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What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
What Does Cloud Computing Mean for the Channel?
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What Does Cloud Computing Mean for the Channel?

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Presented at 2010 Sage Insights Partner Conference by Laurie McCabe, Partner, SMB Group

Presented at 2010 Sage Insights Partner Conference by Laurie McCabe, Partner, SMB Group

Published in: Technology, Business
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  • Spot-on practical advice for the portion of the channel that sees the need to evolve.
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  • Really great presentation - The thing that rings true for me is the idea that the channel is no longer a reselling position - it is a business process facilitation. We're beginning to talk more and more about it on our linkedin group called Business Value Migration and on our blog: http://bit.ly/valuemigration
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  • This presentation is spot on and can be leveraged when discussing [1] Cloud/SaaS opportunities with Channel Partners and [2] Channel strategy with Cloud/SaaS Vendors.
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  • 1. Perspec'ves
on
the
Business
Model
of
 the
Future:
 What
Does
Cloud
Compu'ng
Mean
for
the
 Channel?
 2010
Sage
Insights
 Laurie
McCabe
 Partner,
SMB
Group
 5/26/10 Copyright SMB Group 2010 1
  • 2. Agenda
 •  Pu5ng
Cloud
Compu:ng
in
Perspec:ve
 •  What
Does
Cloud
Compu:ng
Mean
for
the
 Channel?
 •  Crea:ng
Value
in
the
Cloud:
Top
Success
Factors
 •  Summary
 •  Q
&
A
 5/26/10 Copyright SMB Group 2010 2
  • 3. PuDng
Cloud
Compu'ng
in
Perspec've
 5/26/10 Copyright SMB Group 2010 3
  • 4. Cloud
Compu'ng—PuDng
it
Simply
 •  Cloud
compu:ng
is
a
compu:ng
model
that
lets
you
access
soJware,
 server
and
storage
resources
over
the
Internet,
in
a
self‐service
manner
 •  Instead
of
having
to
buy,
install,
maintain
and
manage
these
resources
on
 your
own
on‐premise
servers,
you
access
and
use
them
over
the
Internet
 through
a
Web
browser
 •  Some:mes
you
might
need
to
download
a
small
piece
of
client
code,
but
 for
the
most
part,
the
real
horsepower
is
supplied
from
the
cloud
 Cloud Computing Data Customer Site Center 5/26/10 Copyright SMB Group 2010 4
  • 5. But
We
Can’t
Keep
Anything
Simple!
 5/26/10 Copyright SMB Group 2010 5
  • 6. Cloud
Compu'ng
Takes
Different
Shapes…
 Infrastructure‐as‐a‐ PlaRorm‐as‐a‐Service
 SoJware‐as‐a‐Service
 Service
(IaaS)
 (PaaS)
 (SaaS)
 Amazon
EC2,
 (AppExchange,
Intuit
 (Salesforce.com,
 OpSource,
Rackspace,
 Partner
PlaRorm,
 NetSuite,
Success
 etc.
 MicrosoJ
Azure,
etc.)
 Factors,
etc.)
 SoJware
+
Service
 Connected
Services

 
“Hybrid”
Model

 (MicrosoJ,
Intuit,
Sage,
etc.)
 5/26/10 Copyright SMB Group 2010 6
  • 7. Cloud
Compu'ng
Evolu'on
 Workflow- enabled

 Business
 Process
Hubs
 Marketplaces
 Pre‐integrated
 “Cloud”

 Cloud/on‐ SaaS
 premise
 On‐premise
 solu:ons
 SaaS
(Ver:cal
 Appliance
 solu:ons
 “Hybrid”
 PaaS
 IaaS
 SaaS
(More
 integrated
 horizontal
 Hosted
ASP
 solu:ons))
 model
 Early
mul:‐ On‐Premise
 tenant
SaaS
 Client/Server
 1990 2000 2005 2010 Wave
3

 Wave
1

 Wave
2
 •  Integrated
suites
 •  Hybrid
 •  Standalone
apps
 •  Vertical
solutions
 •  Ecosystems
and
marketplaces
 •  Horizontal
solutions
 •  PaaS
 •  Pre-integration
 •  Multi-tenancy
as
an
option
 •  IaaS
 •  Community
access
 5/26/10 Copyright SMB Group 2010 7
  • 8. One
Thing
is
Certain‐‐Cloud
Compu'ng

 Adop'on
is
Growing
 •  Cloud
infrastructure
will
grow
to
 116.5
B
by
2014:
Forrester
 •  20%
of
all
businesses
will
own
no
 IT
assets
by
2012:
Gartner
 •  Cloud
compu:ng
market
growth
 28%
annually
to
$126
B
by
2012
 •  “Hockey
s:ck
growth
for
cloud
 compu:ng”
‐‐
Steve
Ballmer
 (Informa0on
Week
4‐19‐10)
 5/26/10 Copyright SMB Group 2010 8
  • 9. What’s
Fueling
Cloud
Compu'ng
Growth?
 Customers
 “Faster,
Cheaper,
Easier”
 •  Technology
is
ge5ng
more
complex
 •  Eliminates
capital
investments
for
infrastructure
 •  Eliminates
ongoing
technical
managementand
update
costs

 •  Reduces
financial
risks—predictable
subscrip:on
v.
large
upfront
costs
 •  requirements
for
internal
IT
exper:se
 •  Speeds
:me
to
solu:on
value
 •  Increases
vendor
accountability
and
service

 •  Evolves
more
flexibly
 •  Provides
connec:vity
and
collabora:on
advantages

 Organiza:ons
are
focused
on
business
results—not
on
 technology,
applica:ons
or
infrastructure.

IT
is
a
means
 to
an
end—the
value
of
IT
lies
in
how
companies
can
 apply
it
to
meet
business
objec:ves.
 5/26/10 Copyright SMB Group 2010 9
  • 10. What’s
Fueling
Cloud
Compu'ng
Growth?
 Vendors
 “New
revenue
streams
and
more
efficiencies”
 •  Reach
and
penetrate
new
markets
by
lowering
costs
and
reducing
 technology
barriers
to
solu:on
adop:on
 •  Enables
easier,
faster
prospect
trials
 •  Provides
a
predictable
and
stable
recurring
revenue
stream
 •  Provides
a
real‐:me
pulse
on
customer
behavior
and
requirements
 •  Enables
cross‐selling
opportuni:es
 •  Centralized
controlled

environment
reduces
support
calls
and
costs

 •  More
manageable
upgrade
cycle
 
SoJware
vendors
want
to
capitalize
on
the
Internet,
 digital
technologies
and
“the
economies
of
scale
and
skill”
 that
cloud
and
SaaS
compu:ng
provide.

 5/26/10 Copyright SMB Group 2010 10
  • 11. It’s
Going
to
Be
a
Hybrid
World

 for
a
Long
Time
 •  Most
customers
want
a
blend
of
 soJware
and
services

 •  Cloud
compu:ng
will
complement
 rather
than
replace
tradi:onal
on
 premise
compu:ng
solu:ons
 o  Security
 o  Compliance
 o  Network
performance

 o  Hybrid
or
soJware
plus
services
 model
offers
choice
and
flexibility
 o  Beyond
a
certain
number
of
users,
 on‐premise
solu:ons
can
be
more
 cost
effec:ve
 o  Reliability
(poten:al
network/data
 center
outages)
 •  Combina:on
of
cloud
compu:ng,
 SaaS,
on‐premise
and
virtualiza:on
to
 deliver
solu:ons
 5/26/10 Copyright SMB Group 2010 11
  • 12. What
Does
Cloud
Compu'ng
Mean
for
the
 Channel?
 5/26/10 Copyright SMB Group 2010 12
  • 13. Channel
Adop'on
of
Cloud
Compu'ng
 Drivers
 Inhibitors
 Customer/account control‐‐disinterm 
 edia:on
 Customer
demand
 Compensa:on
 Annuity
revenues
 Selling
services
inst ead
of
 soJware
 Business
consul:ng 
 opportunity
 Limited
customiza: on
 opportunity
 5/26/10 Copyright SMB Group 2010 13
  • 14. Tradi'onal
SoWware
Channel
Model
 •  Indirect
channel
is
an
integral
part
of
the
sale,
delivery
and
 support
of
on‐premise
business
soJware
 •  Complements
soJware
developer
with
sales,
implementa:on,
 support
and
service
 •  Tasks
are
divided
and
there
is
limle
overlap
between
soJware
 develop
and
channel
roles
 Indirect End‐user
 SoJware
 Channels Customer
 Developer
 VARs, SIs, Distributors, etc. 5/26/10 Copyright SMB Group 2010 14
  • 15. Cloud
and
SaaS
Channel
Model
 •  Cloud
compu:ng
and
SaaS
doesn’t
align
with
the
tradi:onal
IT
 channel
provider
role
 •  SaaS
or
cloud
provider
delivers
many
of
the
things
that
IT
channel
 has
tradi:onally
provided‐‐soJware
and
hardware
sourcing,
 installa:on,
management,
etc.
 •  Line
is
oJen
blurred
between
soJware
developer
and
channel
roles
 Cloud
 Traditional IT End‐user
 SoJware
 Channels Customer
 Developer
 Channel 5/26/10 Copyright SMB Group 2010 15
  • 16. Changes
in
Partner
Role
and
Opportunity
 Task
 On
premise
 Cloud/SaaS
 Change
in
revenue
opportunity
 License/ Partner
as
reseller

 Partner
as
catalyst

 Smaller
ini'al
deal
sizes
(. subscrip'on
 Lengthy
sales
cycle
 Shorter
sales
cycle
 5‐1.5x" service
sales

 High
customer
IT
involvement
 Lower
customer
IT
involvement
 Upfront
revenue,
but

 10%‐30%
margin
paid
upfront
 One
'me
referral
fee/up
to
30%
 can
be
recouped
via
annuity
 ongoing
annuity
 stream
 Implementa'on
 Lengthy
dura'on
(weeks
to
 Shorter
dura'on
(days
to
weeks)
 ”Time
to
value”
is
generally
 and
training

 months)
 Partner
doesn’t
install
anything
 shorter
 Partner
provides
product
sourcing,
 Partner
can
manage
project
and
may
 installa'on,
configura'on,
 provide
training
 training
 Partner
adds
value
“on
top”
 Partner
adds
value
“underneath”
 Integra'on,
data
 Integra'ng
local
on
premise
 Integra'ng
on‐premise
with
SaaS/ Integra'on
of
SaaS
to
on‐ migra'on,
etc.

 systems
 cloud
solu'ons—hybrid
model
 premise,
SaaS
to
SaaS
can
be
 more
complex
 Business
process
 Modifying
soWware
to
fit
business
 Aligning
business
processes
to
“best
 Favors
business,
industry
 consul'ng
 processes
 prac'ces”
 domain
exper'se
 Solu'on
 OWen
extensive
 Usually
limited
to
configura'on
 Code
is
usually
“locked
down”
 customiza'on/ configura'on
 Add‐ons,
 Good
opportunity
to
resell,
 Growing
opportunity
to
resell,
 Cloud
plahorms,
APIs,
etc.
 extensions,
etc.

 develop
and
integrate
 develop,
and
integrate
 ease
and
speed
development
 OVERALL
DEAL
SIZE
 3x
–
5x
license
sale
 .5x
–
1.5x
license/subscrip'on
sale
 Decreases
 5/26/10 Copyright SMB Group 2010 16
  • 17. Cloud
Compu'ng
Requires
Changes—But

 Doesn’t
Eliminate
the
Need
for
the
Channel
 Myth! •  Cloud/SaaS
vendors
have
focused
 more
on
direct
sales
to
establish
a
 strong
customer
base
and
 demonstrate
viability
and
scalability
 SaaS
and
Cloud
 
 •  But‐‐direct
sales
alone
can’t
fuel
the
 future
growth
curve
 vendors
can
effec:vely
 •  The
cloud
and
SaaS
eliminate/reduce
 penetrate
the
market
 technical
barriers
to
adop:on—but
 through
direct
Web
 customers
s:ll
need
help
to:
 o  Evaluate
and
select
the
“right”
 channels
alone
 solu:on
 o  Tailor
the
solu:on
 o  Integrate
legacy
and
third‐party
 solu:ons
 o  Adapt
business
processes

 o  Train
people
 5/26/10 Copyright SMB Group 2010 17
  • 18. Cloud
and
SaaS
Vendors
Need
the
Channel
to
 Bridge
the
Last
Mile
to
Mainstream
Customers
 •  Early
cloud
and
SaaS
growth
 fueled
by
evangelism
 •  Direct
model
works
with
early
 adopters
but
doesn’t
scale
for
 the
mainstream
 •  Lacks
trusted
advisor
to
help
 customers
evaluate
alterna:ves
 •  Doesn’t
do
enough
to
address
 concerns
that
many
customers
 have
 •  Overcomes
technology
barriers
 but
not
lack
of
business
process
 exper:se
required
to
extract
 business
value
from
the
solu:on
 5/26/10 Copyright SMB Group 2010 18
  • 19. Require
Channels
to
Fuel
Growth
 •  Direct
sales
costs
unsustainable
 to
influence,
sell
and
serve
the
 broader
market
 •  Cloud
and
SaaS
vendors
need
 to
leverage
channel/trusted
 advisor
rela:onships
to
scale
to
 a
broader
market
 •  Vendors
need
indirect
channels
 to:
 o  Catalyze
sales
to
a
broader
 market
that
channels
have
 served
for
years
 o  Minimize
customer
churn
 o  Op:mize
renewal
rates
 5/26/10 Copyright SMB Group 2010 19
  • 20. Vendor
Channel
Programs
are
S'll
Evolving
 •  Direct/indirect
sales
 •  Service
and
support
 •  Compensa:on
models
 o  Joint
customer
 o  Referral
commission
only
 services
tools
 o  Referral
+
annuity
 •  It’s
s:ll
early
 •  Rules
of
engagement
 o  Most
are
struggling
to
 formulate
a
win‐win
 •  Billing
models
 channel
formula
 •  Channel
programs
 o  Fight
for
channel
 o  Joint
marke:ng
and
sales
 partners
will
intensify
 programs
 o  Programs
will
change
 through
 o  Educa:on
and
training
 experimenta:on
 o  Partner
program
fees
 5/26/10 Copyright SMB Group 2010 20
  • 21. Crea'ng
Value
in
the
Cloud:
Top
Success
 Factors
 5/26/10 Copyright SMB Group 2010 21
  • 22. #1:
Think
Solu'ons,
Not
Products
 •  Focus
on
understanding
 ShiJ
from
 customer
needs
 •  Adjust
for
the
shiW
from
IT
to
 business
decision
makers
 solu:ons
 •  ShiW
mix
towards
services
and
 away
from
license/subscrip:on
 reseller
to
 sales

 •  Enhance
consulta've
sales
 solu:ons
 skills

 •  Deepen
business
process
and
 catalyst
 industry
exper'se
 •  Concentrate
on
customer
 results,
not
technology

 5/26/10 Copyright SMB Group 2010 22
  • 23. #2:
Capitalize
on
Economies
of
Scale
 •  Ramp
up
lead
genera'on
 and
sales
volumes
to
reach
 Prepare
for
 new
customers/markets
 •  Add/improve
online
 smaller
deal
 marke:ng,
telesales,
etc.

 •  Reformulate
skill
sets‐‐ sizes
and
 mul:‐tasking
sales
and
 project
managers
 faster
 •  Reformulate
 methodologies
and
 deployments
 approaches
for
service
 delivery

 •  Revise
compensa'on
plans
 5/26/10 Copyright SMB Group 2010 23
  • 24. #3:
Think
“And”
not
“Or”
 •  Non‐biased
advisor
to
help
 educate,
assess
evaluate
 Posi:on
for
 and
select

 •  Provide
customers
with
a
 a
hybrid
 “one‐stop
shop”
for
both
 on‐premise
and
cloud
 “soJware
+
 solu:ons
 •  Strengthen/develop
new

 services”
 integra'on
exper'se
 (legacy
to
SaaS,
SaaS
to
 model
 SaaS,
etc.)
and
security
 capabili:es

 •  Develop
virtualiza'on
 exper'se
 5/26/10 Copyright SMB Group 2010 24
  • 25. #4:
Strengthen
Your
Role
as
Trusted
Advisor
 •  Tailor
the
solu:on
to
specific
 customer
requirements
 Customers
 •  Hone
ver:cal,
domain
and
geo
 and
local
business
knowledge
 s:ll
need
 •  Provide
flexibility
and
services
 that
cloud/SaaS
vendor
doesn’t
 your
domain
 •  Choice
(aggregate
apps
from
 different
vendors)
 exper:se
 •  Data
migra:on
 •  Integra:on
 •  Change
management
 •  Etc.

 5/26/10 Copyright SMB Group 2010 25
  • 26. #5:
Extend
the
Solu'on
 Capitalize
on
 the
growth
 customer
needs
 •  Tailor
the
solu:on
to
specific
 opportunity
 help
customers
evaluate/select
 •  Become
an
expert
source
to
 capabili:es
for
a
more
 to
resell,
 •  
Provide
extensive
integra'on
 comprehensive
solu:on
 develop
and
 services
(on
premise
to
SaaS/
 SaaS
to
SaaS)
 integrate
 •  Develop
ver'cal
or
niche
 horizontal
func'onality
 addi:onal
 func:onality

 5/26/10 Copyright SMB Group 2010 26
  • 27. #6:
Look
for
a
Channel
Friendly
Vendor
 •  Evaluate
strategies,
offerings,
 pricing,
etc.

 Cloud
and
 •  Vet
vendors’
partnership
DNA
 SaaS
vendor
 •  Reputa:on
and
trust
 •  Direct/indirect
channel
focus
 •  Clear
rules
of
engagement
 channel
 •  Educa:on
to
help
shiJ
business
 model
and
build
new
skill
sets
 programs
 •  Rewards
for
high
levels
of
 customer
engagement
and
value
 vary
 add
 •  Par:cipa:on
fees
 significantly
 •  Joint
marke:ng
and
sales
 programs
 •  Customer‐facing
tools
and
 dashboard
 5/26/10 Copyright SMB Group 2010 27
  • 28. #7:
Adjust
Your
Business
Model
 • Need
to
align
business
model
with
 with
vendor(s):

 • Referral
fees
 Align
skills,
 • Annuity
fees
 • Renewal
fees
for
contract
renewal

 metrics,
etc.
 • Coop
marke:ng
funds
 • Plan
for
different
cash
flows
 to
op:mize
 • Smaller,
more
frequent
 compensa:on
 • Less
money
upfront,
but
 your
 “smoother”
annuity
revenue
curve
 over
:me
 opportunity
 • Consider
crea'ng
a
separate
 organiza'on
for
cloud/SaaS
 business—since
it
tough
to
align
 skills,
compensa:on,
metrics,
etc.
 across
these
different
models
 5/26/10 Copyright SMB Group 2010 28
  • 29. Summary
 5/26/10 Copyright SMB Group 2010 29
  • 30. Cloud
Compu'ng
is
an
Opportunity

 for
the
Channel
 •  Cloud
compu:ng
and
SaaS
are
not
a
fad
 o  Cloud
and
SaaS
compu:ng
vendors
are
growing
more
rapidly
than
 conven:onal
soJware
businesses
 o  Will
be
the
only
way
some
businesses
will
be
able
to
consume
 increasingly
complex
technology
they
need
to
run
their
businesses
 profitably
and
compe::vely
 •  Customers
need
help
in
choosing,
implemen:ng,
tailoring
and
 managing
cloud
and
SaaS
solu:ons
 o  Many
customers
are
s:ll
confused

 o  Cloud
compu:ng
models
are
con:nuing
to
evolve
 o  Hybrid
model
will
be
the
norm
for
the
foreseeable
future
 •  Indirect
channels
are
cri:cal
to
fueling
future
growth

 5/26/10 Copyright SMB Group 2010 30
  • 31. Remember
that
Customers
S'll
Need
Help!
 •  Evalua:ng
and
selec:ng
the
“right”
solu:on
 •  Implemen:ng
and
tailoring
the
solu:on
to
 their
specific
business
and
technical
needs
 •  Integra:ng
third‐party
applica:ons
to
extend
 the
solu:on
 •  Changing
business
processes

 •  Training
people
to
become
produc:ve
on
the
 solu:on
 5/26/10 Copyright SMB Group 2010 31
  • 32. Look
for
the
Opportuni'es
 1.  Think
solu:ons,
not
products:
shiJ
from
solu:ons
reseller
to
 solu:ons
catalyst
 2.  Capitalize
on
economies
of
scale:
prepare
for
smaller
deal
 sizes
and
faster
deployments
with
higher
volume
strategy
 3.  Think
“and”
not
or:
Posi:on
for
a
hybrid
“soJware
+
 services”
model
 4.  Strengthen
your
role
as
trusted
advisor:
customers
s:ll
need
 your
domain
exper:se
 5.  Extend
the
solu:on:
Capitalize
on
the
growth
opportunity
to
 resell,
develop
and
integrate
addi:onal
func:onality

 6.  Look
for
a
channel
friendly
vendor
to
partner
with:
Cloud
 and
SaaS
vendor
programs
vary
significantly
 7.  Adjust
your
business
model:
Align
skills,
metrics,
etc.
to
 op:mize
your
opportunity
 5/26/10 Copyright SMB Group 2010 32
  • 33. Thank
You!
 SMB
Group,
Inc.
 508‐410‐3562
 informa:on@smb‐gr.com
 Website: www.smb-gr.com Blogs: http://sanjeevaggarwal.wordpress.com http://lauriemccabe.wordpress.com 5/26/10 Copyright SMB Group 2010 33

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