The impact of cloud computing has been transformative for every element of the channel – from the vendor right down to the end user. Here, Andrew Wilson, Head of Channel, Node4, explores the impact that cloud computing has had on the channel, the challenges and opportunities it has created, and how stakeholders are leveraging these to remain competitive.
As little as 10 years ago, the perimeters around different channel stakeholders were much more clearly defined. Whether an Independent Software Vendor (ISV), a reseller, or a carrier/system integrator, you knew your role and how it fitted into the overarching channel network.
Cloud computing has changed all that. Whereas previously the emphasis was on the physical, such as loading software onto a server or into a data centre, the introduction of cloud has profoundly changed the way in which businesses buy and consume services and applications.
Does this mean that the sale of traditional and physical infrastructures, or the business need for it, is diminishing? The honest answer would be ‘yes’, but that does not mean that the channel is doomed. While cloud computing has certainly created challenges for the channel, the real danger lies in procrastination – doing nothing to leverage the host of opportunities brought by cloud to the channel can be a business’ greatest downfall.
Brace for impact
The most profound influence that the rise of cloud computing has had on the channel is the way in which technology and services are consumed. It’s not so much about a more efficient means to package, sell and deliver the same hardware and software products but rather a business model ingrained in the fundamentals of how technology is consumed.
According to an April 2018 Gartner report, by 2021 the top five largest categories that will benefit from cloud spend will be Software-as-a-Service (SaaS), Infrastructure-as-a-Service (IaaS), Cloud Business Process Services (BPaaS), Cloud Application Infrastructure Services (PaaS) and Cloud Management and Security Services.
It’s therefore no surprise that channel partners such as ISVs have taken a hard knock. Large up-front investments, plus added costs from continual updates to software and operating systems, as well as expensive licensing fees are no longer desirable to customers. Additionally, the inability of many legacy systems to scale is extremely limiting in a business age when data growth is at its highest.
By contrast, cloud computing and the platforms on which it operates don’t need specific installations or ongoing maintenance. Cloud-based solutions can be implemented quickly and cost effectively, with little or no hardware costs and provide remote accessibility through the web as well as customisation capabilities in accordance with customer needs.
Also, the fact that cloud computing has freed up time and resources to allow customers to focus on their business makes it easy to understand why it has gained such momentum in the channel.
The silver lining
It may seem as though the channel ‘of old’ is on a one-way journey to becoming obsolete, but it’s quite the contrary. Businesses operating in this space are in a very good position to turn technical legacy challenges into opportunities, but the time is now to leverage these.
For system integrators:
With more than half of small businesses using cloud technology for sales, growth and productivity, the transition to cloud services has opened new avenues for SIs to provide value-added services to small and medium-size businesses. It makes sense for SIs to invest in a more diverse business model that caters to businesses taking on cloud and SaaS. For example, the hurdles faced by an organisation transitioning to the cloud from legacy infrastructures and systems are numerous, but present a great opportunity for Sis to oversee the transition from start to finish.
For ISVs:
The growth in popularity of Platform-as-a-Service (PaaS) may have replaced opportunities that were once owned by ISVs, but there are still a multitude of ways to leverage cloud computing. For example, incorporating the most important value propositions that cloud-based software offers can pave the way towards plenty of newer opportunities.
These include SaaS delivery and pricing models, mobile access, customisation and core functionality such as owned data centres for creating, managing and updating dedicated applications for each customer.
Reshaping business propositions in this way, supported by exceptional service in terms of both technical expertise and general service delivery, will help the channel to stay relevant and competitive in the cloud.
The next wave
It’s a given that the impact of cloud computing on the channel, driven by high service delivery expectations from customers will forever change how the channel operates.
Customers will continue to demand a high level of quality from service providers who understand their business, offer local customer support and have expertise that can improve operational performance. But in addition, they will be looking for the service provider to have the ability to deliver an application environment that enables business agility. IT channel partners, ISVs and SIs who proactively embrace and deliver on these propositions are destined to stay afloat in the cloud.
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