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Guest Opinion: Why CIOs should care about the impact of ‘Cloud’ on their traditional suppliers

Gary Kinsley | May 2, 2014
How cloud computing is impacting the channel partner ecosystem.

Gary Kinsley 

Photo - Gary Kinsley, Founder of RIS Limited, and VP of Channels, CloudFX.

 

Chatting to the director of a large venture capital [VC] fund this past week, he was laughing that one enthusiastic IT start-up had got in front of him on the presence of a 'big data' solution. My VC friend, who's technically savvy, saw two minutes into the presentation that this solution actually had little to do with 'big data'. When he challenged the hopeful investee, the lad answer "well everyone's talking about 'big data' so it seemed like a good idea to hang our product on that concept".

The VC didn't elaborate on whether they pursued the investment, and the story was told in good-humour, but it does raise a good question regarding IT trends and how impactful they will be on the way in which we do business, which bring us to the point of this article.

A less humorous story is that while in discussion with the local manager of a large distributor (not ASEAN based I should stress) this same week, he stated that they had transacted with "12-14 percent fewer channels partners this quarter vs. the same quarter for the previous year. These partners had gone out of business largely on account of not recognizing the impact of change as a result of the evolving Cloud business model".

He went on to say that they hadn't see a total drop in total number of channel partners transacting, but that the model had shifted to bring in new Cloud channels they'd not transacted with previously. His line was "the guys who think there's still a viable business in selling hardware and Microsoft upgrades are going out of business fast". He may have been exaggerating, but regardless the Cloud is having a huge impact on how traditional channel partners make money today, and how they will do-so in future.

This is important to CIOs as their historic IT model of supply will change. CIOs need to be savvy as to where Cloud is assisting their business by providing a more efficient (read lower cost) processing and storage infrastructure; and where domain expertise is being provided by channel partners who will need to shift the way in which their domain expertise is charged for.

Predicting the evolution of the channel go-to-market model and how channel partners themselves will adapt will be governed very much by customers buying behaviour. The single largest trend in the I.T. industry today is the concept of 'Cloud'. Like 'big data', while an overused term the concept has had a huge impact on how enterprise customers enable their workforces, how service providers deliver services and make money, and how channel partners need to evolve to meet these new business models. Some channel partners are proactive seeing the opportunity, while others are reactively jumping on the latest jargon, and others still will miss the boat altogether.

Traditional channel partners, by which we'll focus on system integrators, solution providers, consultants, "resellers"  typically come from having domain expertise in a particular market, be it banking, government, pharmaceutical, petrochem, etc., and set themselves up as technology providers in that vertical space with a handful of friendly customers.

Ideally their business grows from there, as they expand their services, technology understanding and account-reach into similar accounts on the back of their domain expertise.

 

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