Are You Ready for a Born-in-the-Cloud World?
By Carmen Sorice and Cristina Greysman
It's clear that the cloud has changed how business is conducted. What is perhaps less clear is how it's reshaping the traditional reseller channel as well as creating a whole new world of "born-in-the-cloud" partners.
A Primer for Born-in-the-Cloud Providers
IPED Consulting and Research has defined five types of born-in-the-cloud providers.
--Cloud consultants design and architect cloud solutions for their clients.
--Cloud agents and cloud resellers sell third-party cloud offerings and often come from a telecom background.
--Cloud brokers aggregate cloud solutions with integrated management services. They use algorithms to help customers pick the right cloud solution for their needs of the moment, and then the cloud brokers are paid a fee from cloud providers.
--Cloud application providers build software-as-a-service (SaaS) applications. To them, the cloud is just a delivery mechanism.
--Cloud service providers build and manage infrastructure for hybrid clouds.
Born-in-the-cloud companies are different from traditional IT solution providers. Most importantly, they lead with a cloud solution when talking with potential customers, while a traditional IT approach might bring in the cloud as a last resort if a hardware sale won't succeed.
Because the cloud is built around a pay-as-you-go model, born-in-the-cloud businesses are completely based on recurring revenue, whereas traditional IT partners rely on making large, one-time sales. This represents a tremendous shift in how companies look at the customer relationship, and it also extends to how the sales force is compensated.
To born-in-the-cloud partners, the IT organization is just one of their clients. They sell to decision-makers throughout the organization, including the head of marketing or sales, the chief financial officer, and the chief digital officer. Born-in-the-cloud companies may or may not bill the customer. However, because of their reliance on recurring revenue, they still want to "own" the customer relationship.
But what if your company was founded before 2010? Can you transform your more "traditional" business and be "born again" as one of these types of companies to take advantage of all that the cloud has to offer?
Before you fire your salesforce or sell your company, here are four questions to ask yourself.
Who Are the Vendors You Represent?
How much of your "line card" contains cloud services? Born-in-the-cloud companies are selecting SaaS vendors such as NetSuite, Salesforce.com, Microsoft (Azure, Office 365 and Dynamics), and public clouds from Google, Amazon and others. How many of those vendors are you offering to customers? If you are not talking about cloud services to your customers, someone else is.
To Whom Do You Sell?
In many cases, born-in-the-cloud companies are not even talking to folks in the IT department. Instead, they are talking to line-of-business owners and even specializing in a vertical such as retail, legal or real estate. Where are your contacts in your customers' organization? Are they solely in the IT department? If so, consider ways to build relationships within the lines of business while maintaining IT as your champion.
How Deep Is Your Developer Bench?
Born-in-the-cloud companies have a developer mindset. They expect to have access to APIs and make their money building their own intellectual property based on third-party cloud services. How many developers do you have on staff that can do that? If not many, try participating in developer and independent software vendor communities as well as attending conferences focusing on the cloud, such as AWS Reinvent, Google I/O, Salesforce's Dreamforce, and Dockercon, to find the people who can.
What Percentage of Your Revenue Is Recurring?
Born-in-the-cloud companies earn their money almost exclusively on a monthly recurring basis, with a healthy dose of professional services wrapped in. Look for ways you can increase the amount of recurring revenue you can add to your business. Reselling cloud services is one way to start. Some vendors will do the monthly billing for you, or you can leverage your distributor's cloud marketplace. But make sure your sales force is compensated and trained accordingly.
Opportunities for born-in-the-cloud partners are abundant. Their sweet spot is selling into small and midsize businesses and into vertical markets that are typically not very technical (such as real estate, legal and retail).
Whether you're well on your way to transforming the way you do business or are still planning your strategy, the good news is that the pie is large. There's still plenty of opportunity for your company to carve out a slice in the cloud services market to solve old business problems in new ways using the cloud.
Carmen Sorice III is senior vice president of global channel sales and programs at Sungard Availability Services (Sungard AS).
Cristina Greysman is the senior director of partner experience for Sungard AS.