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Cloud Computing Vendors: New Channel Alliances Are Critical

Now that the concept of Cloud Computing is gaining widespread market recognition and acceptance, the key to sustaining its initial success is enlisting a broader array of channels to market that will win the trust of a wider cross-section of SMB and enterprise users. While everywhere you look it seems that everyone is talking about […]

Written By

Jeffrey Kaplan

Oct 20, 2011

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Now that the concept of Cloud Computing is gaining widespread market recognition and acceptance, the key to sustaining its initial success is enlisting a broader array of channels to market that will win the trust of a wider cross-section of SMB and enterprise users.

While everywhere you look it seems that everyone is talking about the ‘Cloud’, there are still many mainstream companies, non-profit organizations and government agencies that are either unaware of the potential benefits that today’s Cloud alternatives can deliver. Or they’re uncomfortable with the threats that they perceive these services create.

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In order for leading Cloud vendors to overcome these concerns and convince reluctant IT and business decision-makers that it’s safe to move to the Cloud, they must team with a greater number of channel partners who have won the trust of their customers.

Ironically, many existing IT channel companies are equally concerned about the impact of the Cloud on their businesses. In many cases, they are afraid that today’s Cloud services will ‘disintermediate’ them because of its promise of a simpler set of more user-friendly solutions, and the direct sales and delivery models associated with the Cloud.

Despite the legitimate threat which the Cloud poses to IT service providers who are simply selling commodity hardware and software products, THINKstrategies sees plenty of opportunities for existing channel organizations, as well as new types of channel partners to emerge and succeed in the Cloud.

Channel companies can use the trust they’ve gained working with their customers to help Cloud vendors overcome customer uncertainties and accelerate the adoption process. They can also integrate and customize various Cloud solutions to address the specific needs of particular industries or geographies.

In fact, astute channel companies can offer an entire lifecycle of services to help their customers leverage the power of today’s plethora of Cloud alternatives to achieve their business objectives. These services extend from upfront assessment and selection to service deployment and management.

Channel companies help their customers do the following:

• Choose the right combination of Cloud solutions to meet their operating requirements.

• Configure the Cloud services to meet the specific business and technical needs.

• Integrate multiple Cloud solutions with legacy, on-premise systems and software.

• Optimize the performance and maximize the security of their Cloud resources.

• Re-engineer the customer’s business processes and train their people to fully take advantage of the Cloud solutions.

Up until now, Cloud vendors have been primarily focused on selling and delivering their solutions directly so they could acquire a solid base of customers and demonstrate the viability and scalability of their Cloud solutions. Now, leading Cloud vendors are putting more attention on establishing third-party channel relationships to extend their reach into new markets and deepen their penetration into existing market segments.

The leading Cloud vendors are also tapping new channels to promote and support their solutions. For instance, financial management SaaS vendor Intacct has established an alliance with the American Institute of Certified Public Accountants (AICPA), and its subsidiary CPA2Biz, to sell its solution to over 45,000 CPA firms.

A new breed of value-added reseller (VAR) is also emerging. An example is Veeva, which has developed a customer relationship management (CRM) solution for the pharmaceutical industry based on Salesforce.com’s Force.com Platform-as-a-Service (PaaS).

So, there is a future for the channel in the Cloud marketplace. But many established channel companies will have to reinvent themselves in order to keep pace with their customers’ evolving needs and survive in a changing competitive marketplace.

THINKstrategies is hosting a one-day forum to examine the changing nature of the channel in the Cloud, called the Cloud Channel Summit on Monday, November 7, in Mountain View, CA. For more information, go to www.cloudchannelsummit.com.

Kaplan is the Managing Director of THINKstrategies and Founder of the Cloud Computing Showplace. He can be reached at jkaplan@thinkstrategies.com.