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Creating Profitable Channels in the Cloud

By November 19, 2013Article

Now that cloud computing has become a viable alternative for a growing number of small and midsize business (SMBs) and large-scale enterprise decision makers, the question facing a widening array of SaaS, PaaS and IaaS providers is how to build a vibrant network of third-party channels to extend their reach in the rapidly expanding marketplace. 

This has been the focus of attention at THINKstrategies’ annual Cloud Channel Summit, supported by The first Cloud Channel Summit, two years ago, discussed how to get traditional resellers, value-added resellers (VARs) and distributors to recognize the new business opportunities in the cloud. Last year’s Summit showcased channel initiatives aimed at capitalizing on the new market opportunities. And this year’s Summit examined the key issues that still need to be addressed to build profitable channel relationships in the cloud marketplace. 

Tim FitzGerald, vice president of datacenter and cloud technology solutions practices at Avnet Technology Solutions for the Americas, kicked off the event by identifying how the cloud changes the channel dynamics and the new vendor/channel collaboration, programs and skills that are required to respond to changing customer demands. 

Ron Huddleston, senior vice president of ISVs and channels at, reinforced Tim’s observations by discussing how today’s cloud ecosystems are redefining channel relationships. Ron suggested that providing a quality user experience is key to channel success because of the consumerization of IT. 

Dave O’Callaghan, senior vice president of global channels and alliances at VMware, provided a historical perspective regarding how the cloud is reshaping partner relationships in a one-on-one “fireside chat.” Despite the promise of cloud services that they will simplify corporate operations, O’Callaghan still sees growing demand for consulting services. But the virtualization of software and commoditization of hardware are shrinking traditional channel margins and forcing channel companies to adopt new approaches to meeting their customers’ needs. 

These themes were reiterated in a series of roundtable discussions focused on PaaS, IaaS, Big Data, SMBs and cloud marketplaces. In each session, cloud industry executives admitted that they are just beginning to see their channel partners gain success selling and supporting their offerings. They also said that this initial success will grow only if they work closely with their partners to identify the right combination of packaging, pricing and promotional factors to drive greater customer acceptance and adoption. 

The most common best practices identified by the Summit speakers were: 

  • Establish ongoing communications programs that encourage collaboration.
  • Capture detailed activity data and provide easy-to-use analytics to identify valuable customer behavior patterns.
  • Develop technical and business skills training that not only enable channel staff to address their customers’ support issues, but also help them achieve their corporate objectives. 

The bottom line is that traditional channel companies no longer need to be convinced that the cloud represents a fertile market opportunity, but they still need plenty of help capitalizing on this opportunity. In the meantime, new channels to market are emerging, such as corporate app stores, which are reshaping the competitive landscape. 

Jeff Kaplan is the managing director of THINKstrategies, founder of the Cloud Computing Showplace and host of the Cloud Innovators Summit conference series. He can be reached at

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