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Very clever variable VARs

Clive Longbottom, Service Director

Quocirca Comment
As Dylan may well have put it: 'The markets, they are a' changing.' But surely, this was ever so? The reseller has always had to change with the times, adding extra value to stay ahead of the game – and so stay in business. This may well be so, but as the continued churn of resellers shows, not all members of the channel are equal, and many still believe that a 'bring ‘em in, ship ‘em out' approach will pave the way to financial riches. For some, this has been the case, even as there has been a move through in-house coded applications requiring servers of all sorts of different types, through to commercial, off-theshelf software (COSS), through client server and web-based applications, there has still been the need for resellers who can shift tin or software into the hands of the buying organisations. Will this remain the case, though? If the indications are true, there will be an increasing uptake of cloud computing, and this will stress any reseller who does not manage to get their new approach sorted quickly. If a long-term view of cloud is taken, then the following scenario would be the ultimate outcome. An organisation has 'thin' IT in-house, covering the provision of access devices only. All main computer functions, whether these be at a commodity level (such as email, collaboration, file sharing, web presence) or process level (attracting prospects, turning prospects into customers, achieving optimal customer lifetime value) will be pulled in as needed from the cloud. This has a direct impact on the reseller. The standard components that they have sold before (hardware and software) are now owned and managed by someone else: the cloud provider. For most resellers, it will not be possible to try to gate crash the cloud providers themselves; the big providers will be cherry-picked by the marauding hordes of the large hardware players and their best pals in the channel. There will be the chancers in the cloud market those who think they will be able to beat Google, Amazon, IBM, Dell, salesforce.com and the others by doing cloud on the cheap. Any reseller dealing with these guys had better make sure that payment is made up front before supplying these types with any hardware or software. So where can the channel make money? Although it is a new game, there are a lot of opportunities. Firstly, the ultimate outcome outlined above is actually quite unlikely. Most organisations will end up with a hybrid environment: some based in existing internal datacentres, some of which will be turned into a private cloud, some co-locational private cloud and some public cloud. Don't jump to the illogical conclusion though that this means that the first opportunity is to focus on this rump of the internal datacentre. This will be where legacy applications remain; those where the existing investment is seen as being high enough that the asset has to be sweated as much as possible, but new investment in it will be minimal. What there will be is a need for a one-throat-tochoke channel; one who deals with the collision point between the internal and external clouds, one who can provide an external view and advice on how any changes to the business processes can be managed and facilitated through bringing in new technology. The new VAR will have to aim for flexibility and learn how to deal with adding value to a service, not to providing the service itself. For example, if an organisation wants to move to cloud-based email, it may still need management of its information to avoid data leakage, so the VAR could look at finding and providing this as a service through a cloud provider offering security as a service. If the organisation is looking to move its CRM system to the cloud, the clever VAR can help in

Very clever variable VARs

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© 2011 Quocirca Ltd

either managing the connection through to a hosted CRM service, such as salesforce.com, or through to a set of functions that can be brought together on the fly to create a composite application that can deal far more flexibly with fast-changing business processes as required. The very clever VAR will manage this functional aggregation, and make a lot of money in doing so. The VAR becomes the point of aggregation, the owner of the main contracts between the customer and the cloud providers and embedded in the provision of IT as a service to the customer. This is a far more 'sticky' relationship with the customer, one far more difficult for the customer to unwind than one where the reseller is just a supplier of hardware or software.

Of course, this all needs a change of thought process, of approach and of agreements with the new suppliers. Cloud providers that have historically tried to go direct to market increasingly have to find resellers that understand the market and can help them penetrate markets that are realising that cloud is not as simple as some have made out. By all means, fight the trend, and watch as your rivals move to models with no inventory, with subscription revenues rolling in on contracts that essentially self-renew. Watch as you try ever more desperately to sell tin and software, as the world moves to being supplied with functions as a service. It has been a tough world out there for the channel for many years. It will remain tough, but cloud could be the last straw that breaks many backs. Face up to it and be prepared. This article first appeared on

http://www.channelweb.co.uk

Very clever variable VARs

http://www.quocirca.com

© 2011 Quocirca Ltd

About Quocirca
Quocirca is a primary research and analysis company specialising in the business impact of information technology and communications (ITC). With world-wide, native language reach, Quocirca provides in-depth insights into the views of buyers and influencers in large, mid-sized and small organisations. Its analyst team is made up of realworld practitioners with first-hand experience of ITC delivery who continuously research and track the industry and its real usage in the markets. Through researching perceptions, Quocirca uncovers the real hurdles to technology adoption – the personal and political aspects of an organisation’s environment and the pressures of the need for demonstrable business value in any implementation. This capability to uncover and report back on the end-user perceptions in the market enables Quocirca to advise on the realities of technology adoption, not the promises. Quocirca research is always pragmatic, business orientated and conducted in the context of the bigger picture. ITC has the ability to transform businesses and the processes that drive them, but often fails to do so. Quocirca’s mission is to help organisations improve their success rate in process enablement through better levels of understanding and the adoption of the correct technologies at the correct time. Quocirca has a pro-active primary research programme, regularly surveying users, purchasers and resellers of ITC products and services on emerging, evolving and maturing technologies. Over time, Quocirca has built a picture of long term investment trends, providing invaluable information for the whole of the ITC community. Quocirca works with global and local providers of ITC products and services to help them deliver on the promise that ITC holds for business. Quocirca’s clients include Oracle, Microsoft, IBM, O2, T-Mobile, HP, Xerox, EMC, Symantec and Cisco, along with other large and medium sized vendors, service providers and more specialist firms.

Full access to all of Quocirca’s public output (reports, articles, presentations, blogs and videos) can be made at http://www.quocirca.com

Very clever variable VARs

http://www.quocirca.com

© 2011 Quocirca Ltd