what does cloud computing mean for the channel?
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Perspec'vesontheBusinessModeloftheFuture:
WhatDoesCloudCompu'ngMeanfortheChannel?
2010SageInsights
LaurieMcCabePartner,SMBGroup
5/26/10 1 5/26/10 1 Copyright SMB Group 2010
Agenda
• Pu5ngCloudCompu:nginPerspec:ve
• WhatDoesCloudCompu:ngMeanfortheChannel?
• Crea:ngValueintheCloud:TopSuccessFactors• Summary
• Q&A
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PuDngCloudCompu'nginPerspec've
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CloudCompu'ng—PuDngitSimply• Cloudcompu:ngisacompu:ngmodelthatletsyouaccesssoJware,
serverandstorageresourcesovertheInternet,inaself‐servicemanner
• Insteadofhavingtobuy,install,maintainandmanagetheseresourcesonyourownon‐premiseservers,youaccessandusethemovertheInternetthroughaWebbrowser
• Some:mesyoumightneedtodownloadasmallpieceofclientcode,butforthemostpart,therealhorsepowerissuppliedfromthecloud
Cloud Computing Data Center
Customer Site
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ButWeCan’tKeepAnythingSimple!
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CloudCompu'ngTakesDifferentShapes…
SoJware‐as‐a‐Service(SaaS)
(Salesforce.com,NetSuite,SuccessFactors,etc.)
PlaRorm‐as‐a‐Service(PaaS)
(AppExchange,IntuitPartnerPlaRorm,
MicrosoJAzure,etc.)
Infrastructure‐as‐a‐Service(IaaS)
AmazonEC2,OpSource,Rackspace,
etc.
SoJware+Service
ConnectedServices
“Hybrid”Model
(MicrosoJ,Intuit,Sage,etc.)
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CloudCompu'ngEvolu'on
“Cloud”SaaS
On‐premiseAppliance“Hybrid”
HostedASPmodel
Earlymul:‐tenantSaaSOn‐Premise
Client/Server
SaaS(Moreintegratedhorizontalsolu:ons))
2010
SaaS(Ver:calsolu:onsPaaSIaaS
MarketplacesPre‐integratedCloud/on‐premisesolu:ons
2005 2000 1990
Workflow-enabledBusiness
ProcessHubs
Wave1• Standaloneapps• Horizontalsolutions• Multi-tenancyasanoption
Wave2• Integratedsuites• Verticalsolutions• PaaS• IaaS
Wave3
• Hybrid
• Ecosystemsandmarketplaces
• Pre-integration• Communityaccess
5/26/10 7 Copyright SMB Group 2010
OneThingisCertain‐‐CloudCompu'ngAdop'onisGrowing
• Cloudinfrastructurewillgrowto116.5Bby2014:Forrester
• 20%ofallbusinesseswillownnoITassetsby2012:Gartner
• Cloudcompu:ngmarketgrowth28%annuallyto$126Bby2012
• “Hockeys:ckgrowthforcloudcompu:ng”‐‐SteveBallmer(Informa0onWeek4‐19‐10)
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What’sFuelingCloudCompu'ngGrowth?
Customers
“Faster,Cheaper,Easier”
• Technologyisge5ngmorecomplex
• Eliminatescapitalinvestmentsforinfrastructure
• Eliminatesongoingtechnicalmanagementandupdatecosts
• Reducesfinancialrisks—predictablesubscrip:onv.largeupfrontcosts
• requirementsforinternalITexper:se
• Speeds:metosolu:onvalue
• Increasesvendoraccountabilityandservice• Evolvesmoreflexibly• Providesconnec:vityandcollabora:onadvantages
Organiza:onsarefocusedonbusinessresults—notontechnology,applica:onsorinfrastructure.ITisameanstoanend—thevalueofITliesinhowcompaniescan
applyittomeetbusinessobjec:ves.
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What’sFuelingCloudCompu'ngGrowth?
Vendors
“Newrevenuestreamsandmoreefficiencies”
• Reachandpenetratenewmarketsbyloweringcostsandreducingtechnologybarrierstosolu:onadop:on
• Enableseasier,fasterprospecttrials
• Providesapredictableandstablerecurringrevenuestream
• Providesareal‐:mepulseoncustomerbehaviorandrequirements
• Enablescross‐sellingopportuni:es
• Centralizedcontrolledenvironmentreducessupportcallsandcosts
• Moremanageableupgradecycle
SoJwarevendorswanttocapitalizeontheInternet,digitaltechnologiesand“theeconomiesofscaleandskill”
thatcloudandSaaScompu:ngprovide.
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It’sGoingtoBeaHybridWorldforaLongTime• Mostcustomerswantablendof
soJwareandservices
• Cloudcompu:ngwillcomplementratherthanreplacetradi:onalonpremisecompu:ngsolu:ons
o Security
o Compliance
o Networkperformance
o HybridorsoJwareplusservicesmodelofferschoiceandflexibility
o Beyondacertainnumberofusers,on‐premisesolu:onscanbemorecosteffec:ve
o Reliability(poten:alnetwork/datacenteroutages)
• Combina:onofcloudcompu:ng,SaaS,on‐premiseandvirtualiza:ontodeliversolu:ons
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WhatDoesCloudCompu'ngMeanfortheChannel?
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ChannelAdop'onofCloudCompu'ng
Drivers Inhibitors
Limitedcustomiza:onopportunity
SellingservicesinsteadofsoJware
Compensa:on
Customer/accountcontrol‐‐disintermedia:on
Businessconsul:ngopportunity
Annuityrevenues
Customerdemand
5/26/10 13 Copyright SMB Group 2010
Tradi'onalSoWwareChannelModel
• Indirectchannelisanintegralpartofthesale,deliveryandsupportofon‐premisebusinesssoJware
• ComplementssoJwaredeveloperwithsales,implementa:on,supportandservice
• TasksaredividedandthereislimleoverlapbetweensoJwaredevelopandchannelroles
SoJwareDeveloper
End‐userCustomer
Indirect Channels
VARs, SIs, Distributors, etc.
5/26/10 14 Copyright SMB Group 2010
CloudandSaaSChannelModel
• Cloudcompu:ngandSaaSdoesn’talignwiththetradi:onalITchannelproviderrole
• SaaSorcloudproviderdeliversmanyofthethingsthatITchannelhastradi:onallyprovided‐‐soJwareandhardwaresourcing,installa:on,management,etc.
• LineisoJenblurredbetweensoJwaredeveloperandchannelroles
SoJwareDeveloper
End‐userCustomer
Traditional IT Channels
Cloud
Channel
5/26/10 15 Copyright SMB Group 2010
ChangesinPartnerRoleandOpportunityTask Onpremise Cloud/SaaS Changeinrevenueopportunity
License/subscrip'onservicesales
PartnerasresellerLengthysalescycleHighcustomerITinvolvement10%‐30%marginpaidupfront
PartnerascatalystShortersalescycleLowercustomerITinvolvementOne'mereferralfee/upto30%ongoingannuity
Smallerini'aldealsizes(.5‐1.5x "Upfrontrevenue,butcanberecoupedviaannuitystream
Implementa'onandtraining
Lengthydura'on(weekstomonths)Partnerprovidesproductsourcing,installa'on,configura'on,trainingPartneraddsvalue“underneath”
Shorterdura'on(daystoweeks)Partnerdoesn’tinstallanythingPartnercanmanageprojectandmayprovidetrainingPartneraddsvalue“ontop”
”Timetovalue”isgenerallyshorter
Integra'on,datamigra'on,etc.
Integra'nglocalonpremisesystems
Integra'ngon‐premisewithSaaS/cloudsolu'ons—hybridmodel
Integra'onofSaaStoon‐premise,SaaStoSaaScanbemorecomplex
Businessprocessconsul'ng
ModifyingsoWwaretofitbusinessprocesses
Aligningbusinessprocessesto“bestprac'ces”
Favorsbusiness,industrydomainexper'se
Solu'oncustomiza'on/configura'on
OWenextensive Usuallylimitedtoconfigura'on Codeisusually“lockeddown”
Add‐ons,extensions,etc.
Goodopportunitytoresell,developandintegrate
Growingopportunitytoresell,develop,andintegrate
Cloudplahorms,APIs,etc.easeandspeeddevelopment
OVERALLDEALSIZE 3x–5xlicensesale .5x–1.5xlicense/subscrip'onsale Decreases
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CloudCompu'ngRequiresChanges—ButDoesn’tEliminatetheNeedfortheChannel
• Cloud/SaaSvendorshavefocusedmoreondirectsalestoestablishastrongcustomerbaseanddemonstrateviabilityandscalability
• But‐‐directsalesalonecan’tfuelthefuturegrowthcurve
• ThecloudandSaaSeliminate/reducetechnicalbarrierstoadop:on—butcustomerss:llneedhelpto:o Evaluateandselectthe“right”
solu:on
o Tailorthesolu:ono Integratelegacyandthird‐party
solu:ons
o Adaptbusinessprocesseso Trainpeople
SaaSandCloud
vendorscaneffec:velypenetratethemarketthroughdirectWeb
channelsalone
Myth!
5/26/10 17 Copyright SMB Group 2010
CloudandSaaSVendorsNeedtheChanneltoBridgetheLastMiletoMainstreamCustomers
• EarlycloudandSaaSgrowthfueledbyevangelism
• Directmodelworkswithearlyadoptersbutdoesn’tscaleforthemainstream• Lackstrustedadvisortohelp
customersevaluatealterna:ves
• Doesn’tdoenoughtoaddressconcernsthatmanycustomershave
• Overcomestechnologybarriersbutnotlackofbusinessprocessexper:serequiredtoextractbusinessvaluefromthesolu:on
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RequireChannelstoFuelGrowth
• Directsalescostsunsustainabletoinfluence,sellandservethebroadermarket
• CloudandSaaSvendorsneedtoleveragechannel/trustedadvisorrela:onshipstoscaletoabroadermarket
• Vendorsneedindirectchannelsto:
o Catalyzesalestoabroadermarketthatchannelshaveservedforyears
o Minimizecustomerchurn
o Op:mizerenewalrates
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VendorChannelProgramsareS'llEvolving
• Direct/indirectsales• Compensa:onmodels
o Referralcommissiononly
o Referral+annuity• Rulesofengagement• Billingmodels
• Channelprogramso Jointmarke:ngandsales
programs
o Educa:onandtrainingo Partnerprogramfees
• Serviceandsupporto Jointcustomer
servicestools
• It’ss:llearlyo Mostarestrugglingto
formulateawin‐winchannelformula
o Fightforchannelpartnerswillintensify
o Programswillchangethroughexperimenta:on
5/26/10 20 Copyright SMB Group 2010
Crea'ngValueintheCloud:TopSuccessFactors
5/26/10 21 Copyright SMB Group 2010
#1:ThinkSolu'ons,NotProducts
• Focusonunderstandingcustomerneeds
• AdjustfortheshiWfromITtobusinessdecisionmakers
• ShiWmixtowardsservicesandawayfromlicense/subscrip:onsales
• Enhanceconsulta'vesalesskills
• Deepenbusinessprocessandindustryexper'se
• Concentrateoncustomerresults,nottechnology
ShiJfromsolu:onsresellertosolu:onscatalyst
5/26/10 22 Copyright SMB Group 2010
#2:CapitalizeonEconomiesofScale
• Rampupleadgenera'onandsalesvolumestoreachnewcustomers/markets
• Add/improveonlinemarke:ng,telesales,etc.
• Reformulateskillsets‐‐mul:‐taskingsalesandprojectmanagers
• Reformulatemethodologiesandapproachesforservicedelivery
• Revisecompensa'onplans
Prepareforsmallerdealsizesandfaster
deployments
5/26/10 23 Copyright SMB Group 2010
#3:Think“And”not“Or”
• Non‐biasedadvisortohelpeducate,assessevaluateandselect
• Providecustomerswitha“one‐stopshop”forbothon‐premiseandcloudsolu:ons
• Strengthen/developnewintegra'onexper'se(legacytoSaaS,SaaStoSaaS,etc.)andsecuritycapabili:es
• Developvirtualiza'onexper'se
Posi:onforahybrid
“soJware+services”model
5/26/10 24 Copyright SMB Group 2010
#4:StrengthenYourRoleasTrustedAdvisor
• Tailorthesolu:ontospecificcustomerrequirements
• Honever:cal,domainandgeoandlocalbusinessknowledge
• Provideflexibilityandservicesthatcloud/SaaSvendordoesn’t• Choice(aggregateappsfromdifferentvendors)
• Datamigra:on• Integra:on• Changemanagement• Etc.
Customerss:llneed
yourdomainexper:se
5/26/10 25 Copyright SMB Group 2010
#5:ExtendtheSolu'on
• Tailorthesolu:ontospecificcustomerneeds
• Becomeanexpertsourcetohelpcustomersevaluate/selectcapabili:esforamorecomprehensivesolu:on
• Provideextensiveintegra'onservices(onpremisetoSaaS/SaaStoSaaS)
• Developver'calornichehorizontalfunc'onality
Capitalizeonthegrowthopportunitytoresell,
developandintegrateaddi:onal
func:onality
5/26/10 26 Copyright SMB Group 2010
#6:LookforaChannelFriendlyVendor
• Evaluatestrategies,offerings,pricing,etc.
• Vetvendors’partnershipDNA• Reputa:onandtrust• Direct/indirectchannelfocus• Clearrulesofengagement• Educa:ontohelpshiJbusinessmodelandbuildnewskillsets
• Rewardsforhighlevelsofcustomerengagementandvalueadd
• Par:cipa:onfees• Jointmarke:ngandsalesprograms
• Customer‐facingtoolsanddashboard
CloudandSaaSvendorchannelprograms
varysignificantly
5/26/10 27 Copyright SMB Group 2010
#7:AdjustYourBusinessModel
• Needtoalignbusinessmodelwithwithvendor(s):• Referralfees• Annuityfees• Renewalfeesforcontractrenewal• Coopmarke:ngfunds
• Planfordifferentcashflows• Smaller,morefrequentcompensa:on
• Lessmoneyupfront,but“smoother”annuityrevenuecurveover:me
• Considercrea'ngaseparateorganiza'onforcloud/SaaSbusiness—sinceittoughtoalignskills,compensa:on,metrics,etc.acrossthesedifferentmodels
Alignskills,metrics,etc.toop:mize
youropportunity
5/26/10 28 Copyright SMB Group 2010
Summary
5/26/10 29 Copyright SMB Group 2010
CloudCompu'ngisanOpportunityfortheChannel
• Cloudcompu:ngandSaaSarenotafado CloudandSaaScompu:ngvendorsaregrowingmorerapidlythan
conven:onalsoJwarebusinesses
o Willbetheonlywaysomebusinesseswillbeabletoconsumeincreasinglycomplextechnologytheyneedtoruntheirbusinessesprofitablyandcompe::vely
• Customersneedhelpinchoosing,implemen:ng,tailoringandmanagingcloudandSaaSsolu:onso Manycustomersares:llconfused
o Cloudcompu:ngmodelsarecon:nuingtoevolve
o Hybridmodelwillbethenormfortheforeseeablefuture
• Indirectchannelsarecri:caltofuelingfuturegrowth
5/26/10 30 Copyright SMB Group 2010
RememberthatCustomersS'llNeedHelp!
• Evalua:ngandselec:ngthe“right”solu:on• Implemen:ngandtailoringthesolu:ontotheirspecificbusinessandtechnicalneeds
• Integra:ngthird‐partyapplica:onstoextendthesolu:on
• Changingbusinessprocesses• Trainingpeopletobecomeproduc:veonthesolu:on
5/26/10 31 Copyright SMB Group 2010
LookfortheOpportuni'es
1. Thinksolu:ons,notproducts:shiJfromsolu:onsresellertosolu:onscatalyst
2. Capitalizeoneconomiesofscale:prepareforsmallerdealsizesandfasterdeploymentswithhighervolumestrategy
3. Think“and”notor:Posi:onforahybrid“soJware+services”model
4. Strengthenyourroleastrustedadvisor:customerss:llneedyourdomainexper:se
5. Extendthesolu:on:Capitalizeonthegrowthopportunitytoresell,developandintegrateaddi:onalfunc:onality
6. Lookforachannelfriendlyvendortopartnerwith:CloudandSaaSvendorprogramsvarysignificantly
7. Adjustyourbusinessmodel:Alignskills,metrics,etc.toop:mizeyouropportunity
5/26/10 32 Copyright SMB Group 2010
ThankYou!
SMBGroup,Inc.
508‐410‐3562
informa:on@smb‐gr.com
Website: www.smb-gr.com
Blogs: http://sanjeevaggarwal.wordpress.com http://lauriemccabe.wordpress.com
5/26/10 33 Copyright SMB Group 2010
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