Cloud Challenges Are On Tap for the Channel in 2014

By Michael Vizard  |  Print this article Print
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One of the biggest issues that channel partners face is the impact the shift to cloud will have on their cash flow and balance sheets.

En Pointe Technologies' Rapp explained that after relying heavily on the channel to sell Microsoft Office 365, the company is now cutting the commissions channel partners receive for reselling the most popular of Microsoft cloud services.

"Microsoft definitely needed channel partners to sell the whole Office 365 concept," said Rapp. "Now that they've accomplished that, Microsoft is starting to slaughter the fees of the partners."

Microsoft, of course, can get away with that because it dominates the personal productivity application category. But it definitely makes Microsoft Office 365 less profitable for the partner to sell. Other vendors face stiffer competition, so they may not be able to get away with cutting fees to partners as boldly as Microsoft. Nevertheless, Rapp said that cloud computing definitely gives vendors more control over the customer because they, rather than the solution provider, own the transaction with the customer.

The good news is that as the economy continues to improve, and IT budgets are expanding in 2014. Most of that portion of the IT budget allocated to new technologies is going to be spent on laying the foundation for the adoption of private clouds managed by internal IT organizations.

As a result, the most pressing challenge facing solution providers in the channel may simply be getting customers to actually embrace those emerging technologies.

"To be honest, the biggest challenge is getting the customer to actually listen to what you can do for them," said Anthony Fiore, a senior engineer for Integrated Systems (iSYS). "Most of them are so busy trying to keep manage what they have [that] they don't have the time to listen to anybody else."

Of course, given the current scarcity of IT professionals with the right skill sets to implement those technologies, this all assumes solution providers actually have the ability to implement next-generation products and services.

"The skill sets we have today are often not the ones we need to implement these new technologies," said En Pointe's Rapp. "I may give someone a $25,000 increase in their salary just to hire them, only to see somebody else hire them away for $40,000 more six months later."

Multiply that by a few dozen engineers, and it's easy to see how emerging technologies are creating opportunities that at the end of the day may not do as much for the solution provider's bottom line as everyone might hope.

Michael Vizard has been covering IT issues in the enterprise for 25 years as an editor and columnist for publications such as InfoWorld, eWEEK, Baseline, CRN, ComputerWorld and Digital Review.