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This attitude has had an impact on the channel and particularly the adoption of cloud computing. The channel still appears to be nervous about offering cloud services and according to recent research by TechMarketView, specifically larger and older vendors tend to have a lot of legacy systems making it difficult for them to alter the way they offer services in a cloud based model. However, now more than ever in these new lean times with capital expenditure continuing to be under pressure the allure of being able to pay for only what you need as and when you need, which is the proposition underpinning the Cloud, is slowly gaining traction; TechMarketView points out, 15% of the UKs entire software market will be delivered via the cloud by 2012 and the channel has to change.

Whilst many end-customers are making steps towards cloud services (many use hosted content, email filtering and online CRM from companies such as Salesforce) they are still a little nervous about having mainstream services and applications in the cloud. This is mainly due to the perceived loss of control, security risks, contractual/service level definition issues, lack of case studies and understanding of the cloud as well as data protection management legislations such as the Information Commissioner's new guide.

It states penalties of up to £500,000 can be imposed for breaching the Data Protection Act and as a result the channel is taking a very careful approach to developing cloud products and services for channel partners and end-customers.

A report from the International Telecommunications Union (ITU) says the recession and recovery will challenge many organisations, but will also revitalise the technology industry encouraging new entrants with new technologies and services to thrive. Many companies such as Redstor are seeing this as an opportunity to focus on developing cloud products and services to provide channel partners with quality assured and customer focused products that address specific concerns and needs.

The cloud has unsettled the channel and appears to be changing the traditional set up. As older sizeable vendors and organisations struggle to adapt their business models, remuneration structures and embedded culture to the changing channel, smaller relatively new vendors and service providers will be able to compete equally with them by being nimble and quick to adapt their business operations in offering cloud services and solutions. The cloud allows vendors to deal direct with end-customers, cutting out the middleman, or channel partners, which could substantially increase their revenues. This is leaving the channel worried as it could potentially lose revenue if it doesn't adapt quickly to the flexible and on demand cloud services customers are starting to demand.

How should the channel change and where should it be?

The channel needs to work out where it will fit in this on-demand world as cloud computing brings with it new service offerings such as Software as a Service (SaaS), Infrastructure as a Service (IaaS), Platform as a Service (PaaS) and Public/Private Hybrid clouds. Customers now want to pick and choose the specific technologies and services they require from the channel as and when they need them so if all the customer needs is a fast Internet connection to get these direct services, then where can the channel add value?

Customers are no longer interested in software or hardware, they now care more about value for money, the outcomes of the service they receive and the high availability of that service. The traditional Channel set up is changing drastically and as customers become more focused on service and solution outcomes, there will be less money to be made from selling hardware and software. Rather than selling kit to their customers, Resellers and Distributors must work together and continue to ensure customer needs are met amongst the 'noise' of the cloud.

Resellers and Distributors can help customers better understand what services, applications and solutions are suitable for the cloud and which are best to be kept in house or part out-tasked to the cloud. Customers still want to have meaningful dialogue and advice from the channel partners they have come to know and trust over the years. The cloud represents an additional channel and way of doing business; it will not completely bypass or supplant current ways of working and relationships. To the forward thinking resellers and distributors it represents another opportunity for the channel to engage with its customers and hybrid business models will emerge.

Distributors are now considering value-added services as it's seen as a more successful way of competing in the emerging cloud market. Many channel partners have found that distributors still do not offer enough, if any value-addition. Most distributors have service centres in different geographies and endeavour to provide quality products and services but this is no longer enough. Customers are demanding much more from today's channel partners.

A true value added distributor must make sure the right products are made available at the right time in the most efficient and cost effective manner. One weak link in the channel can affect the whole chain; VADs must ensure customers at the end of the chain are given the exact services and support they demand instantly, by offering not only direct support from vendors and resellers but also from themselves.

Redstor is an example of a company which has been adapting to this new cloud partner world since 2005. Back then it distributed backup software to its education partners so they could build backup platforms and sell a backup service to their schools. As part of the solution, Redstor enabled partners to replicate their backup platforms back to the Redstor Storage Cloud. In time and with growing trust, partners realised the hassle of managing their own platforms and entrusted Redstor with providing the backup platform as a service. The partners maintaining control of the customer relationship and receiving a repeatable income stream.

Over 12,000 schools and 130 service providers in the education and commercial space now use Redstor's online backup service and the hybrid evolution has been so successful that Redstor has introduced new cloud services such as CentraStage device management, which has now been adopted by over 30 channel partners.Partners still retain their customer relationships and benefit from lucrative repeatable income streams with no upfront capital expenditure. This approach has proved that the channel and its customers can benefit hugely from the cloud provided they work with the right cloud and platform providers.

VADs need to evolve and partner with companies such as Redstor, which has been successfully providing cloud services to the channel for the past five years. They must focus on enabling service partners and making their lives easier by doing the work and thinking for them. As a result customers will have a tailored product or service, which in turn creates a loyal and long term customer base for resellers and vendors.

The Future of the channel

The channel must prepare for change and be far more nimble and versatile in responding to end-user demands. Offering siloed services will put many channel partners in a false sense of stability; however with an economic recovery comes aggressive competition.

The channel has to work out what role it will play in the inevitable move to cloud services, how they can retain their customers, move away from providing kit and find new repeatable income streams to ensure their prosperity and survival. It needs to offer more collaborative relationships in order to provide customers with truly valuable services tailored to their needs as and when they demand them.

The days of selling copious amounts of expensive software and hardware to customers that do not need it are well and truly over. Customers are more focused on the service outcome and customer experience, not on IT for IT sake. They want a partner who understands this and is willing to adapt and change with them.

Written by Paul Evans, Managing Director at Redstor

• Posted on: 13th July 2010 at 11:00pm
• Topics: The Cloud; Convergence; Consolidation;