Without partners, Independent Software Vendors, Service Providers, System Integrators and other Consultancies would struggle to compete in a global market and also would probably face massive increases in their direct sales forces. Today, the Cloud is changing these partner models.
Evolution of the partnership model
Over the years we have seen the way that dealers, distributors, system integrators and value added resellers have changed. At the beginning they were often small organizations, which then expanded rapidly to try and take advantage of a demand for technology and knowledge. Today, there is a retrenchment of the channel into skill sets. While the generalists still exists, most now realize that being the best in their market is more important than trying to be just “good enough” in order to grab any sale they can.
The channel has expanded, changed and developed, arguably, as a result of networks, changes in trading agreements (e.g. Europe’s single common sales market) and the Internet. As company projects became bigger and more complex, channel partners started to work together on a project basis. The problem with this is that it demands trust because all but a few organizations have been seen as subcontractors. Any problems with billing can destabilize the fragile relationships between partners.
Cloud Service providers
The arrival of Cloud services has created an opportunity for those working in the channel to create new value added relationships that extend globally. Let’s look at some examples.
With the increasingly small margins on hardware and software, dealers need to provide added value services to customers. One such service is data storage. Everyone agrees that backups are important. However, not everyone has the capability to do it properly. As bandwidth has increased and storage costs dropped, dealers started to provide off-site facilities to key customers. Some did this on their own premises while others did deals with service providers.
A lot of the small to mid-sized service providers have welcomed this move by dealers, because it allows them to transition from hosting providers to Cloud service providers. It may just be a change of name, but it is important in how potential customers view you. However, the vast majority of these service providers own one property in which they have a significant investment in racks, servers and infrastructure. But by working with other service providers they can offer services that they could not have invested in, such as disaster recovery where data is stored over multiple sites. These sites could be in a single country, spread across a continent or even across the world.
For this to be a true Cloud opportunity there have to be other types of services available. Those might be hosted email, applications or rather than local storage backed up into the Cloud, the storage could be directly into the Cloud. This is what we have seen happening over the last few years.
Service providers also need an “as a Service” offering such as Software as a Service, Platform as a Service, Infrastructure as a Service or Storage as a Service.
To do this they need a Cloud stack, something that enables them to virtualize their resources and provide secure, multi-tenanted environments that are flexible and dynamic, based on user demand. Although the virtualization component is not there, the stacks are still being developed, and this is where the big vendors such as Microsoft, HP, IBM, Oracle and others as well as the tier 1 Service Providers and the System Integrators have a real part to play.
Their role is to act as a marriage broker. They can put companies together and provide a platform on which they can develop integrated services that benefit everyone. It allows the smaller companies to invest in their skills and specialize. But bringing them together is hard. They often cannot do this themselves because creating these partnerships means selecting stable partners and no-one is going to show a potential competitor their books.
However, to be part of a large channel model, you need to commit to training, skill development, business development and make your financial affairs open to those whose channel you want to be part of. As a result, vendors, system integrators and the tier 1 service providers can help to establish that trust. But this is not all that they can do, they can provide mentoring to help those partners understand the complexity of operating in a multi-national world. Part of that mentoring is helping them to productize their services.
From Application to Service Lifecycle Management
Another key element, and something that we are currently working on at Creative Intellect, is what we call the Service Lifecycle Management (SvcLM). Within software
development we have Application Lifecycle Management which is a governance process for delivering applications that reaches beyond development into production, covering everything that happens to the software application from inception to decommissioning. As we move to a service led world, the same governance processes and frameworks are going to be needed by those who build and develop services. This is not entirely a new direction. System integrators like Capgemini have long supported the move away from application to business service lifecycle management with the latter being a natural maturity step, in a services oriented world. For the most part the likes of Capgemini and others such as Logica, are already effective in end-to-end governance of application software development and delivery processes and make use of many of the supporting tools and services to be so.
As organisations adopt service-oriented approaches for the delivery of IT capabilities it is clear that an application-oriented perspective on the management of the development and delivery processes is at the wrong level of granularity. Such an approach becomes a barrier to improving the service delivery process. ALM needs to evolve towards service lifecycle management to provide both a business and service-oriented perspective on requirements.
Consolidation on a different scale
With multiple Cloud service offerings available, the role of the system integrators is also set to evolve to encompass the integration of Cloud services. David King, the CTO of Logica, announced in September 2011 a new positioning of their role as a systems integrator and service provider to that of a Cloud Services Integrator. Once again this move is not unsurprising given the integration and interoperability requirements in migrating between Cloud offerings.
Cloud also sets to spark another change in the partner model where the system integrators and tier one service providers, perhaps even the large distributors, begin to become more like vendors in their own right rather than just a larger cog in the channel. Instead of partners simply being acquired by large vendors when they create a missing part of a product portfolio, it is likely that the larger players in the channel will do the acquisitions instead in order to build out a services portfolio which will sit alongside the software and hardware portfolios that they currently distribute or sell. This consolidation may also change the relationships between vendors and the channel.
The way that the channel is evolving is faster than ever before. There is a real chance for
resellers to make money from the services that they have developed and to expand their businesses but to do this they need to work with other partners in a collaborative way.
Vendors also need to step up and help their channel understand how to productise services and this will drive the services model forward.