Channel partners are bullish about their growth prospects. In fact, in a recently conducted Forrester survey in North America (NA) and Europe, 59% of channel partners expect to grow by more than 10% in each of the next two years. However, partners will need help and handholding as they aim for greater sophistication and higher growth targets, especially around cloud based services. Forrester research indicates that three-quarters of channel partners in NA and Europe now sell cloud-based solutions (up dramatically from two years ago). These solutions now make up 26% of their overall revenue, a percentage they expect to increase in coming years.
In my recent report, Seeding the Cloud Channel, I highlight three key areas where the partners will need support from both their tech vendors and their distributors:
Diagnostic tools and services to assess current maturity and set a transformation road map. Partners will first have to collaborate with their principal vendors to gauge the fitness of their organizations for an annuity-based business model — and whether they can sustain that model in long run. Vendors need to create assessment tools to evaluate their partners' business model transformation potential. For example, Cisco Systems built its OnPlus ROI Tool expressly for partners to model the myriad business model options and scenario decisions they face. This will not only help partners identify their pertinent strengths and weaknesses, but will also help them plan their future growth strategy.
Well if you're going to make a dramatic about face from total dismissal of cloud computing, this is a relatively credible way to do it. Following up on its announcement of a serious cloud future at Oracle Open World 2011, the company delivered new cloud services with some credibility at this last week's show. It's a strategy with laser focus on selling to Oracle's own installed base and all guns aimed at Salesforce.com. While the promise from last year was a homegrown cloud strategy, most of this year's execution has been bought. The strategy is essentially to deliver enterprise-class applications and middleware any way you want it - on-premise, hosted and managed or true cloud. A quick look at where they are and how they got here:
Over the last two months, I’ve had the opportunity to interview a plethora of managed service providers (MSPs) and MSP platform vendors across the US, Europe, and Asia. The experience has provided me with an inside view into the fastest-growing technology channel today, but it has also provided me with a clear understanding of the evolutionary path MSPs must take as they attempt to reach a new level of maturity (and profitability).
For those tech vendors hoping to cash in on the budding billion-dollar managed service opportunity, it is critical to first understand where the movement began in order to understand where it is headed. The figure below (from my most recent report, Managed Service Providers, Part 1) highlights the three unique stages of MSP development:
Past (pre-1997): solution provider model. Up until the end of the 1990s, SMBs employed their own internal IT systems, supported by a small IT staff or local consultant. They purchased from and had their IT systems installed by VARs, and got their phone systems from telecommunications providers. An IT solution provider (most often the VAR or consultant) provided reactive break-fix support and maintenance for their hardware and software. For SMBs, this model represented a heavy capital investment (capex) for their IT systems and a heavy operating expense (opex) for labor, all executed on-site.
Through this process, we uncovered a market that we believe is currently ripe for a major disruption: market demand for managed security services (MSS) remains extremely strong, customer satisfaction is higher than we’ve seen in the past, and current MSSPs tend to compete on delivery, customer service, and cost.
This isn’t to say MSSPs all currently offer the same services with the same level of quality – not by a long shot. Selecting the right provider still means that you must understand your needs and the areas you feel they can enhance your security program the most. Each MSSP we evaluated has solid overall security capabilities, but has unique strengths in certain security areas and use different deployment methods to bring their offerings to bear.
At the same time, however, we hear more decisions today come down to cost and execution, and as this becomes more commonplace, we begin to prepare ourselves for a shift in the market. In fact, we believe we’ll see significant changes over the next couple of years for three primary reasons: