How Channel Partners Can Weather The Cloud IT Storm
It’s no secret we live in an era where businesses of all sizes are demanding cloud IT services. According to IDC, cloud spending, including cloud services and IT products, will exceed $500 billion by 2020. The cloud continues to transform how businesses communicate and collaborate, and it has even helped many businesses leverage enterprise-grade tools and infrastructure at a very affordable price.
The cloud is also transforming the IT channel and, specifically, the way partners (who sell technology solutions to businesses) operate — from the way they sell and market, to the way they bill their customers. It’s now more important than ever for channel partners to acquire new skills and expertise to grow their businesses and deliver more value to their customers. But, the transition hasn’t been easy for many — channel partners are now facing a sink-or-swim era.
Here are three ways channel partners can not only weather the cloud IT storm, but come out on top.
Increase added value
Traditionally, channel partners have been able to rely on their technical prowess to get by. However, in today’s cloud-centric world, this expertise is not nearly as important. Businesses can now work directly with the big cloud providers to deploy solutions for email, voice, backup, file collaboration and much more — there’s no need for deep technical knowledge to build and maintain these types of solutions.
Previously, a channel partner’s technical expertise used to be an absolute necessity, but now, this isn’t always the case. It’s critical that partners develop specialization in verticals, provide hands-on implementation support and offer expert round-the-clock support to achieve high value (and high margin) differentiation compared to the big cloud players.
To be successful in a cloud-dominated IT landscape, channel partners need a greater number of customers to achieve the same level of top-line revenue each year. Prior to the cloud, channel partners were mainly selling, upgrading, installing and maintaining IT in the (more expensive) infrastructure model. This shift is likely the reason why CompTIA’s research revealed a 64 percent increase in the number of channel firms that expect more revenue to come from new customers over the next two years. Transitioning existing customers to cloud services alone simply won’t be enough to close the initial top-line revenue gap. Channel partners must have a robust marketing strategy (beyond word of mouth) to drive new customer acquisition. CompTIA’s latest “State of the Channel” study revealed only 32 percent of channel partners considered their sales and marketing efforts to be highly effective — further reinforcing the fact that channel partners have not traditionally been considered sales and marketing experts. But, with the cloud IT model now prevailing, the time has come to significantly invest in these areas.
Embrace a new way of selling
Many large vendors with direct sales channels are pumping millions of marketing dollars into driving significant awareness of their cloud services. This can work for or against channel partners, as businesses often make up their minds before they even speak with a service provider. On average, businesses complete nearly 60 percent of a typical purchasing decision before even having a single conversation with a supplier. This includes researching solutions, ranking options, setting requirements, benchmarking pricing, and so on. Channel partners can choose to act as order takers if they happen to resell the specific product or set of products a prospect is demanding. However, the products or solutions businesses want aren’t always the solutions they actually need. It’s critical for channel partners to reinforce their position as trusted advisers by providing solutions that truly addresses customer needs and pain points. Giving customers exactly what they ask for to make the easy sale is a short-term strategy at best, and it can lead to serious longer term retention issues.
The cloud IT storm continues to loom and the forecast isn’t changing anytime soon. So, what does this mean for the future of the IT channel? It means channel partners will continue to thrive if they invest in developing skills to help them scale and further enhance their value add. Many partners are catching on, but many still have a ways to go. Don’t get left behind.
Edited by Erik Linask