Born-in-the-cloud partners vs. reseller vs. hybrid

On the final day of the Ingram Micro Cloud Summit 2014, partners are urged to transform their business and adapt to new and more educated customers.

HOLLYWOOD, FLA. -- Disrupt yourself. That was the message from Gartner Vice President and Distinguished Analyst Tiffani Bova to partners here at the kickoff of Wednesday morning's general session on the final day of the Ingram Micro Cloud Summit 2014.

In the Gartner keynote, titled, "The Future of IT Sales: Creating New Customer Experiences," Bova homed in on what's happening in the marketplace when it comes to cloud from the customer side of the equation. "As we gain a better understanding of the power that cloud can bring to business, it becomes clear that the experience of technology in the ways that people are using it is more important than the technology itself," she said.

By the end of the session, Bova translated her findings and observations into a takeaway for partners from a sales perspective: Change your approach to sales, understand the new customer/buyer thinking and drivers, and transform from selling a product to selling an experience.

The big thing that is going to hold you back [in a transition to hybrid partnership] is your sellers because they're always going to fall back to what's going to pay them the most.

Tiffani Bova,
vice president and 
distinguished analyst, Gartner

She delivered enough food for thought to shake up the room full of several hundred early risers.

Her keynote centered on three core understandings of the market: Technology -- encompassing delivery, pricing, architecture, expectations and players -- is different today than it was five years ago; the customer is more educated and new buyers are in the mix; and sales processes, models, compensation plans and types of sellers have remained almost constant.

Partners have to decide what business they want to be in -- creating an experience or just satisfying an outcome, Bova said. "You have to learn how to change the conversation and say, 'How do I create this overwhelming experience that's positive for the customer so that they can understand the vision of what all of the technology can do for their business rather than getting stuck on the conversation of what the technology can actually do?'" she said.

Without underestimating what it takes for a partner to transform their business in order to move into this new world order, Bova shared some very good news. Partners, she said, are uniquely positioned to do this.

Why? Because vendors have their own vested interest in their products and can't do it individually. They can try to create an experience around their individual story, but there are very few in the marketplace today that can create a customer experience in isolation.

Ultimately, however, the world is broken from a channel business perspective and partners fall into three distinct segments: reseller, hybrid and "born in the cloud." In a nutshell, Bova contended that the number of resellers will compress because demand will dwindle; transforming from a reseller to a hybrid partner will require significant organizational change and investment; and born-in-the-cloud partners are a breed unto themselves. Today, only a minority of partners are hybrid partners, she said, and most of the people she was addressing in the room are trying to go from reseller to hybrid.

Let's take a closer look at these three partner types:

  • Reseller: These businesses are typically product-heavy; rely on vendor programs; look to vendors to fund the business in margins, incentives, leads, deal registration and presales engineers, etc.; their services relate closely to implementation, integration and break/fix; most are still at the infrastructure layer -- not the OS, application or device layer -- in the managed services they deliver, nor do they manage it from end to end; and they have limited cash to invest in the business.
  • Hybrid: According to Bova, these partners have integrated a few cloud services with application programming interfaces (APIs) and some development work; have logical investments with existing providers but have started to expand who they work with; resell cloud services; have software development capabilities; and have project-based work as well as recurring revenue.
  • Born in the cloud: These companies are cloud-only and cloud-first; do heavy custom application and software development work; have significant recurring revenue; are more closely aligned with cloud services providers; and perform cloud service brokerage.

Veritra Inc. of Schaumburg, Ill., is a 3.5-year-old IT solution provider that focuses on application development and the development of business solutions in the cloud. It's an example of a born-in-the-cloud company.

Rao Achanta, vice president of business applications and development, said Veritra focuses on business value rather than technology solutions, with a main focus on taking customers to the cloud.

"My responsibilities are developing the business in the cloud area, developing applications on AWS [Amazon Web Services], Microsoft Azure, SAP Business One and also mobility. At this time, 70 percent of our projects are based on the cloud," he said.

While born-in-the-cloud partners don't have to make a big business shift, Bova had some advice for partners that want to transform from reseller to hybrid: The partner organization will have to make investments around software development, API development, some business process transformation, consulting and project management. "[That will] help you integrate the various pieces and parts that you can get from your distributor or providers and pull it into a meaningful integrated solution," she said.

The ability to make the transformation requires a strong leader as well as a new sales force. "If you really want to make this transformation, the big thing that is going to hold you back is your sellers because they're always going to fall back to what's going to pay them the most," Bova said.

Partners serious about making the transformation will require very different actions, new sales talent, new messaging and new capabilities, depending on where they want the business to fall on the transformation continuum, she said.

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