Cloud News

Research: Booming Cloud Market Means Solution Providers Need To Consider New Revenue Streams

Cloud platforms are starting to influence how solution providers have to think about their business models, according to new research by The Channel Company.

The survey of 639 solution providers finds that 50 percent of solution providers are seeing a positive impact across all areas of their business thanks to Microsoft Azure, Amazon Web Services and Google Cloud. Furthermore, Microsoft Azure, AWS and Google Cloud have seen dramatic increases in revenue, helped by the sales muscle of partners. The booming market means that partners now need to consider how they can generate different revenue streams, said The Channel Company CEO Bob Skelley. Skelley discussed the topic in an interview with CRNtv.

What kind of cloud service opportunities are available to solution providers today? How has this changed in recent years?

There’s a life cycle of cloud services and solution providers can participate in any part of that, starting with consulting and advising customers on their hybrid cloud strategy, implementing and moving workloads, custom app developments to support cloud strategy, and managing that cloud environment for the customer. So, these services are starting to take over as a percent of revenue and what we’ve seen in the last six years is a change from a 50/50 percent services-to-on-prem, software and hardware sales to now 65/35 percent software and hardware sales. So, it’s a very different world now.

The Channel Company research finds that cloud providers are becoming more channel-friendly. Tell us about that.

We’re all realizing as we learn that it’s pretty complex. Customers can’t do it on their own and, like any industry, they are realizing they can’t do it with their own people. If you’re an AWS or an Azure, you don’t have enough resources to deal with customer demand on your own. So, we are finding that you need solution providers, number one. They have to be an extension of your message and voice and your implementation plan and your migration services and consulting and all of that. And what we are seeing is that these companies are taking a channel model more seriously, too. They are trying to figure out how they can bring talent in, specifically around channel: People who are in the industry, who have ran channel programs, who have been channel chiefs. How do we bring that type of talent into our company so we can build a world-class program with solution providers?

What advice do you have for solution providers looking to build a cloud practice?

Part of it is they have to have the right skill set. If they don’t already have that organic skill set to advise on cloud migration, they have to go figure it out and go build it. But, there’s a little bit of trepidation there. There’s still a leftover fear, uncertainty and doubt that the these cloud providers will cut them out of the business over time and potentially cut them out of the transaction. I don’t think that will happen. I don’t think either company can afford to. And I think solution providers are more and more becoming more trusting of those cloud providers. The early adopters will be ahead, though, so if you’re a solution provider and you haven’t gone down that path, you have to build that cloud practice now.

First, identify gaps: What are the gaps you have in the organization to be a value-added provider in cloud solutions and cloud capabilities? Then, you have to go out and recruit, find or train the people to fill that gap. That’s the most important thing. And what we are seeing is that cloud migration services is the catalyst. Start there.