One of the key factors determining the future growth of the cloud computing marketplace is the pace in which IT solutions companies — ranging from value-added resellers (VARs) to systems integrators (SIs) and managed service providers (MSPs) — transform their businesses to better support their customers’ cloud migration processes.
Despite the promises that adopting cloud service alternatives is significantly easier than deploying traditional, on-premises hardware and software of the past, the truth is that the migration process is still complicated and fraught with pitfalls.
A recent survey conducted by THINKstrategies and INetU of 358 IT professionals found 43 percent have had a failed or stalled cloud project implementation. Of these, nearly half had cost overruns relative to their original budgets, two-thirds had to change their cloud environment from the original plan within a year, and more than 50 percent had to make a change in the first six months. Given the respondents’ negative experiences, it isn’t surprising that only 27 percent of the participants in our survey were extremely satisfied with their overall cloud deployment experience.
However, the survey also found the companies that worked with experienced IT solution providers were more likely to be successful. Our findings may not be surprising, but they reinforce a longstanding truism in the technology industry: cloud vendors are just as dependent on strong channel partners to ensure the success of their mutual customers as the previous generation of software and systems vendors.
Building strong channel relationships that encourage greater customer success has been the primary focus of THINKstrategies’ Cloud Channel Summit for the past four years. The executive forums have enabled senior-level business development pros to trade perspectives about industry best practices and establish the new relationships to respond to the escalating demand for cloud services.
We co-located our most recent Cloud Channel Summit in San Diego with the NexGen Cloud Conference, hosted by the Channel Company, to educate IT solution provider executives about the new business opportunities in the cloud and how they can leverage cloud services to streamline their operations and respond more effectively to their customers’ changing requirements.
Many IT solution provider executives continue to be hesitant to convert their businesses to a cloud solution provider orientation. This reluctance isn’t surprising given the perceived and real risks involved.
IT solution providers have heard plenty of predictions about the channel being disintermediated by the cloud and are rightfully concerned about the impact of commoditized Infrastructure-as-a-Service (IaaS) offering on their businesses. There is no question that the escalating customer expectations and intensifying competition in the cloud marketplace requires IT solution providers to realign their operations to be more responsive to their customers’ changing needs and more agile to keep pace with a new set of competitors.
However, the THINKstrategies/INetU survey clearly shows IT solution providers can profit by helping their customers properly evaluate, select, deploy and manage cloud services to meet their corporate objectives. And customizing the cloud services to cater to customers’ specific business needs is where the solution providers can offer the greatest value-add and gain the greatest competitive advantage.
As I stated in a previous Sandhill.com commentary, even Salesforce.com is seeing a surge in customer deployments that involve SI partners and generating greater revenues from these joint engagements.
Converting more of these IT solution providers into effective cloud solution providers will be essential for the cloud industry to continue to grow.