EXCLUSIVE...The real story on Westcon’s cloud

Westcon's Darryl Grauman is frustrated and worried for some of the resellers he's worked with for many years.

Westcon's APAC services and cloud director believes some Kiwi resellers aren't moving fast enough when it comes to cloud, and he worries about what the next few years will bring for them.

"I'm lucky enough to have a market view of the Asia Pacific region," says Westcon's APAC services and cloud director."In my own personal crystal ball, I can see where the market is going.

"A lot of the resellers are people I have worked with for years and it frustrates me that they can't switch their thinking to move fast enough into the cloud. It worries me. What will happen to them?

"But at the same time, it's their business and their decision. Maybe their crystal ball is working better than mine. I can't begrudge them for their choices. But I do worry for them.

The company launched its cloud platform 10 months ago, and now has 11 cloud vendors onboard, with some such as Symantec, Cisco and Amazon, providing multiple services. Amazon along provides around 150 offerings.

Grauman was unable to provide numbers on how many resellers are selling via the distributor's cloud platform, but he's 'thrilled' at the uptake Westcon has seen.

"I'd always like to see more numbers of resellers [selling the cloud offerings] but I'm thrilled at the level of participation of those coming onboard and their commitment and what they are doing in the market.

"The innovation they are adding to our cloud offering is awesome.

While revenue numbers aren't being disclosed – Westcon NZ is wrapping up its financial year this month – Grauman says cloud revenue for the next financial year will be in single percentage numbers of Westcon's revenue.

"My goal in the next three to four years is to grow that to 25% of our total revenue across ANZ. That's my big hairy audacious goal!

While Grauman can't give numbers, he says the growth for the cloud business 'is the fastest we have ever seen', albeit, off a low base.

"We hit our 18 month targets after just five months and doubled that by month seven. We're now in month 10 and very happy with where we are.

"But if you look at it compared with total value of the New Zealand market, I don't think it would even move the needle at the moment." The distributor is currently onboarding a couple of new cloud vendors to fill gaps in the current portfolio, and Grauman says he doesn't believe many more vendors will be added.

"Over the next year, vendors will have to have a very special, very differentiated service to come into our catalogue.

"But that said, I saw one on Monday that I sent out to our cloud and strategy team in the US because I believe they have something special and we should look at it," he says.

"What is awesome is that more and more services can be delivered out of cloud. Things you expected would always be totally premise bound, on-site services are now in the cloud.

"It's amazing how fast the leap has been made and how much more functional some of the cloud offerings are."   Going direct? When asked directly how Westcon would respond if one of their current cloud vendors wanted to sell direct via Westcon's cloud platform and whether they would be removed from the platform, Grauman was non-committal.

"I don't know. We would have to look at each situation and the wheres and whyfores.

Grauman says the question of vendors going direct is no different under cloud.

"It's the age old question. It was there with storage servers, laptops, mobile… the question remains the same and I wonder why people are bringing it up again.

"With hardware and software sales someone registers a license and the customer information is passed on," he notes.

"It's the value add that makes a relationship sticky and resellers are in a prime position to offer services and make themselves integral to end users.

He admits there's always a possibility of a vendor going direct. "It has happened to us in software and hardware land. And if it happens again, we'll look at each case as it comes. But I hope it never happens.

"We have invested a lot from our side and spent a lot of time working with vendors putting this together. That was the engagement stage. Now we're all [Westcon, vendors and resellers] happily married.

Grauman says there are big returns to be made for resellers who can make the transition selling cloud services.

He cites the case of an Australian 'born in the cloud' reseller who, in its first year of business, has mare more than $1 million in services revenue.

"And that's physical services over the top of cloud," Grauman says.

He says the company provides consultation and engineering skills around cloud migration to customers moving to the likes of Amazon, Google and Azure, as well as bespoke offerings, predominantly via Telstra.

The company in question, however, grew out of the cloud and runs its own company using cloud services, including CRM, capture, invoicing and accounting in the cloud.

"They basically run their own business in the cloud so they understand where a lot of their clients want to be.

"They're coming at it from a different context. There is a massive mindshift in doing business wholeheartedly in the cloud.

Grauman says he's seeing three categories of reseller. The born in the cloud resellers are jumping in boots and all.

"Then there's another group who are proactively looking to change their model and move part of their balance sheet into cloud services. And that's about 10, 15 or 20% of the reseller population.

The rest are 'passively' looking at cloud, he says. "If a customer comes and ask them, they'll do it. But they're holding on to their old business models and want to continue to hug their own tin.

"And those are the ones who I worry about what it will look like for them in five years time.

He says ultimately, the transition is up to the resellers, whom he urges to make use of Westcon's enablement tools, ranging from pre-sales technical enablement to help design and deploy cloud services, to a 70 page 'playbook' outlining best practice.

"We've spent a while building a great portfolio of services so we can add value to our channel. We're here to help take resellers into the cloud world, and I'm hoping they'll take advantage of it all.