Channel Role: Cloud Pragmatists in IT Services Age

By Howard M. Cohen  |  Print this article Print
cloud strategy, IT services

The cloud has brought a new pragmatism to the channel and prompted companies to modify their businesses to adapt to a new age of IT services.

It is only those resellers who have depended upon slim margins on servers, storage, and related hardware and software sales who need to come up with an alternative income stream.

The good news is that these partners are giving up slim and shrinking profit margins and high operational overhead in exchange for the opportunity to sell fundamental services that do not require their direct involvement and bring high profits repeatedly, month after month, for years. Yes, the holy grail of computing—monthly recurring revenue (MRR).

Lest we be guilty of deluding channel companies into the common thinking that MRR is all they need, the end of selling server platform products does not bring with it the end of server platform services. Yes, you're going to see a reduction in product-attached services, such as installation and integration, but wherever their servers and storage are physically located, customers will still need your expertise to monitor and manage them along with network carrier connections and everything else it takes to deliver high-quality compute and communication services.

Seeking New Types of Partnerships

Many channel partners will worry where the marketing money is going to come from once they're no longer selling servers and storage products, and there are three answers to that question.

  1. Smaller product vendors need you more than you need them. Many are more than happy to invest in co-marketing ventures that help them sell more products while you enjoy more service sales. Look to utility vendors, compliance products, network access control and security vendors, and the like.
  2. Your new partners will be the cloud service providers whose services you now sell, including public cloud software-as-a-service (SaaS) providers as well as basic cloud server platforms delivering infrastructure-as-a-service (IaaS). Once you've proven you have the ability to market their services effectively, many will gladly make investments.
  3. Your own increased operating profit margins (yes, increased) become an available source of marketing dollars. Just figure out what proportion of them you're willing to invest and what that will buy you.

The other partners you need to actively seek and select are those who will provide the services that you yourself will not. There are many national and global organizations designed to help you find and vet these partners. Their services will also increase your profit portfolio.

Howard Cohen has spent 30-plus years as an executive and community leader inside the IT channel. He now writes and presents about it in Channel Insider, Redmond Channel Partner, Insight Technically, Channel Partner and more.