Cloud Computing: Partnering for Profit
B Raghavendran, Head, Partner Organization, Cisco India and SAARC
The cloud computing phenomenon is generating a lot of interest worldwide because of its potential to offer services 'on demand', at lower cost, with less complexity, and greater scalability. Cloud computing can make network, computing, and storage resources easily accessible, changing the way people buy, manage and leverage technology.
Cloud computing will usher in a new era of functionality and opportunity by enabling organizations to do things previously not possible. While small organizations gain access to computing capabilities that are currently beyond their means, large enterprises can plan for, and support a broader portfolio of applications. Leveraging cloud computing services can help organizations to better align their technology investments with their business objectives.
Everything from data access to applications performance will be seamless in a cloud-enabled world, whether the user is working at a desktop computer behind a firewall or at a remote location using a smart, mobile device connected to a public network.
A 2010 Gartner survey reveals that the percentage of CIOs that will have their IT running in the cloud or on software as a service (SaaS) technologies will increase from the present three to 43 over the next four years, and nearly one in five businesses will rely on the services provided by various third-parties, including cloud vendors, as early as next year. By 2020, Deloitte predicts that 15 percent of on-premise spending will be replaced by clouds. The worldwide revenue from public IT cloud services is forecast to reach $55.5 billion in 2014, according to IDC.
This means that companies which develop, market and support IT hardware and software solutions will see an upheaval in IT reselling and services delivery, as customers adjust to new business models and buying habits. Currently prevailing business models such as reselling of basic, on-premise software and infrastructure will come under severe demand and pricing pressure.
Partners will be in high demand because customers will require help to rationalize the many technology combinations and financing options that cloud computing presents. Customers will seek partners with competency in architecting, building and selling cloud-based "pay-as-you go" solutions. Organizations that can provide the expertise, service, and convenience for customers through a robust and capable ecosystem of partners stand to benefit the most.
Partners and Cloud Computing
While there is likely to be no shortage of opportunities for partners, they are likely to be concentrated in primarily building cloud infrastructures (Builders), providing cloud services to different customers (Providers) and reselling cloud services (Services resellers). Majority of the partners will develop a core competency in one or more of the above and build ancillary capabilities around them.
Builders sell hardware and software infrastructure and the services that create clouds for their customers. These could be private clouds for enterprise customers, public clouds for the government or telecommunications service providers. These partners have wide and deep expertise in all aspects of cloud like infrastructure design and implementation, virtualization and applications management, business process change and applications migration.
Providers develop and operate clouds that typically support multiple customers. They include telecommunications service providers or managed service providers who have the capacity to build public and private clouds and wrap services around them. Services offerings can include application-as-a-service or infrastructure-as-a-service sold to a customer as a utility. Computing resources can be offered on an as-needed basis to customers through a multi-tenant, public cloud environment, or offered as dedicated and secure services via a private cloud.
Services Resellers market cloud services as agents of a cloud provider, and aggregate cloud services from multiple sources to sell computing assets as a service or utility. They earn referral fees for recommending cloud services provided by third-parties, or collect annuities for managing a customer relationship on behalf of a cloud provider (handle billing, support etc). They can also wrap their brand name and added value around service offerings which they provide to the customer.
While partners can embrace multiple business models and go-to-market strategies for the cloud, the most likely business model for value added resellers (VARs) is likely to be as cloud services resellers. Partners with system integration capabilities will evolve to a hybrid business model of building, providing and reselling cloud services.
What vendors must do
By creating compelling cloud services offerings, and driving innovation in partner programs, vendor organizations can help partners leverage their existing investments to build cloud business practices, validate capabilities necessary for cloud offerings and monetize professional and annuity services. They can also provide guidance on the infrastructure architecture to set up a cloud environment and insights on new pricing and possible go-to-market models.
To help cloud partners better market themselves to customers, vendors must offer intellectual property and best practices that increase partner expertise and provide branding assistance. They must also validate partners' competencies, leverage the certifications and specializations partners have attained and fill in the gaps where needed. For partners to make the most of cloud computing, vendors must align their sales policies to minimize channel conflict with their sales force.
Cloud computing represents a new computing paradigm that will change the way people work, live, play and learn. Embracing this paradigm helps partners develop sustainable business models, increase their value to the customer, generate additional revenue and expand their lines of business.