Long seen as an essential cog in the IT eco-system, the channel has placed products and solutions in the hands of the customers for countless years.
Fast forward to 2015 however and the rise of Cloud computing has lead to fears, founded or unfounded, amongst the channel of being cut out in face of decreased relevance of traditional channel roles and revenue streams such as system installation, customisation and maintenance.
Coupled with losing percentages on licences for physical distribution, which disappears altogether, the debate at the inaugural Reseller News Distributor Roundtable moved onto whether the channel, in an apparent new age of IT, can make serious cash from the Cloud.
“Resellers need to ask themselves what were they doing before Cloud?” says Mark Hardie, Senior General Manager, Datacom, when discussing whether reseller business models require adjustment as the Cloud usage grows across organisations. “There’s very little change from then to now in that respect.”
In the era of on premise software, customers have depended on the channel to analyse their business problems, map them to the available IT technology, and to a degree, hold their hands though the entire process of implementation and maintenance.
Yet today, the customer knows more, seeks more and when it comes to value, demands more.
To combat this changing dynamic, and ultimately derive value out of it, Stephen Parker, VP Market Research, Rhipe, believes the approach for resellers is three-fold.
“The key for resellers is to continue utilising the three Rs in sales - Reenforce, Remind and Reveal,” he explains. “Resellers should reenforce what they’ve always done and remind themselves of their history.
“When I talk to systems integrators, initially many of them who were drifting into selling boxes saw Cloud as a threat but now they are remembering their history which was built around integration and advice.
“That’s the real heritage and when you remember that then for system integrators Cloud becomes a massive opportunity because there are more integration issues, more advice required and more challenges to overcome.
“And of course you have the reveal, such as the ‘Oh did you know we have some other new stuff also?’”
Recalling an earlier conversation with resellers, Parker used the upcoming end of support for Windows Server 2003 as the perfect example to illustrate his point.
In making it to the table, the Rhipe chief questioned whether partners should pursue option A - getting the customer to simply upgrade - or option B - engage in a sophisticated conversation about bringing technology into the modern day.
Touching on the need for resellers to become more open minded when it comes to selling cloud, Darryl Grauman, APAC Services and Cloud Director, Westcon believes that from a distributor’s perspective, embracing new ways of solving business issues, chiefly through cloud, is central to reseller success and profitability.
In truth however, there are so many new entrants to the market, those that are born in the Cloud and know how to operate. So what should resellers do to guarantee relevance and ultimately, revenue in the Cloud game?
The premise to become profitable is simple, according to Grauman.
“Long gone are the days of discussing renewals 90 days in advance,” he warns, “this landscape has completely changed because we’re seeing a refresh of quotes and this is a quote to move to the Cloud.
“End-users are becoming more educated and they are now asking questions upfront about the Cloud. They’re seeing all these renewals coming up and are wondering about Cloud and how much it’s going to cost to get there.”
Therefore Grauman concludes the knock-on effect rippling through the market is that the renewals process is “not 90 days, it’s 270 days out and people are now asking the right questions.”
“We’re expecting our resellers and customer base to be asking exactly that question - what does it look like in the future?” he observes.
Based on in-depth analysis of customer business goals and requirements, resellers can help develop and execute a customised, holistic strategy to use cloud to drive not just savings, but revenue and growth.
“What do you want to do?” Grauman adds. “Can we help you with a consultative phase to help you with what you should be doing with this piece of technology? It’s about resellers providing these options and being schooled in it.”
Echoing the earlier point of Stuart Stitt, VP, Managing Director, Fujitsu New Zealand, Grauman acknowledges that the industry at present houses architects that “are good because they are open to Cloud” but conversely, is still made up of those that are really closed to the option, a position which could result in reeducation or reemployment five years down the track.
In hosting a table of distributors and resellers, all operating at the forefront of the channel, it’s typical for the discussion to stir up debate and unsurprisingly, disagreement.
The overriding consensus when it comes to Cloud, irrespective of the best approach to generating a surplus, is that for the box movers still in operation today, “you’re screwed because of the Cloud.”