The cloud has become more and more essential over time, with businesses transforming their stacks to embrace cloud opportunities and meet the digital demands of customers. More than two-thirds (70%) of companies now have more than half of their infrastructure in the cloud, according to Pluralsight’s State of the Cloud 2023 report.
Cloud services are already transforming the channel as customers look to integrate more of the services they buy with cloud infrastructure. The need to increase flexibility, track IT channel sustainability, reduce costs, and improve security pushes the channel to become more cloud-focused with its core offerings.
Improving customer satisfaction and digital experience (DX) has become a focus for channel providers who increasingly see their role as helping partners meet customer needs. This is often realized through the enhancement of IT infrastructure and cloud as a critical component, with 27% of those surveyed in Pluralsight’s report stating their cloud strategies drive customer value.
The shift to the as-as-service model for vendors and channel partners continues accelerating. Where channel customers would have bought into multi-cloud offerings, customers are now looking to the channel for the best cloud computing services.
Speaking to ChannelPro, Stew Parkin, CTO of EMEA Assured Data Protection, expressed his view that the channel is no longer just selling its core commodities: "In a world where anyone can sign up to Microsoft Azure, AWS or Google Cloud Platform and put their card behind the desk, placing a channel vendor in between the cloud service provider (CSP) and the hyperscaler is often seen as an irrelevant barrier.
“In recent months and years, I've seen a definite shift to 'managed public cloud' or 'migration support' to attempt to keep skin in the game and maintain a proportion of margin.”
That 'skin' is constantly changing as channel customers engage in digital transformation to make their IT infrastructure more efficient and secure. The channel must adopt a cloud-centric approach simply because its customers demand this, but the channel has a chance to look past the hyperscalers and create new targeted services that the marketplace needs to thrive.
“As cloud technology constantly evolves, there is an opportunity for the channel to continually adapt its offering and make it ever more relevant for customers,” Sonya Mathieu, channel lead UK and Ireland, NetApp, tells ChannelPro. “Over the past five years or so, cloud services have adopted a better model to make sure channel partners are included in the process, making it more profitable and inclusive. The challenge for channel vendors is to ensure that their clients benefit from the latest features without adding further complexity to their existing solutions through upgrades or downtime.”
Cloud opportunities for the channel in a SaaS world
Where the relationship between the channel and the cloud can be adversarial today, partnerships that offer the best of both worlds are being actively developed. This is a direct result of channel customers shifting their focus to more integrated services, including the cloud. "A successful, long-term partnership between channel partner and cloud provider can be the difference that delivers competitive advantage,” says Terry Storrar, managing director of Leaseweb UK. “Rather than a cloud provider simply selling services, the focus must be on sharing knowledge and providing a consultancy element to end customers.
“In short, cloud services must adapt to help fulfill what the IT channel needs for end customers,” Storrar adds. “Responsiveness and fluidity are important – choosing from a menu of cloud offerings is no longer enough to give IT channel partners what they need to fulfill customer business demands.”
Build coherent strategies that drive growth
Security is always on the agenda when conversations between vendors, the channel, and customers occur. With a propensity to build hybrid cloud infrastructures to meet an organization's needs, cloud security is paramount. The hybrid cloud is a complex environment; organizations must simplify management and migration. By providing visibility from cloud to core, channel partners can help customers identify and mitigate bottlenecks or inefficiencies more quickly and easily.
Jon Kane, channel and alliances director, EMEA, Gigamon advocates an integrated and partnership-based approach to enable the channel to ensure the cloud is safe and secure: “Looking forward, channel vendors must also be committed to supporting the channel in optimizing customer’s existing tech stacks, therefore reducing IT complexity, and highlighting where cloud-to-core blind spots can be eradicated to improve security. This will require solutions that integrate seamlessly, rather than solutions that only work in siloes and do not provide added value to other systems.”
Channel innovation can unlock cloud opportunities
Channel customers look at every aspect of their IT estate to reduce costs. The channel can use cloud services as a value proposition if these services are correctly packaged as Jon Howes, VP and GM, EMEA for cloud storage provider Wasabi, outlines for ChannelPro: “Channel partners today face challenges around navigating costs and ensuring they achieve the best out of their partnerships.
“Moreover, as customers experience unclear egress and ingress fee structures – 48% of EMEA cloud storage spending last year was allocated to fees alone – channel partners are under increasing pressure to navigate pushback and deliver savings or specialist solutions. However, there are cloud vendors whose models differ and do not include ingress or egress charges. Such solutions increase transparency for both channel partners and their customers, removing complex and unpredictable access expenses.”
The future of the channel lies in cloud opportunities, but how these services are sourced and packaged is the question being asked by channel members as they see an expanding cloud landscape. How can they package this to remain relevant?
“I think the channel is currently in a state of flux with regards to the cloud,” Stew Parkin, global CTO at Assured Data Protection, tells ChannelPro. “Some are all in, some are all out, most aren’t sure if they are in or out. In my opinion, the hyperscale's are going through a transition of early all-in adopters, to starting to have to convince organizations sat on the fence.”
As cloud service providers have expanded, businesses within the channel have often reinvented themselves as managed service providers (MSPs) to define better their expanding offerings, which, of course, include cloud services.
Enterprises often look to their channel partners for alternative cloud services as they are concerned about vendor lock-in and large hyperscalers’ power over their businesses. In this scenario, creative channel members can leverage cloud services and incorporate them into their core offerings to create bespoke hosted services, which many customers want to create to become more agile across their critical business processes.
Vendors are the hub of infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), and SaaS as they can see the businesses they support connecting these services across their enterprises to take advantage of the service model. The cloud is pivotal in these hosted spaces. The tech stack of all enterprises is shrinking to remove complexity and cost. For the channel, offering fully integrated cloud services is essential to maintain customers who are actively evolving their IT infrastructure to support a rapidly changing customer profile.
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David Howell is a freelance writer, journalist, broadcaster and content creator helping enterprises communicate.
Focussing on business and technology, he has a particular interest in how enterprises are using technology to connect with their customers using AI, VR and mobile innovation.
His work over the past 30 years has appeared in the national press and a diverse range of business and technology publications. You can follow David on LinkedIn.