Cloud computing is taking off, and there is scarcely an end user company large or small that is not considering or implementing at least one cloud project. The danger for resellers is that, if they can’t find ways of adding value to a cloud implementation – or ensure that they’re the ones driving the move to cloud - there is a very real danger that they’ll be disintermediated completely. In this issue, we will look at the different cloud solutions available and discuss why, and in what circumstances, end user companies could benefit by moving to cloud. More importantly, we’ll give resellers guidance on how they can help their customers to identify the opportunities and make the move – keeping themselves front and centre, and ensuring that they continue to survive and thrive.
Editorial in this feature will consist of the cloud offerings, the case for cloud and how resellers can be involved.
Elaine Wang, Microsoft Business Unit Manager, Mustek Group
Demand for cloud amongst both consumers and businesses is currently growing rapidly. In the consumer space, it’s often difficult for resellers to get their slice of the pie, due to the extreme ease of use and set up of products. SMEs surveyed in last year’s SME survey conducted by World Wide Worx reported that they did not have a preference as to where they procured their cloud services, which is a big threat to resellers. This scary fact makes it even more important for resellers to showcase the different way in which they can add value in order to stay competitive and relevant as the IT landscape changes. With the way that information consumption and information search is transforming, it’s also important for resellers to start to think seriously about how they reach out to new customers.
Business Services vs. IT Services
The first principle that we talk about in sales is understanding your customers’ needs. This is quite a broad topic - it’s almost like going to a doctor and telling him (or her) that you’re sick. The doctor then asks a whole range of questions to try to determine the underlying root of the problem before they prescribe medicine, as they want to ensure that they are addressing the cause and not just fighting the symptoms. In selling, resellers need to ensure that they have an intimate understanding of what keeps their customers up at night. By identifying these business pain points, they are able to potentially implement solutions, systems and tools that address these needs. These are solutions that tend to be stickier and that decrease pricing sensitivity of customers and increases loyalty.
Marketing & Sales 2.0
In today’s world, the way that resellers find customers is changing. It’s therefore difficult to speak about the move to the cloud without mentioning sales and marketing in the same breath. If a reseller is interested in going to market with a cloud offering, it is only logical to suggest that web presence becomes important. Setting up a custom domain and a professional looking website is very easy and can be done relatively cheaply, with a plethora of tools and templates that are available by way of an Internet search. Once this is done, resellers can think about whether or not to include social media in their strategies. However, my personal suggestion is that unless you’re serious about committing to social media, it might be better not even to dabble with it as there’s nothing more irrelevant than a company that has a Facebook/Twitter/LinkedIn page with content that was last updated two years ago.
A powerful tool for resellers looking for new business is Search Engine Optimisation. Through careful monitoring of online engines and understanding the terms that customers are searching for in their information finding process, it’s entirely possible for resellers to reach new markets relatively inexpensively.
The process of selling also changes in the cloud era. Even in our own organisation, we have challenges in getting our traditional sales people to sell cloud – it’s simply a scary prospect that going cloud will have an impact on sales peoples’ pockets. In the ideal scenario, resellers need to ensure that when they bring on new sales people, they are remunerated first and foremost on selling your cloud services. These new sellers won’t have legacy business to fall back on, which means that they will become the cloud champions. If a reseller’s business simply cannot accommodate new heads, they will need to seriously re-think the way in which they remunerate. Quite simply, they will need to re-structure commissions in such a way that they are driving behaviour towards the sales of higher margin products, and not just simply base commissions on a linear revenue attainment model.
Success in the world of cloud means that resellers need to be ready to shift their focus from a once off transactional business to a more long term services based approach. The challenge behind this transition is that this often means that in the short term, resellers might see a negative impact to their profitability. However, it is important to understand that cloud business is about scale – if you have more businesses buying cloud services from you, you’ll have a bigger pool of customers that will need services, ranging from migration to management, training and customisation.
As people are getting more tech savvy, the threat to resellers’ services revenue is significant. For a new business, setting up email on Exchange is as simple as filling in a form and clicking “next”. However, looking at an existing company, with existing infrastructure, an Exchange migration is not just an Exchange migration, but might involve a few levels of complexity that still necessitates a reseller’s touch. As a reseller, it becomes extremely important that if you do get a business to move to the cloud that you are helping them to make sure that they make effective use of the technologies available to them to ensure that they do renew their subscriptions.
Despite these risks, there are actually some real positives in getting customers to use a public cloud solution. For starters, this could potentially help resellers to free up funding that was traditionally used for low margin hardware business, to be transferred into high margin services business, a business that is higher in value and directly impacts on the longevity of a reseller-customer relationship.
Something else that we often suggest to our reseller partners is to offer user based training – the migration to a cloud product might require behavioural change – example – instead of mailing documents back and forth as in the old way, the new way of collaborating might mean that documents can be directly co-edited online, or perhaps as simple having a working document on a SharePoint site.
Worldwide, we’ve also seen interesting things happening with cloud technologies in terms of information services. If you have a look at a service such as Open Table in the United States, you’ll see that not only are they now an online bookings tool, but they’re also starting to offer BI services to their customers. While we haven’t seen too much in South Africa, this remains an attractive opportunity for our local partners.
While vendors provide great out of the box solutions, it’s worthwhile for resellers to explore how they can customise their offering – as an example, the creation of app plug-ins to programs, or the customisation of user interfaces for CRM applications. Once again, this type of additional development will mean higher rates of retention of customers.
Show Me the Money
Looking at the incentives being offered in the channel, it’s not difficult for a reseller to see where the priorities for vendors and distributors lie. In our partnership with Microsoft, we are seeing a lot of money being put back into the channel to incentivise resellers to consider the take up of Office 365. Careful structuring of deals around incentives and support mechanisms in the channel can take a deal from being marginally profitable to extremely profitable upfront, while allowing for sustainability of the business in the long run.
At the end of the day, there's a lot of money on the table when end customers choose to use cloud services. Today’s resellers need to, more than ever, develop intimate understanding of what makes their customers tick to ensure that the services that are offered really add value.