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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.

This is achieved by making it easy for ISVs and ASPs to bring their products to market, and simplify the delivery model (pay per user versus licensing). CIO's can be comfortable with this model by still using the domain expertise of their traditional partners, while capitalizing on the cost and operational benefits of Cloud provision. For this reason, more vertically aligned system integrators and SPs are either partnering with ISVs to represent vertical industry specific ISV solutions or acquiring ISV's and so wholly owning the Intellectual Property (IP) and the assets. Going one step further, many are developing their own applications and so become ASPs and solution providers in their own right.

In the case of large Enterprises and the proliferation of business applications being available at low cost via SaaS, traditional IT departments are evolving. In the future IT departments will be profit centres with revenue targets to meet based upon turning I.T. infrastructure into a chargeable service. This may simply be cost allocation to other subsidiaries or business units for hosted infrastructure and applications; but increasingly likely will be scenarios like delivering an online business, or using transaction processing speeds to competitive advantage in the financial services industry, or taking market share in the logistics industry such as airlines and hospitality.

Calling the shots

As an upshot, the IT department will have less influence over the tools a business uses; so the business unit managers, not the I.T. department, are increasingly calling the shots for the applications needed to run one function of the business. An example is a marketing manager choosing the customer relationship management (CRM) system based on their unique business needs, and simply paying for usage in a Cloud scenario. The examples of where this is happening are too numerous to count. The challenge for the CIOs department is to contain and manage this.

This does present a unique opportunity for the CIO. That is to structure the IT department around the concept of a Cloud brokerage service to all other departments in the organisation. Progressive CIOs are developing this concept today, rather than find 6 different departments or business units are all paying AWS for hosted apps, SaaS, and storage out of their own OpEx, and - predictably - not getting the optimal deal, CIOs can provide a 'self-serve' brokerage service which provides the business unit's with the desired service, while providing optimal service levels, and within an sensible cost framework.

The winners therefore are the CIOs who proactively embrace Cloud services, by driving their IT departments to offer a brokered Cloud service, governed by migration services for the business units, within a structured service delivery framework. Moreover, the beneficiaries in the IT supply chain are the channel partners capable of consulting on, and assisting the delivery of such a migration and business innovation service. This means channel partners must increasingly evolve into providing vertical business specialisations. Generalist channel partners are likely to struggle at the expense of domain expert channel partners, selling into specific departments focused on their unique business function. This furthermore facilitates the workgroup and collaboration concept of users and business models, whereby the well-placed channel partner is a trusted advisor, and is therefore well entrenched in their customers.

Lastly, this will assist the concept of customer communities, whereby focused workgroups providing the same function/service but within disparate companies can communicate and share best practices. Examples here would be marketing departments, product development teams, legal practices, and healthcare specialists. Channel partners can and should facilitate this by assisting with the forming of such collaborating workgroups through tools like Conversation Clouds. This reinforces the trusted advisor and domain expert status of these channel partners, and facilitates the 'reference selling' concept within the workgroup. CIOs should encourage this model as it protects the domain expertise existing in the channel today, which if lost ultimately makes the CIOs job that much harder when looking for those trusted advisors - can they trust their local Cloud provider to have domain expertise in their business - maybe but probably not.

CIOs and business unit heads making informed decisions on the technology available to them to best operate their business' will increasingly need the expertise of specialist Cloud solution providers to assist with transition and Cloud migration services, and the expertise of domain experts in their given field will be needed. Identifying Cloud skilled consultants is a must, as is engaging the domain experts around given industries who can no longer rely on hardware and software licenses to maintain business validity, but can sell their industry specialisations either in partnership with the Cloud consultants and Cloud service providers, or/and as application service providers in their own rights. But caution - beware of people seeking venture capital simply by claiming their new-fangled offering is a "big data" solution.

- Gary Kinsley is the Founder of I.T. channel research company RIS Limited, and is Vice President of Channels, for Asia based Cloud consultants CloudFX and author of "If you want loyalty --Buy a dog."

 

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