There’s no doubt “the times they are a-changin'” in the channel. Just about everywhere a solution provider looks somebody is trying to turn an application into a service.
Google and Microsoft are leading that charge. The former wants to gain share at the expense of the other by getting customers to adopt Google Apps while the latter is obsessed with cannibalizing its own base of Office customers by getting them to switch to Microsoft Office 365 delivered as a service before that happens.
Many channel providers are not excited about either option. The margins associated with selling application services from either Google or Microsoft are fairly thin, and the ownership of the transaction moves from the solution provider to vendor. In effect, the solution provider becomes an agent for the vendor, which has a negative impact on the overall financial equity of the business.
The challenge facing solution providers is how to go about preserving and possibly even enhancing the equity value of their businesses. While no one can turn back the hands of time when it comes to the shift toward services, solution providers can start thinking about how application services might actually be a means to a larger end.
Case in point is Agosto, which was just named Google Enterprise global partner of the year. The fact of the matter is that productivity applications and email are services that customers now treat as utilities, said Aric Bandy, president of Agosto, a cloud product development firm. As a solution provider, you must be able to provide access to those utilities. But Bandy admitted that unless you’re also providing custom application development services on top of a cloud platform, it’s going to be difficult to be profitable.
That’s not necessarily something many solution providers want to acknowledge. Many of them simply choose to ignore the existence of either Google Apps or Office 365—at least until a customer forces the issue.
But no matter how a solution provider feels about applications delivered as a service, there’s a new application development reality in the channel concerning where and when a solution provider can add value that no amount of complaining about at this point is ever going to change.
There’s no stopping the shift toward services, but solution providers can start thinking about how application services might actually be a means to a larger end.