How Cloud is Changing the Channels

We continue to see doom and gloom news about the future of the software distribution channel, in particular how it’s being impacted by the global recession, catalog providers and, most importantly, the cloud security delivery model. We already know that cloud software will change the security landscape as we know it today and it looks likely to change the software marketplace as well.

In my opinion, this change is long needed, and for the better. Resellers who find the right education and support for transitioning to a mixed world with both traditional and cloud delivery mechanisms will find this a much-needed improvement.

The security landscape is constantly changing. With new attacks coming from far more sophisticated sources and in greater volumes than ever before, channel partners now have an unprecedented opportunity to help their customers protect themselves with cloud-based services, which are far more effective and easier to maintain than traditional, on-premises products.

But two potential roadblocks may stand in the way of progress: Many CIOs or IT administrators and other potential customers are not well versed in the cloud, and they’ve likely become sensitive to budget constraints during the recession. Naturally, they tend to turn to a balance of price versus relationship and support.

Resellers must identify new areas where their knowledge and skills can differentiate them from commoditized technologies. Cloud and virtualization technologies, for example, will give resellers a greater advantage toward differentiation than products that have reached a stage where e-commerce houses can adequately provide them at a cheaper cost of sale.

Some security vendors enter the cloud market and sell directly without taking into account the value of the channel. Having attended a channel conference some months back, I heard vendors discuss models such as delivering cloud offerings directly to customers and perhaps paying their channel partners a commission or very low rate for all sales and an even lower rate for renewals. That kind of model, in my opinion, doesn’t exactly make for a great incentive to get a reseller on board.

Ultimately, I believe customers will choose cloud technologies regardless of whether they receive it direct or via the channel. After all, if a technology offers better performance and effectiveness for less cost, it’s going to be their first choice, regardless of who presents that choice to them.

IDC predicted this past July that the SaaS delivery model would wipe $7 billion off the software licensing market this year alone, with a proportional market price decline continuing in subsequent years. Like it or not, the channel needs to find vendors who will support cloud and get on board with cloud as a distribution model. Those that fight the change will, in my opinion, pay the price in lost sales and customers as others take a more pragmatic approach.

Ian Moyse is sales director at www.workbooks.com and a Eurocloud UK and Cloud Industry Forum Governance board member.