The changing channel landscape and the impact of the cloud

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By Craig Freer, executive head of Cloud at Vox Telecom


 

Vendors and telcos are aligning.

They’re aligning their business models, their technology and in so doing, dis-intermediating the traditional channel partners. Essentially removing the system integrators (SI) out of the equation.

In turn, the shift from SI to cloud partner is immense.  It’s not a business model that can just ‘quickly’ be changed.  SIs have heavy cost structures to support their traditional business models and when coupled with the threat of their intellectual property (IP) being usurped, at a lower cost base, does not bode well for their continued dominance in the ICT channel landscape.

The reality is that delivering cloud services is complex – and there are multiple components of a cloud strategy.  There is the (1)

Craig Freer, executive head of Cloud at Vox Telecom
Craig Freer, executive head of Cloud at Vox Telecom

network, (2) ISP layers and (3) infrastructure and (4) all the services that sit on top of that.

Aside from the technology, there is a requirement to provide support – support that spans from enterprise, through to consumer.  So you’ve got to be geared to support all the aspects.

But let me take a step back.  There is no doubt that cloud services, and the pace at which it is being adopted is driven by the end user (or consumer), who is demanding services that can not only be self-provisioned, but also self-consumed.

Gone are the old, traditional ways, where vendors simply delivered kit, in a segmented market, and then built products and applications on top of that.  Today, vendors are looking for value added partnerships with ISPs, and other providers that deliver services, on top of which they can build an ‘as a service’ model.

The result? A large number of technology vendors are being marginalised because they can only offer a small part of the total solution.  And ultimately, with the exception of the likes of Microsoft (through Azure), Amazon or VMware, that can offer platform-as-service because they have global clout, when you get to local, you need a partner that can aggregate everything from platform, to infrastructure, to security, to applications.

99% of vendors never used to engage with the end-user, they used to do either large Capex sales, or sell licensing, and only through certain distributors.

Today, that distribution model has changed.

The old way of selling hardware and software is gone.  And in turn, the traditional system integrators are facing a dual threat – they’re facing (1) the global vendors that are now going direct to end users and (2) more flexible cloud providers that are offering consumption based services.

Two examples of vendors that have changed their approach are Microsoft and VMWare.

In the ‘old’ days, Microsoft was just a software house and prided itself on its 100% channel based model.  You purchased software through licenses and perpetual licensing models, ordinarily through a distributor or reseller.  VMware, and its licensing for a Hypervisor, operated in much the same way.

Microsoft has subsequently moved to Azure and is delivering its own services, out of its own cloud.

VMware is doing the same – it has built its own cloud platform and has realised it can no longer just onsell licenses.

It, like Microsoft, needs to be delivering cloud-based solutions and applications as a service, directly to the consumer.

Technology adoption, and the migration to the cloud is changing the ICT landscape.  Companies are increasingly looking to turnkey solution providers to advise, simplify and manage the solutions stack.

It is up to the channel to recognise a changing demand, to mature its business models, aimed at delivering greater value, consultancy and partnership with the companies and end users that are increasingly becoming the technology adoption custodians.

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