We just completed our sixth annual Partner Advisory Council meeting in Philadelphia. We received great insight, including evidence of the ongoing trend toward recurring revenue—across the entire channel. Indeed, more partners from AWS, Microsoft, Google, IBM, Equinix and more are moving business toward service providers. The move is happening for the services we sell today and for new IT services in the cloud, both of which drive recurring revenue. The Channel Company has talked extensively about this “Strategic Service Provider” model and its grip on the channel of the future.
Moreover, the recent announcement that Microsoft is buying LinkedIn to bolster its cloud-based Office 365 offering, along with the daily new SaaS acquisitions, demonstrates the importance of our solutions and model. Acquisitions like this may have seemed imprudent 10 years ago, but, in today’s environment, they are about survival and change. In fact, the IT industry and the overall technology landscape are changing so rapidly that nearly all companies in the service provider and IT vendor communities have to transform themselves almost overnight. After all, it’s about solving business problems for the customer--with the right set of solutions and a customer-friendly experience.
Here at Comcast Business, we are working on transforming our customer experience with significant investments to make it easier to work with Comcast, and we see many of our partners and suppliers doing the same. It is all about making the pivot to what customers demand in a monthly recurring bill for their IT services: both connectivity and applications in the cloud. Some of the big players are transforming their business models from selling hardware and software to a recurring revenue software business model. It makes perfect sense. With SDN and NFV this is inevitable for every networking hardware company that is now governed by the cloud model.
Channel partners are beginning to assemble rosters of multiple services from many different technology and service provider partners to meet their customers' needs--and all have a recurring revenue model. Perhaps we will see a cross vendor/cross industry “Certified Cloud Specialist” credential similar to that of a Certified Financial Planner or “CFP” in the financial services industry at some point. The world of the VAR from the past is being altered to a new world in recurring revenue, especially among millennials. According to a younger colleague from a major cloud company, “Why would you ever sell a customer anything but a recurring revenue IT service offering?” That sums it up quite nicely.
Our partners are all moving in this direction, and this year alone cloud services are expected to be $300B and growing. You can see why the nation’s seven million SMB customers are using cloud as the way to match the resources of larger companies to survive and thrive.
The flood waters do not seem to be subsiding any time soon!
Craig Schlagbaum is Vice President of Indirect Channels at Comcast Business.