Cloud Solution Provider Paradox: Promise and ProblemsBy Michael Vizard | Posted 2016-04-29 Email Print
WEBINAR: Live Date: September 27th, 2017 @ 1:00 p.m. ET / 10:00 a.m. PT
Take Advantage of Cloud Backup to Kick-Start Your Disaster Recovery REGISTER >
ANALYSIS: Although cloud solution providers have made clear strides, a key issue for companies in the channel is finding the best spots to add value.
The cloud solution provider faces a complicated paradox: There is no shortage of opportunities—or obstacles—in this burgeoning field. This irony, though common in the business world, is particularly pronounced in the channel.
The movement of workloads in the cloud challenges business models that many solution providers have relied on for decades. A key issue for companies in the channel, including cloud MSPs, is finding the spots where they can add value.
However, as cloud computing continues to mature, those spots are becoming more apparent. Although spending for "the greater cloud"—including software as a service (SaaS), platform as a service (PaaS) and MSP cloud solutions—is projected to exceed $500 billion by 2020, IDC reports that more than half of cloud service revenue is now generated indirectly via one channel or another.
Rather than merely reselling Microsoft solutions, such as Office 365, or infrastructure-as-a-service (IaaS) offerings from Amazon Web Services (AWS), cloud solution providers are becoming more sophisticated about where they can add value. In general, cloud solution provider opportunities fall into two main categories. The first is to combine products and cloud services in a way that creates a unique solution. The other is to help customers integrate a broad array of services.
Cloud Solution Providers: Differentiating Their Offerings
Differentiation is crucial to the success of cloud MSPs, distributors and other solution providers.
When it comes to combining products and services in a unique way, Data Resolution, a provider of managed services stands out. Rather than simply ceding the Microsoft SharePoint in the cloud market to the tech giant, Data Resolution created its own Microsoft SharePoint service running on AWS.
Data Resolution CEO Jim Pathman explained that as it turns out there are lot of companies that prefer to standardize on AWS rather than Microsoft Azure in the cloud. "It's cheaper to run Microsoft SharePoint in the cloud, but it's not necessarily easier," Pathman said. "We help do the migration and integration and then charge a premium to monitor the system."
At the other end of the spectrum, it is also clear that organizations are starting to look for external help once they subscribe to their third or fourth cloud service. Integrating multiple cloud services and existing on-premise data winds up being too big of a challenge.
For that reason, distributors, such as Ingram Micro and Tech Data, are betting heavily that cloud solution providers will be more relevant than ever as long as they do not focus only on reselling low-margin services.
Cloud Solution Provider Investment Needs Are Less Daunting
Some financial pressures have eased for the cloud solution provider.
"There's going to be more profit at the middleware and application layer," said Renee Bergeron, vice president of global cloud for Ingram Micro. "The good news is the level of investment required for solution providers to operate in that space is not what it used to be."
For example, the cloud solution provider no longer has to stand up its own integration platform because it can now leverage integration platform-as-a-service (iPaaS) offerings made available as a cloud service.
Stacy Nethercoat, vice president of TDCloud for the Americas at Tech Data, said the distributor has seen a marked increase in the sophistication that solution providers are bringing to the cloud. For that reason, Tech Data recently agreed to resell the CloudConsole developed by ConnectWise to provide access to a professional services automation, or PSA, service hosted in the cloud.
"The maturity level is definitely greater," Nethercoat said. "You're seeing a much greater solutions focus."