Moving to a cloud model is inevitable for the channel, and is destined to change the relationship between VAR and vendor. Rather than reselling products, channel partners will be selling cloud subscriptions. So who owns the relationship with the customer and handles customer billing? How will compensation be structured?
These are the questions on many partners’ minds, notes Carolyn April, director of industry analysis at the IT industry association CompTIA, in Downers Grove, Ill., which recently completed a survey about vendors’ partner programs. “How will the vendors structure how they’re compensating their partners when the partner’s business model changes from a product-based sale to a cloud computing sale?” she asks. “Is the channel going to be acting as an agent only? That’s going to be a big business model change for some.”
It comes down to this: Who owns the customer? That, it seems, is a question executives from some major vendors are not anxious to answer. At a recent partner event hosted by distributor Synnex Corp., for example, executives dodged the question, simply noting that in the past the VAR owned the customer and used his or her IT expertise to bring the vendor’s goods and services to that customer in a salable package.
But according to Tiffani Bova, vice president at Gartner Research covering sales and channel strategy, that’s not the right way to look at it. “Nobody owns the customer,” she says. “The customer owns the customer.” Bova points out that most customers use multiple partners to complete their IT business transactions, so what partners really own is the relationship with their customers. And as long as partners do not allow it to happen, vendors will not trample on those relationships.
This is entirely dependent on individual partners, of course. Bova notes that partners who hold onto the concept of transacting licenses or products as their primary source of revenue are in for an awakening. “Cloud is going to be significantly disruptive to [their] business,” she says.
But partners who invest in delivering business process-oriented services as a great percentage of their overall revenue, who are more interested in professional services than technical break-fix offerings, are likely to see the vendor/customer cloud relationship as fruitful. “There is far more services revenue made around the cloud than in the transaction of the technology,” says Bova.
BEST CHANCES FOR SUCCESS
Qualitative follow-up responses with unidentified vendors in the CompTIA partner programs study underscore Bova’s assertions. According to those vendors, partners need to focus more on selling to key customer pain points and less on selling features and functions. They also say that services-oriented partners have the best chances of success with cloud computing.
One channel director in the study says that even though the cloud has much to offer end users, the end user still needs someone to help with the last mile of consulting services and support.
“At the end of the day, we’ll probably have an evolution where we’ll have new channels or new sets of channel partners,” says another CompTIA survey participant, a VP of channels at a software company. “Some of [the programs] will probably die and become obsolete. But at the end of the day, channel partners will exist.”
