cloud-channel insights

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

5/26/10 2 5/26/10 2 Copyright SMB Group 2010

PuDngCloudCompu'nginPerspec've

5/26/10 3 Copyright SMB Group 2010

CloudCompu'ng—PuDngitSimply•  Cloudcompu:ngisacompu:ngmodelthatletsyouaccesssoJware,

serverandstorageresourcesovertheInternet,inaself‐servicemanner

•  Insteadofhavingtobuy,install,maintainandmanagetheseresourcesonyourownon‐premiseservers,youaccessandusethemovertheInternetthroughaWebbrowser

•  Some:mesyoumightneedtodownloadasmallpieceofclientcode,butforthemostpart,therealhorsepowerissuppliedfromthecloud

Cloud Computing Data Center

Customer Site


ButWeCan’tKeepAnythingSimple!


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.)


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


OneThingisCertain‐‐CloudCompu'ngAdop'onisGrowing

•  Cloudinfrastructurewillgrowto116.5Bby2014:Forrester

•  20%ofallbusinesseswillownnoITassetsby2012:Gartner

•  Cloudcompu:ngmarketgrowth28%annuallyto$126Bby2012

•  “Hockeys:ckgrowthforcloudcompu:ng”‐‐SteveBallmer(Informa0onWeek4‐19‐10)


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.


What’sFuelingCloudCompu'ngGrowth?

Vendors

“Newrevenuestreamsandmoreefficiencies”

•  Reachandpenetratenewmarketsbyloweringcostsandreducingtechnologybarrierstosolu:onadop:on

•  Enableseasier,fasterprospecttrials

•  Providesapredictableandstablerecurringrevenuestream

•  Providesareal‐:mepulseoncustomerbehaviorandrequirements

•  Enablescross‐sellingopportuni:es

•  Centralizedcontrolledenvironmentreducessupportcallsandcosts

•  Moremanageableupgradecycle

SoJwarevendorswanttocapitalizeontheInternet,digitaltechnologiesand“theeconomiesofscaleandskill”

thatcloudandSaaScompu:ngprovide.


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


WhatDoesCloudCompu'ngMeanfortheChannel?


ChannelAdop'onofCloudCompu'ng

Drivers Inhibitors

Limitedcustomiza:onopportunity

SellingservicesinsteadofsoJware

Compensa:on

Customer/accountcontrol‐‐disintermedia:on

Businessconsul:ngopportunity

Annuityrevenues

Customerdemand


Tradi'onalSoWwareChannelModel

•  Indirectchannelisanintegralpartofthesale,deliveryandsupportofon‐premisebusinesssoJware

•  ComplementssoJwaredeveloperwithsales,implementa:on,supportandservice

•  TasksaredividedandthereislimleoverlapbetweensoJwaredevelopandchannelroles

SoJwareDeveloper

End‐userCustomer

Indirect Channels

VARs, SIs, Distributors, etc.


CloudandSaaSChannelModel

•  Cloudcompu:ngandSaaSdoesn’talignwiththetradi:onalITchannelproviderrole

•  SaaSorcloudproviderdeliversmanyofthethingsthatITchannelhastradi:onallyprovided‐‐soJwareandhardwaresourcing,installa:on,management,etc.

•  LineisoJenblurredbetweensoJwaredeveloperandchannelroles

SoJwareDeveloper

End‐userCustomer

Traditional IT Channels

Cloud

Channel


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


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!


CloudandSaaSVendorsNeedtheChanneltoBridgetheLastMiletoMainstreamCustomers

•  EarlycloudandSaaSgrowthfueledbyevangelism

•  Directmodelworkswithearlyadoptersbutdoesn’tscaleforthemainstream•  Lackstrustedadvisortohelp

customersevaluatealterna:ves

•  Doesn’tdoenoughtoaddressconcernsthatmanycustomershave

•  Overcomestechnologybarriersbutnotlackofbusinessprocessexper:serequiredtoextractbusinessvaluefromthesolu:on


RequireChannelstoFuelGrowth

•  Directsalescostsunsustainabletoinfluence,sellandservethebroadermarket

•  CloudandSaaSvendorsneedtoleveragechannel/trustedadvisorrela:onshipstoscaletoabroadermarket

•  Vendorsneedindirectchannelsto:

o  Catalyzesalestoabroadermarketthatchannelshaveservedforyears

o  Minimizecustomerchurn

o  Op:mizerenewalrates


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


Crea'ngValueintheCloud:TopSuccessFactors


#1:ThinkSolu'ons,NotProducts

• Focusonunderstandingcustomerneeds

• AdjustfortheshiWfromITtobusinessdecisionmakers

• ShiWmixtowardsservicesandawayfromlicense/subscrip:onsales

• Enhanceconsulta'vesalesskills

• Deepenbusinessprocessandindustryexper'se

• Concentrateoncustomerresults,nottechnology

ShiJfromsolu:onsresellertosolu:onscatalyst


#2:CapitalizeonEconomiesofScale

•  Rampupleadgenera'onandsalesvolumestoreachnewcustomers/markets

•  Add/improveonlinemarke:ng,telesales,etc.

•  Reformulateskillsets‐‐mul:‐taskingsalesandprojectmanagers

•  Reformulatemethodologiesandapproachesforservicedelivery

•  Revisecompensa'onplans

Prepareforsmallerdealsizesandfaster

deployments


#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


#4:StrengthenYourRoleasTrustedAdvisor

•  Tailorthesolu:ontospecificcustomerrequirements

• Honever:cal,domainandgeoandlocalbusinessknowledge

•  Provideflexibilityandservicesthatcloud/SaaSvendordoesn’t• Choice(aggregateappsfromdifferentvendors)

• Datamigra:on•  Integra:on• Changemanagement•  Etc.

Customerss:llneed

yourdomainexper:se


#5:ExtendtheSolu'on

• Tailorthesolu:ontospecificcustomerneeds

• Becomeanexpertsourcetohelpcustomersevaluate/selectcapabili:esforamorecomprehensivesolu:on

•  Provideextensiveintegra'onservices(onpremisetoSaaS/SaaStoSaaS)

• Developver'calornichehorizontalfunc'onality

Capitalizeonthegrowthopportunitytoresell,

developandintegrateaddi:onal

func:onality


#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


#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


Summary


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


RememberthatCustomersS'llNeedHelp!

•  Evalua:ngandselec:ngthe“right”solu:on•  Implemen:ngandtailoringthesolu:ontotheirspecificbusinessandtechnicalneeds

•  Integra:ngthird‐partyapplica:onstoextendthesolu:on

•  Changingbusinessprocesses•  Trainingpeopletobecomeproduc:veonthesolu:on


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


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


cloud-channel insights

Documents