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Cloud partners must differentiate to thrive

Speakers at the Microsoft Worldwide Partner Conference said partners in the cloud must differentiate through methods such as verticalization, IP and content marketing.

Heightened competition is compelling cloud partners to rethink their businesses and seek new points of differentiation.

The size and rapid rise of the cloud market has made it an attractive space for service providers. Market researcher IDC predicts the greater cloud market, which includes software as a service, platform as a service and infrastructure as a service offerings and related services, will push through the $500 billion mark by 2020. Steve White, program vice president of channels and alliances at IDC, said the company's research indicates that 80% of customers now deploy cloud technology.

Not only are more customers embracing cloud, they are doing so with increasing levels of maturity. Within the next two years, nearly half of the customer organizations using the cloud expect to be at the highest level of cloud maturity, according to IDC. This level of adoption creates a sense of urgency.

"The time to act is now," White said, speaking at a cloud partner panel discussion at this week's Microsoft Worldwide Partner Conference. "The wave is happening."

As more cloud partners pursue the cloud, the onus is on the earlier entrants to up their game.

"Cloud partners are telling me, 'I have to reinvent myself again,'" observed Jen Sieger, senior business strategy analyst with Microsoft's Worldwide Partner Group.

However, Sieger said she has found that partners often compete on price and may lack the cutting edge of a truly differentiated value proposition.

Paths to differentiation: Vertical marketing

Some partners, however, have taken steps to differentiate their services. One approach is to cultivate vertical market expertise.

Terry Doherty, CEO at Doherty Associates, a company based in the United Kingdom that provides networking and cloud services, began working with cruise ships 20 years ago and now maintains a vertical niche in the travel and tourism industry. Doherty said his company has been able to use its experience in on-board IT to move into another vertical market dealing with remote locations: mining. Both industries use satellite communications, which helped the company segue from tourism to mining operations.

Cloud partners are telling me, 'I have to reinvent myself again.'
Jen Siegersenior business strategy analyst, Microsoft Worldwide Partner Group

"Success in one vertical can often lend itself well to other verticals," Sieger noted, who advised cloud partners to think about customers' common needs and how they might apply in other verticals.

Sieger also suggested partners hire personnel from the industry they plan to target, citing her own experience at LexisNexis, which hires attorneys to sell its legal information and research services.

Intellectual Property

Developing intellectual property (IP) can also help cloud partners differentiate their services.

That's a strategy SSB, an enterprise data management consultant based in Denver, pursues. Over the course of working on business intelligence (BI) projects, the company developed a customer intelligence platform, dubbed Central Intelligence.

Andrew Brodie, CEO at SSB, described Central Intelligence as outsourced BI. He said his company was able to combine its experience in data management and analytics with Microsoft's Azure cloud infrastructure to deliver BI as a service. 

"We become an extension to the customer's IT department, doing end-to-end BI," Brodie explained.

Brodie said SSB's approach to developing IP has been to work with an early adopter to build the alpha version of a product. He said partnering with a customer lets a partner test its technology in the real world and helps determine whether there will be a bigger market for the product.

SSB's focus on analytics and BI has helped it grow its business in verticals such as professional sports and healthcare.

Content marketing

Once a cloud partner has created a differentiated business, it needs to get the word out. Sieger said partners should modernize their sales and marketing approaches, with a particular emphasis on creating compelling content to reach online buyers. She said partners must share their stories on how they are differentiated and solving the needs of customers.

"Content is king," she said. "Partners need to invest in content."

Jim Sheehan, senior vice president at PowerObjects, a partner based in Minneapolis that focuses on Microsoft Dynamics CRM, said the company's content strategy is based on the philosophy of "give until it hurts" and creating a "point of relevance on the web."

The company, which invests close to 10% of its revenue in marketing, starts with creating content for its website and optimizing for search engines. But the company's marketing thrust doesn't end there or with the marketing side of the company. For example, PowerObjects offers "dollar apps" -- CRM add-ons -- on a click-try-subscribe basis. While people have told Sheehan that the company won't make money selling apps for a dollar, he said that view misses the point. The dollar-app strategy has generated 250,000 seats around the world and a large CRM customer database for the company.

PowerObject's R&D department may have created the apps, "but it is all tied into marketing."

Sheehan said partners need to commit to marketing for the long haul.

"Marketing has to become a muscle you build inside the organization, not an afterthought," he said. "It is a long-distance marathon over multiple years."

Next Steps

Find out how AWS partner status helps MSPs differentiate

Learn about cloud startups and differentiated services

Read more about differentiation as a key channel trend

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