The Cloud Industry Forum is a strategic partner of Comms Business Magazine and with their recent report in to the state of the UK market and its uptake of cloud based applications showing that 78% of organisations have deployed at least one service, the opportunities for resellers to expand upon that wallet share look to be enormous.
Cloud adoption is forecast to accelerate throughout 2015 according to The Cloud Industry Forum (CIF) who say that by the end of the year, 90 per cent of organisations in the UK will have formally adopted at least one cloud service and 60 per cent of these will use two or more material Cloud services.
CIF’s research indicates that cloud adoption will reach another peak throughout 2015, increasing in breadth with more organisations overall using cloud services, and in depth, as existing users expand their use of cloud services.
This growth, according to Alex Hilton, CEO of CIF, will be driven in no small part by the end of support for Microsoft Windows Server 2003, which will create a new imperative for businesses to look to Cloud-based alternatives.
Hilton says that in the period leading up to July 2015 the market faces the most significant IT refresh of the 21st century to date with the end of support of both Microsoft Windows Server 2003 and Small Business Server 2003.
“These products have not only underpinned the IT server market for the last decade they have been the basis upon which many local IT providers have built their businesses.
In the UK alone, an average of 1000 servers per day are likely to need to be transitioned in the final year of support. Some customers will take the opportunity to move the server workloads to cloud services, some will undertake a rudimentary incremental upgrade and others will take the opportunity to refine their IT strategy.
The next 12 months represent a great opportunity for customers to make a cloud migration and adopt the latest enterprise ready technology at a fraction of the price.
Our research suggests that 61 per cent of UK organisations are still running Microsoft Windows Server 2003. This product has been supported for 11 years but technology has moved on. Doing nothing is not a viable option; the majority of users will move to cloud or managed services. Cloud migrations tend to happen on needs-based activity – historically, users migrate because of a definitive business need, be it business growth, security, or in this case, a technology refresh cycle.”
Glenn Woolaghan, UK SMB Director for Microsoft commented, “Migration to the cloud presents businesses of all sizes with an opportunity to discover the right balance of simplicity, flexibility and cost and enable SMBs to take advantage of enterprise-grade features at start-up prices. By this we mean that businesses will be able to host applications in the way that bests suits their business and cost structure, whether on-site or in the cloud. They’ll also be able to grow efficiently and use only what they need, when they need it. Finally, employees of SMBs will be able to get their work done anywhere and work together easily with the latest cloud-based mobility and productivity solutions.”
What are the best strategies for expanding your cloud based services footprint with end users?
Steve Glaister, Sales Director at Invosys believes that cloud based services is one of the most prolific viral sales products.
“As soon as the customer understands and trusts how cloud works, they instantly want all of their services to be cloud based. In that sense, after that first sale it becomes relatively easy for a reseller to expand their cloud based services footprint with end users.
So naturally, the key to success is educating them properly about the benefits of cloud services in the first instance, and really getting them on-board with the concept. Resellers need to remember that for those of us in the channel, cloud services have been around for several years – indeed at Invosys, we have been cloud based since our inception in 2006. Yet for many end users, it is still a relatively new concept, and one that they can struggle to get their heads around.
The birth of Spotify and Netflix have massively helped people buy into the cloud concept. Gen X and Y really ‘get’ the idea that you can access films and music via any device, anywhere, without having a hard copy and really appreciate the benefits of this. Once they see the product in use, and that it works first time, they have the confidence to expand their cloud portfolio into other areas.”
Tony Martino, Managing Director at Tollring believes that the big opportunity that the cloud opens up is access to a host of new online services that providers can exploit to increase revenues and deliver greater value to end customers.
“With advanced call management services now available in the cloud, gone are the days when such systems were deployed solely in large enterprises. These solutions are now accessible to not just large corporates, but to a huge SME market. Cost effective call recording together with innovations in call management solutions with Unified Communications and CRM integration means SME’s can now take advantage of powerful cloud solutions that deliver real business intelligence.
The channel must embrace cloud services to remain competitive and focus on the business value of every solution that they sell. These services not only empower providers by adding value to their hosted voice offering with valuable analytics, they also drive user adoption. They also help to improve customer service and deliver a vital way for customers to measure and justify a real return on investment.”
Richard Carter, Group Sales & Business Development Director, Nimans, says the first strategy a reseller should adopt is to own the connectivity.
“If you own the connectivity you’ve got the best chance of controlling what goes down it. Even if you’ve got customers that aren’t looking at cloud-based applications right now then you still need to own their data connectivity. Think ahead and plan ahead is the best approach.”
Steve Denby, Head of Sales South at Node4, “To grasp the cloud opportunity resellers must focus on building strategic partnerships with customers, delivering immaculate service levels and providing a high level of consultancy. In many ways this mirrors the relationships that resellers already have with vendors.
With businesses thinking much more specifically in terms of the flexibility they want from specific applications and services, one-size-fits-all off-the-shelf Cloud infrastructure solutions can rarely deliver maximum value and businesses are entitled to expect more from their IT supplier.
Whether users need a single development server, a load balanced dual-site set of web servers, a comprehensive Disaster Recovery strategy or a private virtualised environment, resellers should be providing more bespoke solutions so that businesses get exactly the right balance of services to suit their individual needs.”
Dave Joplin, Head of Indirect Services at Exponential-e says that one of the best generalist strategies they have seen is partners’ upselling through offerings such as disaster-recovery-as-a-service.
“For example, we’ve had end-users begin to use our cloud offering purely for back up purposes, but once they fully adopt the service, they realise it’s actually better than their existing in-house service – that way, a channel partner can therefore get a foot through the door.
“Another key strategy is through the migration of servers over to the cloud when legacy servers reach end-of-life. This way, channel partners can increase the value of their offerings and take the end user into the cloud.”
Are cloud-based services a key to building business value for the reseller?
“Absolutely!” says Steve Glaister at Invosys.
“Creating something new or a disruption to the norm is how you build value. The offering has to have an advantage to the customer either via cost, time or flexibility (which in essence is a saving of cost or time or indeed both). This inevitably means that the reseller goes on to own more product within the customer’s portfolio, and in turn that makes the customer far more sticky as a change is an upheaval.”
“Absolutely!” says Jeremy Neal, Chief Sales Officer at Cube52 too.
“If resellers are able to offer their new and existing customers something they already want it instantly creates a stronger opportunity to extend the lifetime value of that customer.
Cloud technology is a contract-based service that changes the reseller’s income profile. Offering cloud enhances the reseller’s share of the customer’s IT, by working to a contract rather than one-off sales. Customers are likely to go elsewhere if their IT provider cannot deliver a flexible cloud strategy, jeopardising the longevity of the relationship and future business revenues.”
Is the OPEX based deployment model best for the customer, the reseller or both parties?
Tony Martino at Tollring, “The OPEX model delivers recurring revenue to the reseller and no up-front capital investment to the customer – a win win.
As customers move to the cloud they minimise their risk. They can now pay only for what they use, switch solutions if they don’t see the value and monitor the performance of their chosen technology. Customers can also demand working pilots before committing to a company-wide roll-out with the supplier having to prove a return on investment before adoption. And once the customer contract is signed, the supplier has the same vested interest as the customer to monitor usage and drive business value.”
Still on the same page is Jeremy Neal, at Cube52.
“The future of IT purchasing means that OPEX based deployment is best for both customer and reseller. Organisations no longer want to tie their money up in IT and the channel must embrace the on-demand way they now want to buy it. OPEX is an expectation and resellers need to deliver services in this way.
Many factors make cloud migration an appealing option for those businesses looking to free up capital and this opens up a massive opportunity for the channel. Resellers must partner creatively with cloud providers that can offer a quick, scalable solution that their customers want, allowing the end user move towards a model based around operating expenditures rather than capital outlay.”
Chris Cooper, Sales Director, Cloud Infrastructure & Cloud Services at SIPHON.
“Continued growth in the highly competitive market for Hosted Telephony and SIP Trunking has made it more important than ever for resellers to differentiate their cloud-based service offerings.
There was a time when resellers of Hosted Telephony were seen to be providing a next generation voice service. This is no longer the case. Today, resellers also need to have a solution that incorporates Mobility, Unified Communications (UC) and Video as well as the WebRTC capabilities that enable other cloud-based applications and services.
Even if a customer doesn’t need or want it all from the outset, a reseller that is able to demonstrate its experience in delivering these capabilities is more likely to secure the initial sale. It’s the reseller’s roadmap to future applications and services that will build further business value through upsell potential: delivering lucrative new revenue streams and most importantly, ensuring customer loyalty as innovative possibilities begin to be realised from cloud-based technologies.”
Reseller Comment
Steve Palmer, Head of Cloud Services at Azzurri Communications, says that in a notable shift in attitude over the last 12 months or so, CIOs consider themselves to be in the ‘Service Business’, delivering services to employees and user departments to improve their productivity.
“In order to best deliver these services, they are less likely to want to own infrastructure and hardware since therein lies risk.
As a side benefit the staff whose job it traditionally was to maintain the kit have had a significant boost to their careers by becoming true business consultants – determining how a service should be best consumed by the business.
If there’s no hardware to sell and maintain and no software to support, the reseller model will die and frankly few people will mourn its passing. Like vinyl LPs, we can be nostalgic about them but Spotify and iTunes are so much more convenient and practical.
And buried in the next grave is the Capex model - buying equipment or leasing it, depreciate it over the term and start again with a reinvestment in three years’ time. Great for vendors and resellers, not for consumers.”
Ed Says…
Well this is all very positive stuff so later in this issue look out for the other side of the cloud coin when we report on what analysts are saying about user reluctance to adopt cloud applications.