured according to new criteria.
The importance of renewal rates will take dominance. Both channel partners and distributors need to concoct, framework and execute a different value process to make renewal compelling for the consumers. The better the perceived value, the higher the renewal rates, the more profitable the business.
"One aspect of this new model is a greater dependence on recurring revenue."
While there could be a longer list of laundry necessary to make the transformation of cloud business effective, the above suggested points are some of the more crucial pillars within a distribution business.
We'd love to hear from you if you are more important factors to introduce. We warmly welcome your views and perspectives.
Cherry-O!
Morgan.LIM@3ds.com
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