Every day I have conversations with the leaders of value added resellers (VAR’) and solution providers and the dialog goes something like this - “I know we need to get serious about Cloud, but business has never been better and I don’t see any signs of the Cloud threatening my business…” Oh boy, I'm old enough to remember Ken Olsen, the founder of Digital Equipment Corporation, telling the world that "there was 'no reason for any individual to have a computer in his home'?
How'd that turn out for the mighty powerhouse that was Digital Equipment?
It’s tough to argue - things are pretty good right now, however, the facts and trends show that the Cloud threat is growing and many VAR’s and solution providers are missing out on the transition in its truly formative stages. Look at the numbers:
Amazon Web Services didn’t exist 9 years ago, this year they’ll generate $6B in revenue – did you get a slice?
Salesforce is a $5B software-as-a-service (SaaS) juggernaut – how many of your customers adopted the platform and you lost the opportunity to play within their application consumption strategy?
Cisco has pledged $1B towards expanding its cloud business and acquired MetaCloud and Piston Cloud to further deliver on their Intercloud strategy and meet the needs of customers desire to change their IT consumption model – are you positioned to leverage these investments and changes in customer buying habits?
The global cloud computing services marketspace will reach $127 Billion by 2017.This is not net-new IT spend, it’s a significant shift from traditional transactions to a subscription-based consumption model – have you looked at your ability to prevent these opportunities from passing you by?
The other truth is that customers are making the transition without you. The numbers are compelling and paint the following picture:
70% of businesses are either using or investigating cloud computing solutions…
42% of IT decision makers are planning to increase spending on cloud computing in 2015…
78% of customers preform their own research on cloud computing without the help of their solution providers…
Remember, once a workload moves to the Cloud, it’s never coming back for that 3-5 year refresh that you might win the next time. You need to have a cloud strategy and value proposition that will ensure that you can truly capture your clients’ full wallet share and prevent that slow leak of deals to the cloud.
I have a few high-level thoughts that might be worth exploring to validate my viewpoint and the realities of a changing marketplace. The thoughts include:
During your next pipeline review assess whether those deals, especially data center & server upgrades, are truly on budget hold or going through the approval process – many times they’ve already been lost and the deal is flowing to a cloud-based solution.
Truly look to see if you have a cloud play that is different and provides the value that will allow the blended gross margin your business relies upon to generate the net earnings you desire. Reselling SKU’s in the cloud by itself typically provides lower margin than straight transactional resale.
Are you or your people afraid of having a cloud dialog with your customers for fear that you’ll disrupt your business?
The reality may be that you are being disrupted and don’t yet see it - unfortunately someone else is writing the story instead of you - even though you now have the time and resource to begin making the transition that your business must undergo while you are strong and thriving.
Hope you found this brief insightful and I’d be interested in your feedback. Please stay tuned for my next brief on the importance of altering your business model and not having your eyes wide shut. feedback. Please stay tuned for my next brief on the importance of altering your business model and not having your eyes wide shut.