Picking A Cloud Partner: What You Need To Know

Since it's clear white-label cloud services are hot, let's start there. Solution providers generally say smaller cloud providers offer better white-label terms than larger cloud companies. Specifically, smaller vendors and providers offer more customization and true partner branding, whereas larger companies are more protective of their brands.

"When vendors talk about white-labeling, often they're really talking about co-branding," said Mario Guerendo, president and CEO of Ecotech Solutions Group. "There are a lot of white-label programs out there, but it's still hard to find really good white-label services."

Charles Layne, CEO of Signature Technology Group (STG), agrees. His company offers IT maintenance and support services to other VARs, and it also uses third-party cloud partners. "The bigger the white-label provider is, the harder it is to brand," Layne said.

And while a number of leading hardware and software companies have built up cloud businesses, from Hewlett-Packard and Cisco Systems to Microsoft and SAP, some solution providers prefer to work with born-in-the-cloud vendors that only do Software-as-a-Service or Infrastructure-as-a-Service.

"They understand the cloud model better, and they don't have a retail pricing mentality," said Erik Bodor, director of information technology at Global Solutions and Technology Inc., Denton, Texas.

That's not to say that traditional vendors don't have good cloud offerings and strong partner programs. Bodor said GSATi, which outsources the majority of its cloud services business to third-party providers, works with cloud-only partners such as Intermedia (hosted Exchange) and Axcient (cloud backup) but also uses Symantec's Email Security Cloud.

And while the financial models of purchasing cloud vs. traditional software are different, so are the financials for delivering them. Guerendo said traditional boxed software can deliver 25 to 30 points of margin, but those sales are largely transactional. With cloud, the pricing may be lower, but the opportunity to drive more bundled services around the SaaS model is much larger. The successful vendors, he said, understand the difference.

"Some of the vendors we worked with on traditional hardware and software just aren't relevant in the cloud," Guerendo said. "But there are vendors like Microsoft and IBM that have made the SaaS model work for partners."

Other big cloud players are not so successful, according to cloud solution providers, who echoed the sentiments of other solution providers in a recent CRN tablet app exclusive "SP500 Roundtable: Amazon, Google Are 'Seducing' Some Solution Providers." They say Amazon, for example, has shown little interest in working effectively with channel partners.

"We've done a couple of engagements with Amazon but I wasn't impressed with the service or their partner program," Bodor said. "The thing people need to remember is, moving to the cloud is a risk and you're putting a lot of faith in these cloud partners to help you make the migration. So you really need to choose the kind of partners that are going to give you the support and attention you need."

Smaller cloud providers in both the public and private markets are hoping to fill that channel void. Evolve IP, a private cloud provider based in Wayne, Pa., launched its formal CloudNow partner program earlier this year and now has around 200 channel partners, thanks to a host of attractive offerings from a private-label program to accelerated commissions and higher agent fees.

"We understand that [solution provider] business and the importance of cash flow and profitability," said Guy Fardone, COO and general manager of Evolve IP. "We show partners how it's more effective to offer our cloud infrastructure and bring their own services into the mix."

Fardone said Evolve IP occasionally runs into the public cloud giants such as Amazon and Google, but he believes there's plenty of opportunity for smaller private cloud players like his company. "There are different target markets and different offerings," he said," and everyone's looking for cloud."

PUBLISHED DEC. 16, 2013