Insights & Ideas

Psst. What Software Vendors Aren’t Telling Their Channel Partners

The big elephant in the room is how to sell software in an era of cloud computing. For channel partners, this is (or should be) top-of-mind. Why?

The cloud eliminates the need for customers to buy software or hardware because saleable, future-proof computing power is now available on-demand, delivered as a service. In other words, there is no more need for consultants to design, install, deploy, test and maintain the underlying infrastructure to run a large scale enterprise-wide business intelligence (BI) reporting or analytic platforms.

For channel partners that sell software, those days of making revenue are about to end sooner than expected – the vendors and you’re selling software for probably aren’t communicating this fact especially if they are planning to offer cloud services such as analytics. The reason is simple: They need to hit revenue targets expected by shareholders.

The traditional channel business model is changing. Here are some statistics that show where the future revenue will and will not come from:

  • Revenue for professional services firms is at an all-time high – PwC: $31.5 billion, up 8.9% from 2011/Deloitte: $31.3 billion, up 8.6 % from 2011/KPMG: $22.7 billion, up 10.1% from 2011 (Sources: PwC, Deloitte and KPMG)
  • Revenue for companies that offer cloud-delivered services are up while those that continue to sell on-premise solutions are down (Source: Rosslyn Analytics)
  • Worldwide server market decreased 4.8% year over year to $12.6 billion in the second quarter of 2012 because of economic uncertainty (Source: IDC)

Traditional ERP and BI players including SAP and QlikTech are developing cloud strategies and offerings such as with HANA and QlikView OnDemand, respectively

What can you, the channel, do about it?

Besides not doing anything (which isn’t a real option), there are three ways you can grow your business as revenue streams from traditional sources dry up:

  • Expand your portfolio of professional services
  • Expand your addressable market
  • Enter new adjacent markets

There is also a fourth option which, if considered, will enable you to out-perform your peers: Monetize your intellectual property (IP) by developing cloud services. We will elaborate on this important differentiating factor in a series of blog posts meant to prepare you for radical changes rippling through the channel.

In the meantime, here are four areas channel partners should consider strengthening their capabilities in order to capitalize on 2013 and beyond business and technology trends:

  • Data Integration: Most channel clients are assessing cloud computing because of its innate cost saving benefits. However, for those that subscribe to cloud-based services such as analytics, the question of how to integrate and port data into the cloud will be a big question – and is an opportunity for channel partners to lend their advice and expertise.
  • Data Quality: The biggest challenge employees face when making decisions is poor data, which is often inaccessible, inconsistent, unconnected, uncategorized and incomplete. Channel partners should develop tools to help clients identify and address this major problem that is inhibiting companies from exploiting their enterprise data and growing.
  • Apps: Apple’s app store has refined how consumers access information. The consumerization of information management (IT) has spurred companies to offer their employees similar self-service tools in the guise of enterprise apps. There is huge market demand for a new class of analytical apps that leverage big data, accessible from any device at any time.
  • Verticalization: Companies recognize the business benefits of using as much enterprise data as possible, bringing in contextual information from the internet. Business and IT teams are looking for vertical-specific role-based analytics that exploit the opportunities found in terabytes of structured and unstructured data (big data). Partners can help companies move up the data maturity curve.

Channel partners have a huge market opportunity to be seen by their customers as educators at a time when there are many questions about why companies should embrace cloud computing and how they should make the transition. The leaders will be the early adopters of cloud computing, leveraging innovative technologies that enable the creation of a new generation of agile, elastic business models that benefit both channel partners and their customers.


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