Cloud challenges for the channel

Customers want the advantages of cloud computing, particularly delivered on premise as private or hybrid cloud, but they have a tricky evolution of their own. The IT department is under pressure too, trying to reduce cycle times and improve responsiveness – becoming an agent of enablement, not control – and they need help to get there. They need partners who understand their business, their infrastructure and their options.

Unfortunately, most of those options don’t seem to involve channel partners. At least, not in the traditional sense.

Earlier this year, I visited Microsoft’s Redmond headquarters and spent a few days with the execs and engineers developing the company’s cloud and server products. And while those products are telling an interesting story, one of seamless management and migration of workloads between datacentres, there’s an ominous footnote for the channel: evolve or else.

IT departments are struggling with cloud services popping up under their noses, signed up for by users eager to explore new tools and improve productivity. Microsoft has taken this to heart, with new features like Azure’s management interface that encourages users to self-provision cloud services and then delegate them to a centrally-managed Active Directory. It’s estimated 500 services will be supported by the end of this year (and the growth is more about market adoption of standards-based federated identity than any tie-up with Microsoft). Windows Server and Azure, in other words, are forming a framework for provisioning and managing Software as a Service (SaaS). Great for users and admins, but it completely eliminates the middleman.

And enterprise software is rushing to the cloud.

The ASP (application service provider) model didn’t set the world on fire all those years ago, but it did set the stage for today’s cloud computing, and where ASPs were largely operating as an online channel for existing solutions, cloud SaaS is built to scale without intermediaries. IT admins can initiate and deploy enterprise applications through the web, delivering services to end users on desktops and mobile devices without an implementation partner in sight. There’s value to be added, but it’s in integration, not installation.

Take South African stalwart Accpac, now Sage. It’s a good example of a software company moving firmly into cloud delivery, but its partners should not be under threat...if they are able to evolve as well. There are two key cloud advantages for Sage and its partners. Cloud delivery streamlines software provisioning and licensing, but opens the door for implementers to lift themselves out of the disk-shipping business and become more strategically aligned with their customers. Meanwhile, the principal’s business is, in turn, enhanced – Sage, for example, is making use of third-party cloud-based services to deliver new functionality.

The channel, then, will no longer be delivering a Sage accounting or ERP product, it will be delivering a cloud ecosystem, and can build related business services. Himanshu Palsule, CTO of Sage, visited South Africa earlier this year and spoke bluntly about the disruption facing the channel. The channel has to stop delivering technology, and start delivering business solutions, he said, noting that some simply aren’t going to make it. That’s a tough line to take, but it’s also a reassuring: if you’re doing business with a technology provider so upfront about channel evolution, you should expect support in that transition.

Conversely, any of your providers without a clear cloud strategy, and without clear expectations of their channel’s role in the cloud, is a partner you need to look at very closely, and start asking the same tough questions that the users will.

The bottom line is at once simple and complex. The cloud is going to revolutionise the IT channel – in many areas it already has and in others the writing is on the wall. There is opportunity for those who can adapt, and adversity for those who can’t.