Damn it – react! The increasing demand for cloud services is forcing value-added-resellers (VAR’) and Solution Providers to assess their current business models and the services they provide to their clientele. Many times that leads to talk of becoming a new age VAR or a “Hybrid VAR” 1.
Note 1: Although folk’s these days prefer Solution Provider verses VAR, I’ve never seen the downside of value added in any name or phrase and use the descriptor VAR proudly – ergo, I’ll utilize VAR and Solution Provider interchangeably…
I’m a major proponent of catching transitions and evolving ones business to drive growth, however, my belief is that you also have three (3) years to make the journey from your current model to a fully vetted Hybrid VAR model.
With that said, it’s important that you begin making the move to alter your business model and solution-stack to reflect your clients desire to consume IT services in new and different ways. And as I’ve mentioned in recent posts – don’t think for a minute that some of your deals aren’t slipping from your sales pipeline to someone else’s – they are.
Remember, once you lose a deal or a client to the cloud – those deals don’t return in three (3) years for a refresh, they’re gone forever…
So, as I stated in the title of this post – it’s important to start your journey towards becoming a Hybrid VAR, but you need to do it in a way that makes sense for your business and the culture you’ve created. The first step should be to become cloud savvy, as cloud will be the gateway to the internet-of-things (IoT) and many more transformational business technologies.
By the way if you’re not convinced that the IoT is the new black - you need look no further than the amount of money flowing into mergers and acquisitions in the space and the number of articles being printed on the subject. The real world use cases are showcasing the business impact of the technology today and its presence is being seen across multiple market segments from consumer to manufacturing to healthcare.
Your 1st Step
Now back to the story… Most organizations making the move to the cloud services world usually and inevitably have three (3) discomforting episodes that afflict them early on. The afflictions include:
They don’t spend enough time assessing and altering their business model, sales model & plan and the investments they’ll require to make the transition to a recurring revenue centric approach.
They spend too much time coming up with elaborate solution-stacks and solutions that prove impractical as the provider is just beginning their journey to the cloud and earning their spurs with clients and partners.
They have a tough time determining where they truly provide value and how they’ll craft a story that clearly tells people where they play, what they provide and why it’s important to their customers and partners.
In this post I’d like to focus on item #3 from above as I’ve found a pretty simple approach that’s worked time and time again. My hope is that it will help you and provide a small catalyst to begin or accelerate your journey towards altering your model and generating significant recurring revenue.
I’d like to use several examples to showcase my approach. The examples include:
If you are a network infrastructure or connectivity expert – build your story around being a cloud connectivity expert who is fluent in connecting private and public clouds to legacy infrastructures…
If you are a data center centric company – build your story and capabilities around compute and craft solutions that focus on moving workloads to the cloud and allowing your clients to scale on demand, implement open stack infrastructures and allow your customers to consume applications seamlessly…
If you focus on end user – build your story around desktop as a service (DaaS) and platforms that allow for anytime + anywhere access with alternatives that may better meet their consumption needs and allow you to increase your margins in the long-term by growing your recurring revenue composite.
If you are a storage expert – build your story around being a cloud storage expert who is fluent in on-demand storage and recovery services. Also, down the road if you develop analytics capabilities it’s a natural extension and you’ll command instant credibility.
It’s important to keep in mind that many of the things you’re providing today will be relevant in the cloud and that you’re initial approach should be - just add a new way for your customers to consume IT and for you to leverage your current skill-sets, while growing your recurring revenue base and expanding your skill-set to claim a larger cloud services footprint over time.
What is a Hybrid VAR?
A Hybrid VAR is (understanding that there are several definitions based on context & viewpoints…) a value added reseller who has transitioned from a product centric model with traditional professional and support services that allow for the deployment and on-going maintenance of the “product” - to one who typically provides cloud services, has internet-of-things (IoT) capabilities or strong network or data security skills and has a valid analytics and Big Data practice. Feel free to mix and match any of the megatrends affecting our industry to come up with your own Hybrid VAR cocktail mix.
In the End
It’s important that you don’t overreact, but that you do react as the world is changing and this change isn’t because the vendors have come up with the latest and greatest flavor of the week by repackaging an existing solution and rebranding it, rather it’s because this is the first major dramatic business shift we've seen in 15 years and customers are voting with their IT spend - 78% of them will be choosing to make that spend in the cloud and you need to make sure you get your fair share and continue to truly own that client relationship.