Channel Looks to the Cloud as Microsoft Courts SMB Partners

By Nathan Eddy  |  Print this article Print

Clouds on the horizon? A report from AMI-Partners finds increased competition from major telcos could mean stormy weather for small to medium-size businesses (SMBs) operating in the cloud computing space.

A report from research firm AMI-Partners found the rapid growth of cloud computing is making it much easier for small to medium-size business channel partners to provide a broader range of offerings on a 24/7 basis at a lower cost and with fewer IT staff, including services such as SaaS and managed IT services. The report predicted that as a result, SMB channel partners could lose more than 200,000 IT jobs over the next decade.

According to AMI-Partners’ Cloud Computing Research studies, SMB channel partners will play a critical role in bringing cloud-based services to SMBs in the early years. However, as large companies scale up cloud-based offerings in coming years, they will make greater use of automation, reducing the need for IT staff employed by local channel partners, who have traditionally dominated SMB market spending, leading to significant attrition and consolidation in the industry.

While the channel partners will need additional sales and account management personnel to grow their business, the report predicted reduction in IT staff would "far outweigh" growth in other jobs. As a result, AMI expects a net reduction of 200,000 - 250,000 jobs over the next decade, out of the over 1.3 million people currently employed by U.S. SMB channel partners.

"The great recession of the last year and a half has significantly increased SMBs’ interest in adopting various cloud-based services as they look for ways to meet their IT needs while keeping costs under control," says Anil Miglani, senior vice president of IT infrastructure research at AMI-Partners. "However, cloud computing cuts two ways for small SMB channel partners. It allows them to offer new kinds of services and solutions to their SMB customers without having to incur high initial capital expenditures. But automated service delivery via the cloud will also reduce the need for internal IT staff."

The report comes as Microsoft announced a program to reach out to SMB channel partners operating in cloud computing. ChannelWeb reported the new division, headed by ten-year Microsoft veteran Cindy Bates, would enable the company to better compete against companies such as Google. According to an internal memo obtained by ChannelWeb, the division is intended to attract the thousands of SMB solution providers that are "shaping up to be a very competitive battleground" and ensure a "foundation for cloud and annuity penetration."