XChange: Solution Providers Are Selling Themselves Short On The Cloud

As some companies are getting ahead by moving to the cloud, many solution providers are getting in their own way and stunting their own success for the future, said Terry Hedden, CEO of CloudGuru.com, a business consultancy specializing in the cloud.

In a breakout session at XChange Solution Provider 2014, hosted in Los Angeles by CRN publisher The Channel Company, Hedden said that while many solution providers have made the jump into the cloud, or are at least starting to, he finds that many are using what he called an "ostrich strategy."

"A lot of people in the industry have the ostrich strategy," Hedden said in his session. "They put their head in the sand and they promote customers doing the same thing. Isolating them from the truth [that cloud is] better, faster, cheaper than [on-premise]."

[Related: Collapse Project Teams to Succeed With a Cloud Services Model ]

For example, Hedden said that only 3 percent of Microsoft partners are selling cloud-based Office 365, which he said could have larger implications than just the bottom line.

"That should scare the heck out of us," Hedden said. "What's going to happen if we don’t respond, if we don’t promote Office 365 through the channel? What will Microsoft do? They'll go direct ... you can stick your head in the sand but the market doesn’t."

While margins are not usually very high for cloud-based software, Hedden said the value solution providers can provide to their customers is around creating complex solutions with a seamless operation, which the customer can perceive as valuable. If the customer feels the service is valuable, they are more willing to pay you, and even pay a premium for it.

However, he said he sees solution providers giving away their advice and services for free. Implementation is a one-time event, he said, but if solution providers threaded revenue all the way through the deal, it would create a more long-lasting relationship.

"One of the problems in our industry is we tend to give away the answer," Hedden said. "You've got to charge for advice. That’s the most valuable thing that we have."

Danne Peterson, owner of Poway, Calif.-based Metro Computer, who attended the XChange panel, said that he is looking to finally start making the move into the cloud, after traditionally reselling hardware. He said with dropping prices in the PC market, there's no "easy money" coming in, so he is working to rethink his strategy and stop resisting change.

"The writing's on the wall. It has to happen," Peterson said.

Peterson said his major concern with the switch was what he saw as a lack of support from cloud providers if something broke in the system. He said with hardware, there's someone to call if it breaks, but he said he didn't see the same support response with the cloud.

Hedden said that regardless of companies' fears about the cloud, they have to start making moves toward adopting it as part of their overall business strategy if they want to still be in business 10 years down the road. Instead of being afraid, he said, take advantage of the opportunity.

"Don’t be afraid of the cloud -- make money doing it," Hedden said. "The value you provide is the expertise, so get knowledgeable and provide the expertise."

PUBLISHED MARCH 4, 2014