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Vendors support partner cloud transition despite unanswered questions

Vendors support channel partners that transition to a cloud business model; however, the channel's precise role in cloud remains unclear.

A recent webinar by consulting company PartnerPath revealed that some vendors are advancing full-tilt into the cloud arena regardless of whether they have figured out the channel's role in cloud.

Hosted by PartnerPath's vice president of client services David O'Brien, the webinar, titled "Are Your Partners Resisting Cloud?," addressed channel pushback to cloud and cloud transition and explored what vendors are doing today to enable their channels to make the cloud business transition. The webinar featured two channel executives from CA Technologies and SAP.

"It's cloud that represents the biggest change to a solution provider's business model," said O'Brien. "That's because cloud is a different paradigm in terms of how customers pay for technology, and, therefore, how both IT vendors and their partners are paid."

Whether or not partners embrace the cloud, it is something they will have to accept, said Sal Patalano, vice president of global marketing, partners and channels at CA Technologies. He acknowledged that at the same time that vendors are moving aggressively toward cloud, they wrestle with questions of how channel partners factor into strategies and can profit.

I'm not going to tell you we have it figured out yet. ... But here's the thing: Like it or not … [the cloud] is where we're going, folks.
Sal Patalanovice president of global marketing, partners and channels, CA Technologies

"Like SAP and a number of our peers in the industry, at CA, we're looking at what it will take for our business partners to be successful in the cloud," Patalano said. "I'm not going to tell you we have it figured out yet. ... But here's the thing: Like it or not -- and I want to emphasize that -- like it or not, [the cloud] is where we're going, folks."

One of things that vendors haven't figured out yet, said Patalano, is the pricing model. Pricing must work at the same time for customers, vendors and partners. "How do you price this so that obviously it makes sense to the customer, makes sense for our business, but importantly, it makes sense for channel partners? Is our pricing set up properly so that [partners] can offer value-add and they can make money with this model?" he said.

He spoke optimistically about vendors resolving the pricing model question and other problems. "When [vendors] get this right, when we figure out this pricing model, and we figure out how the margin stack should apply back to the pricing model, and we figure out the precise role that a channel plays in working with a vendor that has put cloud service or cloud offerings out there -- when we get the answers to these questions -- I think it will proliferate."

Patalano and Lisa Penn, senior director, global channel marketing strategic initiatives at SAP, attested to the fluidity of vendors' current strategy.

"I think all of us in this industry are learning, observing, modifying and tweaking our plans on a daily basis," Penn said during the webinar. "I think the challenge that we face is not only a customer environment where there's a lack of knowledge about cloud and the benefits of what cloud can provide -- and there's still a lot of myths out there -- but we also have a partner environment that is looking for a vehicle to help them get from Point A to Point B."

According to Penn, SAP is focused on helping partners understand the many changes and challenges that cloud has brought to the industry. "Your resources are accustomed to selling [on-premises]. This is what they do. … Now they're actually selling to LOB [line of business]. [Now] they're selling cloud, and it's a completely different evolution of value proposition. We're moving from, 'Here's what this feature functionality is,' to, 'Let me understand what your business challenges are, and let's talk about how cloud can address those.' That's a pretty significant shift," she said.

In response to the shift, SAP is delivering role-based training and prescriptive guides for partners to help them understand what the financials look like. Addressing the evolution in marketing cloud, Penn said SAP works with partners to help understand how the vendor is changing its approach and sometimes recommends partners get a new marketing person to focus on cloud. "You may have your marketing team that's going to be traditional, and they may continue to do traditional, but we're recommending a completely different focus when you look at cloud."

Penn also noted that vendors must have the right internal people focused on supporting channel partners. "We actually spend the time to continuously train our internal salespeople," she said. "The people that are touching the partner: We train them and ensure that they know what's the latest, what's the greatest, what we are seeing today [and] what are the new trends."

In such a monumental industry shift, both Patalano and Penn stressed vendors have rules of engagement.

"You've got publish to the industry a very strong set of rules of engagement," Patalano said. "You've got to vet [the set of rules] with your partners globally. You've got to etch it in stone. And you've got to publish it out to the industry. … And then you've got to stand behind it."

But there's only so much a vendor can do to help partners make the cloud transition. Regardless of vendor support, vision and passion are what enable a partner to succeed, said Penn.

"[The cloud transition has] got to be 100% vision and passion. [Partners] have to know they want to move there, and everybody has to be onboard. The organization itself has to be financially strong. This is not something you take with ease. You're going to make an investment, and you're going to need time and energy in order to get it done," she said.

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What are your top three concerns about the cloud business model?
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Obviously  security but to get staff buy in is difficult to follow due to lack of initial directions. Lessons learned hard,  but if we can just have some kind of interventions to assist in the having staff adopt that concept. 

Cloud business model can be a distraction, for some companies who  just want to use the cloud. Not everyone can adopt the requirements  then maybe the cloud is not feasible  for some companies.  As much as some can say cloud is the way, we should not  inundate the good work and time of the hard and caring working people. Just let the process continue as necessary.

Teamwork is imperative, but when not everyone  see  eye to eye there will be problems.
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So, people jumping into a new technology before truly understanding how it fits with their business goals - this usually doesn't lead to good things. 
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It's true that the cloud delivery model is the most disruptive change for partners, but it's not the only one driving new channel engagement models. Partners need to be teaming more than ever before, changing their sales engagement processes and reinventing their value propositions. As vendors we need to help with that. IBM in Australia has launched a whitepaper to help partners plan their transition - it's free at https://ibm.biz/rethink-the-channel
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