The Cloud, Disintermediation, and Where You Fit
By Sam Liu
Imagine a world without grid-based electrical service such as those provided by large utility companies. What would that look like? You’d have an ecosystem of companies that manufacture generators, distributors who stock an inventory in various regional locations, and a community of resellers and service providers who would offer electrical service to customers by selling generators, installing and maintaining them at the customers' locations.
Well, that world is not unlike the world of IT prior to cloud computing.
Now, add grid based electrical service into the picture above, and think how that ecosystem may change. First, the manufacturers who built generators would quickly get into the grid business or be out of business, or find themselves in niche markets. Distributors would face the dangers of being disintermediated since one of their primary value props (i.e. inventory) no longer would exist. Service providers would find themselves looking for other ways to provide value since there’s no longer a need to install and service generators. And customers would be faced with the decision to go with electrical grid services or keep their old generators, or both.
Now let’s bring this back to the world of IT, and specifically what it means for the channel.
If you’re a distributor now is the time to consider changes in your business model. Already in danger of being bypassed as more and more manufacturers sell and ship direct, cloud solutions can bypass classic distributors altogether. As this comes to fruition, distributors could be left with just credit and financing services, which some manufacturers may take on. To address these issues, distributors in the world of cloud computing should look at business models where they can offer customer-facing storefront solutions that make it easier for manufacturers to sell direct to their customers, and for customers to find and procure solutions more easily with the manufacturers. Staying in the middle of this will allow distributors to participate in the transaction and maintain their value.
If you’re a VAR or a service provider, these are confusing times. You’re no longer dealing with physical bits or hardware, but rather getting a core component of your service from the “cloud”. However, out of the confusion comes opportunity. Customers are equally confused and will look to VARs and service providers for expert advice. This customer intimacy and resulting face-to-face relationship that VARs and service providers have with their clients will become ever more critical. A VAR or service provider needs to quickly get on top of this trend –get educated, talk to their vendor suppliers and become experts in this new paradigm. Other opportunities include expanding their portfolio by representing a larger set of cloud application solutions since they don’t need to spend as much time dealing with physical hardware and software. This is also a great time to seek out opportunities around partnerships that may have been bound by location dependencies in the past.
Cloud computing also opens up the door for application developers. Not only will server-side cloud architectures enable lighter and faster app development, but the new wave of mobile computing devices such as enterprise tablets presents new opportunities for third party developers. Most enterprise IT departments simply don’t have the resources and expertise for mobile application development and will look more and more towards third parties to fill this need.
Net-net? Cloud computing is coming, but it will not replace all IT architectures. It depends on the application, maturity of the technology, and the economic benefit to making the change. And customers will need help in this transition for some time to come. Which means, for channel partners, much of your current business value will remain valid, but it is definitely time to get proactive in order to stay in front of this change and maintain value for your customers.
Sam Liu, is vice president of Marketing at Partnerpedia, a a provider of private label marketplace and enterprise app store solutions designed to leverage the power of social commerce and partner communities and to help enterprise companies monetize vendor partner strategies through partner enablement, collaboration and go-to-market solutions.