New Revenue Opportunities with Cloud
B Raghavendran, Director, Partner Organization, Cisco India and SAARC
Article Published in DQ Channels/ DQ WEEK
The changing landscape of the Internet and communications technologies has created new challenges and unearthed new growth opportunities for both partners as well as their customers. With today’s businesses requiring more than just basic technology to reduce costs and grow efficiently, the network has emerged as the primary platform to support most critical business processes and align with customer demands.
As the market evolves and new technologies emerge, customers today have more choices and seek innovative ways to control costs. Technologies like cloud computing have a great impact on enterprise-based and private online environments in the delivery of shared resources, software and information as a utility over a network.
Cloud: the new normal
Cloud Computing has emerged as one of the top technology priorities for IT professionals according to a study by Gartner. The study estimates that nearly 50% of all CIO’s expect to shift the majority of their applications/infrastructures to the cloud by 2015. According to a Cisco study, twenty-three percent of total IT spending is devoted to Cloud and the increase in Cloud’s share of IT spending is expected to increase by 17 percent over the next three years. This means as businesses transition into the next phase of IT evolution, partners like the rest of the ecosystem, will need to know how to adapt and seize opportunities for growth.
Premises-based solutions that demand a heavy up-front capital investment are making way to hosted and managed models that require a minimal initial investment. They also help reduce the operational cost of employing specialized IT staff and enable businesses’ conserve cash in a fragile economic environment through easy-to-absorb monthly payments. Such solutions also help organizations to focus on their core competencies instead of constantly keeping pace with fast-changing network technologies and applications. In India, Cloud based solutions are also seeing rapid uptake in the SMB segment.
Opportunity for Partners
With customers’ seeking scalable, on-demand compute and storage and looking to move from capital expenditures on IT to operational expenditures, it is necessary for partners to go beyond the traditional resale proposition and customize their portfolio in a sustainable manner. Cloud is opening up a plethora of new business models that allow technology partners to go beyond their role of ‘providers’ to become ‘consultants’ in their own right. The direct impact of technology on business goals has changed the way customers are looking to work with their IT providers, and they are now relying on the expertize that the IT partner possesses to boost business imperatives.
Organizations increasingly seek skilled partners who not only understand the network, but the datacenter, virtualization, and the storage piece. Partners are expected to have all the capabilities of a system integrator in addition to a comprehensive view of what the business needs are. Partners are expected to transform from a product to a services play and develop expertise in the area of intelligent networks and the Cloud. New business models need to be developed because there are multiple market transitions happening simultaneously – each of which could change the industry.
Opportunities exist for partners who can focus on cloud services including SaaS, TaaS and IaaS. Channel partners with the right skill sets can reap higher profits and grow their business. Foresight and the necessary expertize can help partners make informed transitions, especially in terms of their relationship with vendors. Partners need to join hand with vendors who can help them leverage industry transitions, and provide them with the capability to create annuity streams for themselves.
Vendor support critical
Vendors need to be cognizant of the fact that partners need to evolve their business to stay competitive and be successful. They need to support this evolution through introduction of cloud partner programs to help partners choose their role in the cloud, evolve their business models to capitalize on the cloud market opportunity, enhance their professional services capabilities and accelerate their evolution to selling end-to-end communications and IT solutions or 'architectures.
They should also provide guidance on key business functions including business-model building, marketing, sales, operations and services. Armed with these insights, partners can make better informed decisions when building a cloud strategy that is expansive, flexible, and ready for the deep changes that continue to disrupt the future of IT consumption.
Vendors should also aim to simplify operations, streamline audits and refresh requirements to reflect the latest technologies and architectures. This will reduce operational costs for partners without compromising service quality or end-user experience. Vendors must assist partners in their go-to-market strategies to build, market, and sell their services. This can provide partners with a competitive edge and augment the value of the partner services in the marketplace.
Partners realize that they need to transition to a more scalable business model and cannot restrict themselves to a traditional set-up only, if they’re looking for sustenance. As they becoming more aware of this shift, partners have begun to evaluate suitable models that would complement their business strategies and help them achieve an efficient and easily integrated outcome.
With increased demand from customers, partners will soon see the pipeline building up for cloud and managed services. Customers will move to the cloud in small but definite steps. Adoption has been improving year on year and organizations across the board are slowly beginning to understand the potential that Cloud brings to the table. According to the Cisco Cloud Index, the global cloud IP traffic will account for nearly two-thirds of total datacenter traffic by 2016. This in itself translates to a huge opportunity which partners can bank on for growth and expansion.