The resale model is becoming commonplace for many cloud providers.
Selling cloud computing — especially of the externally hosted variety — to established businesses is no easy feat. Companies understand the potential benefits, but they’ve spent years and possibly large sums of money on virtualization efforts, and they have their own specific problems that aren’t easily addressed by one-size-fits-all cloud offerings. Many cloud providers and vendors, meanwhile, have neither experience selling to nor dealing with traditional businesses, which in turn puts them in a tough spot.
Considering these obstacles (not to mention, for smaller providers, the difficulty of attracting attention from under the shadows of Amazon Web Services, Google and Microsoft), many cloud companies are turning to channel partners to boost adoption, a very smart move. Systems integrators, VARs consultants, telcos and the like are trusted faces for many businesses, and via in-depth training by cloud providers, they can provide the personalized service those providers cannot. The role of channel partners changes a bit, of course — they’re managing applications and monitoring cloud infrastructure instead of hosting applications and building custom environments — but, generally, the song remains the same.
One provider making no secret of its channel strategy is OpSource. This week, in fact, the company announced telco veteran Keao Caindec as senior vice president and CMO, with the hope that he’ll use his experience to make that channel a major distributor of OpSource’s cloud services. The combination of telcos’ experience serving enterprise IT with OpSource’s enterprise-grade cloud-computing and SaaS-hosting platforms is a near-perfect match. For telco resellers, it means a full-featured suite of cloud services without spending millions on development; for OpSource, it’s more business and notoriety. Caindec, in fact, told me, “We could see more than half our business being driven by channel partners in the future.”
Even cloud vendors are getting into the channel game. Elastra’s Stu Charlton, during a recent conversation, informed me that the company is seeing a large degree of interest from systems integrators. The rationale is simple: Systems integrators want a solution that lets them test customers’ applications on the cheap, or that lets them port legacy applications to the cloud, and Elastra provides just such a solution with Cloud Server. Who knows whether end-users would have turned to Elastra (or even AWS, the only cloud with which Cloud Server works) by themselves, but it might not matter much to Elastra in terms of its bottom line. Systems-integrator money is just as green as anyone else’s money, after all.
Recently, IT distribution giant Ingram Micro launched its Cloud Conduit program, offering its channel customers the ability to sell cloud services to their customers. Proving that the biggest names in cloud computing also see the value of channel partnerships, the three initial partners in Ingram Micro’s program are Amazon Web Services, Rackspace Hosting and Salesforce.com. Smaller competitors probably don’t want see these three now interfering with potential channel revenue, but they can’t blame them either. Not having a strong reseller alliance means missed revenue opportunities, and large providers are missing it on a larger scale.
But all in all, cloud-computing channel partnerships appear to be a win-win-win arrangement for all parties involved. Resellers get in on a hot market without making huge investments (OpSource’s Caindec mentioned one telco partner that believed it lost several million in the last quarter because it lacked a cloud offering), cloud providers increase the visibility and attractiveness of their offerings and end-users get cheaper IT without having to learn the intricacies of developing or managing applications to run in the cloud.
The only losers might end up being large IT vendors directly selling their own cloud services: Channel partners — experienced in dealing with businesses, thanks to their relationships with these vendors, and feeling scorned over lost opportunities with their longtime partners — are reselling the very offerings large-vendor efforts emulate. That’s no slight against large vendors’ cloud offering or their abilities to turn profits with them, it’s just an assertion that resellers and cloud providers have a uniquely symbiotic relationship that should serve them well at the expense of some direct sellers.