Thunderclouds approaching

Many resellers in the technology channel wince at the familiar term 'box-dropper'. While this business style did exist at a point in time, the need for resellers to add value beyond the transaction is now well known and understood. Today, even a simple implementation requires installation, configuration and a set of other related activities.

Of course, the entire model is turned on its head when customers start to procure directly from vendors, through the Internet. Cloud-based solutions mean that boxes don't get dropped (at least not on-site). It sometimes means that deployment and additional services are not required. Some resellers see storm clouds. Some see a morning mist that will be gone tomorrow.

Of course, cloud computing is not new. Remember application service providers in the 90s? Then, 10 years later it was 'on demand' or 'utility' computing. Remember Sun's John Gage with his line: “The network is the computer”? That was in '84. Many in the technology channel are a bit tired of fretting about something that never seems to happen.

This time, it's different. High-speed, highly reliable, affordable bandwidth means cloud computing is finally not only technically possible, but is already earning cloud computing vendors billions in revenue, and it's growing fast.

If technology resellers weren't worried before, now it's time. Thunderclouds are approaching for the channel, and it's time to think where to hunt for a silver lining.

Software as a service will not come marching up as a grand revolution, eliminating existing infrastructure. Rather, it will wander in the back door, and then grow, and grow. One day, the IT manager might be playing with online document services - sharing it with his team, and the next, it will be business users starting to utilise a Web collaboration service for work they might have discovered when browsing Facebook. In yesteryear, it might have been just anti-spam, but tomorrow it could be the holistic management of e-mail.

The advantage for the channel is that it's not a revolution but rather an evolution. There is time to adapt, because customers will not be outsourcing completely to the cloud anytime soon. But the clock is ticking.

Some resellers see storm clouds. Some see a morning mist that will be gone tomorrow.

Grant Hodgkinson is channel and alliances director at Mimecast SA.

The bottom line is that unless a technology reseller has a service offering, there's not a lot they can do besides act as sales agents working on commission. There's nothing necessarily wrong with this - do it often enough, and the incremental monthly revenue over a volume of customers can be pretty tempting. Sadly, though, there is very little room in the market for a “cloud order taker”, so the reseller could end up as one of many organisations competing for a quick buck.

The key lies in being a valuable decision-influencer for customers, helping them transition to the cloud, providing fulfilment services along the way. This could mean making solid recommendations on cloud providers to clients. Resellers will need to know what cloud vendors are offering, and which are worth recommending. (Just because a vendor operates from the cloud, does not mean they are here to stay.) Naturally, remember that technology uptake remains a challenge for customers - cloud-driven or not. How is the reseller positioning itself to assist with this transition?

This also means developing a relationship with a cloud provider to work out where the reseller's technical and business skills, client relationships and industry partners can be brought together to create an enhanced solution.

Just some of the areas that resellers will need to add value are network connectivity (critical to the client's experience, and the cloud provider's ability to deliver), and security (pretty top-of-mind for prospective customers in this environment). Training and change management will also be required by customers moving to the cloud, as often, the vendor is pretty hands-off. Lastly, resellers must be prepared to understand their role in helping configure the solution to the customer's need. Cloud-based solutions are becoming more complex as they mature. This denotes a need to understand the technology end-to-end, the same way that would have been done for on-premise vendors.

Give some relevant and specific thought to the current sales team. It may need to be redesigned - once a customer has signed onto a cloud-based service, the reseller will hopefully earn annuity income from commission. The reseller won't get to go back every five years and do a large technology upgrade, as cloud-based means the tech is always the latest and greatest. To grow the business, the reseller will need to either find more customers (and they're not limitless), or up-sell the current ones to additional services.

Here are the key steps:

1 Develop an understanding of software as a service at a fundamental level. Understand how the services and technology being offered today are moving to the cloud.
2. Research appropriate cloud vendors. Understand what makes them tick, and any risks to their businesses. If customers are trusting cloud vendors with their data, they will want assurances that systems will be available in the future. Customers will expect the reseller to know this.
3. Define the value proposition to customers and vendors being supported.
4. Finalise the revenue model. Cloud-based services often mean incremental annuity revenue, and no up-front capex. How is the reseller going to sell these services, and more importantly, how is the reseller going to incentivise its sales teams?

The cloud has been a long time coming. For resellers it's been on the horizon far away. Now it's here, and it means business. It's time for resellers to start some hard planning.