January 9, 2014
By Ryan Brock
For decades, the two-tier distribution model worked well for vendors, partners and customers. Then along came the cloud. And now everything has changed. Or has it?
One of the top questions vendors and partners share centers on the value of two-tier distribution in todays technology environment. Should vendors continue to rely on and invest in distributors to reach partners and customers? And are distributors best positioned to help partners succeed in the transformation to cloud, or is aligning with other emerging players such as hosters or cloud brokers a better bet? Lets break it down by looking at the needs of partners and the emerging roles of the players in the technology value chain.
The Partners Perspective. One thing has not changed: Partners need help. They still need to efficiently source solutions both traditional and cloud from many technology vendors and providers. And when it comes to marketing and sales, especially for emerging technologies, most partners are lacking in the know-how and resources needed to effectively engage customers and prospects. According to AMI Partners most recent SMB channel partner study, only 31 percent of partners have a staff member dedicated to leading marketing, and only 30 percent are meeting on at least a weekly basis to plan and manage marketing activities. Not surprisingly, the No. 1 area of support partners are seeking is developing sales opportunities. Given these challenges, two-thirds of partners continue to work with distributors. However, when asked if distributors have done a good job of helping partners transition to the cloud, only 45 percent of partners said yes. And one-third of partners said they will be working less with distributors around cloud solutions and more with other providers like vendors, hosters and telcos.
The Vendors View. Many vendors have reached a distribution crossroads. Some have begun to aggressively offer cloud infrastructure and applications directly to customers. Aside from the obvious economic value of selling directly, doing so also affords vendors other important value-add opportunities, such as the ability to provide meaningful integration, analytics and management layers across cloud solutions. As the cloud market continues to mature, we expect to see integration of solutions become a key driver of customer purchase decisions and supplier selection. Of course, vendors can and sometimes do provide access to APIs to enable other providers to integrate solutions and layer on other front- and back-end value. However, as public cloud continues to grow, it remains to be seen whether these providers are able to bring enough additional value to justify a two-tier cloud distribution model.
The Bottom Line. For partners, the decision of which provider to align with in the cloud really depends on where they are in their cloud journey. Partners that are all-in with cloud have been successful in partnering with an emerging set of cloud-focused suppliers such as hosters and remote monitoring and management (RMM) providers. However, partners that are transitioning to the cloud and maintain healthy on-premises businesses have been successful in continuing to work with distributors. The traditional distributors have made significant investments in building their cloud capabilities, including meaningful value-adds, such as back-end integration and front-end management layers. And they continue to invest (with vendors) in helping partners with training and enablement to become cloud capable. In fact, our recent study shows that partners that have been most successful in making this transition are significantly more likely to be working closely with a distributor. So, the bottom line is that most partners would be well served to take a good hard look at the cloud opportunities that their distributors offer before making any alternative cloud-alignment decisions.
Ryan Brock is senior vice president of worldwide SMB cloud & channels at Access Markets International (AMI)Partners Inc. where he helps suppliers and their channels with market intelligence and business practice consulting spanning all aspects of the evolving technology footprint including infrastructure, platforms, applications, communications, services and devices.
Twitter: @cloudbystorm, @ami_partners
Learn more from AMI Partners’ Ryan Brock in the session, “Partner to Win in the Cloud: Benchmarking Provider Performance,” at the Channel Partners Conference & Expo, Feb. 26-28, 2014, in Las Vegas.
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