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Cloud in the channel... a "matter of life or death" for Kiwi resellers

As the struggle to make real money from cloud continues, Heather Wright polls some experts for their views on the road ahead.

Gartner's Michael Warrilow doesn't beat around the bush when asked about the importance of the New Zealand reseller channel evolving away from their traditional business model to include cloud offerings in some form or another.

“It's a matter of life or death for their business. If not in the short term, then in the medium to long term.”

The Gartner research director says survival will require adding value on top of base platforms.

“Traditional partners will evolve to sell less licenses but become the primary route to market for subscription offerings, where they will also add extra value.

“It will be the path to survival. But there will be many partners not successful in it. “The assumption you can continue just by selling hardware and licenses is getting dangerously close to becoming untrue, if it isn't already.

“New Zealand organisations are very savvy. Cloud may not have taken half of [a reseller's] business away, but it will come. We're close to a tipping point.” He says even looking at the software side, SaaS now accounts for 15-20% of all software.

“It is staggering how quickly it has come.” While Warrilow's picture of the future for resellers may initially appear grim, he says that's not necessarily the case. “It depends on whether you're a glass half full or glass half empty person.

“But it does need to be carefully considered. If you do not acknowledge, adjust your business, adapt and embrace it, go past fearing it and treat it with the seriousness it deserves, you should probably sell the business and get out now.”

However, he says opportunities do abound for those prepared to think a little differently from their current business offerings – from working with the big players to provide a more personal service, to aggregating offers for a specific vertical and white-labelling.

“Amazon is very much of the retailer mentality. It's not set up for enterprise engagements and can't do the handholding many enterprises desire,” he notes, adding that the same applies for some of the other big name offerings traditionally thought of as big competition for resellers.

He says even when customers look to global cloud players for some of their solution, there's a good chance they'll still want a local portion in combination with the global players offering.

“There are good reasons to maintain some of your [customers] data in New Zealand, but then leverage the global scale of say, Google, for reach. And that can be part of the strategy.

“You need to find the right mix of suppliers.” Finding that right mix, can however be easier said than done, and Warrilow says it may not be the traditional names which succeed.

Amazon and Google are, in many ways, newcomers, he notes. It's not just resellers who are being caught up in all the changes cloud is bringing. Warrilow points to Ingram Micro as a distributor which has looked at its role in the cloud environment, and made changes.

“They're offering cloud-like services, acting more as an aggregator, reselling cloud IaaS with an array of white-labelled offerings. “It's a range of licensed services that partners can white-label.”

John Drayton, VMware country manager, says resellers too, will ultimately become service aggregators, providing a front window to available services, which will be customer delivered out to end users.

“It will be a consultative value add process as opposed to a procurement process.”

Arron Patterson, EMC New Zealand CTO, too, believes the way forward will involve aggregation, noting that the traditional reseller business of providing core infrastructure and services to support and maintain the lifecycle of in-house applications is in ‘rapid decline’.

“But as businesses begin to build a portfolio of public and private cloud services to deliver business processes, they will need assistance from resellers in order to identify their requirements and to evaluate available options.

“As this portfolio of services grows, resellers can assist by providing customers with solutions to measure, monitor and manage multiple cloud services to ensure that service providers adhere to SLO, governance and compliance requirements."

Patterson says a further opportunity for resellers is to build proficiency in an industry vertical, understanding the specific challenges of that vertical and providing a catalogue of private and public cloud services consolidated in an easy to consumer portfolio for customers in that industry.

“End-users are asking for simple, cost effective, easy-to-consume services that enable them to support and transform their business processes,” he notes.

“Resellers should be proactive in discussing the availability and applicability of cloud services in their industry in order to build trusted advisor relationships with their customers and ensure they have a role as customers embrace cloud,” he adds.

For Part 2 - Check back to The Channel on Thursday