Almost every organisation in the IT space is moving to the cloud in some way or another. All the major software vendors now have significant SaaS offerings (albeit with disparate pricing models), major hardware manufactures are also getting in on the act, whilst most telecos are making major cloud plays as well.
But it’s the reseller channel where the change is probably the most pronounced. VARs generally have the scale and the product knowledge to sell software-as-a-service, but they are transitioning from a very transaction model and in many cases, a brand that isn’t recognised for technical integration. As a result, a lot are acquiring SI practices in order to offer a technical and consulting capability.
SaaS also presents a huge opportunity for smaller ISVs to expand their reach and they will undoubtedly play a major role in driving future cloud adoption.
The upshot of all of this is a market experiencing an unprecedented level of competition, where establishing and maintaining any kind of competitive advantage is increasingly difficult.
The days of channel players being all things to all people are as good as gone. To remain competitive, solution providers are going to have to develop deep specialisms and re-think how they go-to-market with them. We are going to see them taking a more vertical or horizontal focus and forging many more strategic partnerships with other companies to create the necessary scale. We are also going to see a progression in what companies are actually doing to make money as higher gross margins can be generated by things like managed services.
But maybe more significantly, we’re going to see new types of businesses emerging that look set to transform the industry landscape:
BORN-IN-THE-CLOUD businesses, these are solution providers who have no legacy or boundaries like traditional firms. These companies are already operating with very different business models. They bring in revenue on a recurring basis and are focused on driving a very different go-to-market model. Typically, they introduce ‘land and expand’ solutions to get in the door with either a simple meeting or a first application. From there, they are up-selling and cross-selling other cloud and non-cloud solutions. It’s a model that’s second nature and customer-focused and that more established firms are struggling to compete against.
NON-TECHNICAL SPECIALISTS. There’s all sorts of unconventional ‘horizontal’ influencers from the non-technical business community entering the market. For instance, travel agencies and accountants referring their customers to expense management and accounting software. This is because people trust accountants for advice on accounting-related matter and cloud is reducing the technical expertise that is needed to operate in these markets.
CUSTOMER-TURNED PARTNERS. Then you have customers who are figuring out that they too can get into the IT solution provider business. This is usually an IT department that figures out a great way to implement a new technology and then realizes that the solution would make a lot of sense for others in the industry, so they create an operation to develop the business.
HOBBYIST START-UPS. And you also have Start-ups. But not necessarily just the professional developer community, but hobbyist developers who are coming up with unorthodox new ideas especially in SaaS and mobile apps. Their ability to get to market without significant investment is dramatically improved by the proliferation of App Stores and Market Places.
It’s the channel Jim, but not as we know it!
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