If you’ve read previous posts for my “Climbing Out of the Box” Blog, you may have noticed that the point of view is from the vendor perspective – e.g. “How do I sell more of my product to customers?” You also may have noticed that the #1 piece of advice has been to “put yourself in the shoes of the customer” to understand their challenges and how your company could help, so that you can market and sell your products as part of solutions that connect to the customer perspective.
The same dynamic holds true for your sales channels and your channel partners. As the customer requirements for buying IT products move toward solutions, outcomes, software and SaaS/cloud services (rather than hardware and point products,) your channel has had to evolve from the traditional hardware-centric model. For your company to be successful, you need to be talking to your partners to understand the channel perspective, and you need to be taking steps to create new sales opportunities for you and your channel partners that reflect the changing sales and channel model…
Guest Blog Post from Thom McAleer
Today we have our the first “Guest Blog Post” to bring new voices and perspectives to our dialogue on the future of IT products and GTM strategy and execution. I first worked with Thom when I ran the VMware Partner Advisory Council in the late 2000s and since that time Thom has been a sales leader at several US-based resellers. I’ve always found Thom’s feedback to be insightful, and his steadfast support of the woeful Kansas City Royals baseball team to be quaint. Today Thom shares his observations and advice to VARs in the face of today’s “Cloudy Landscape”…
What’s Next on the Cloudy VAR Landscape?
“Life moves pretty fast. If you don’t stop and look around once in a while, you could miss it.”
-Ferris Bueller
The marketplace for IT products and services is changing at an alarming pace, indeed. For those of us who have been kicking around the industry for a while – 20 years, in my case (gulp!) – it’s clear that things aren’t what they used to be. But the real question is “what’s next?” Particularly, if you’re a value-added reseller (aka VAR).
Once upon a time, VAR life was simple. Buddy up to the IT guys at your targeted prospect or customer – lunch, golf, a couple of beers. PO’s were sure to follow. (Remember Y2K? That was fun!) But a funny thing happened on the way to the bank. First, the decade following Y2K brought two difficult recessions causing CFO’s and other financial-minded executives to question and scrutinize the return on their massive IT investments, which had been directed largely by middle managers and IT administrators. Next, a little high-tech innovation called “virtualization” kicked off a revolution in not only how IT infrastructure was designed and implemented, but in how IT would be consumed and financed in the future.
Yes, I’m talking about Cloud Computing. And while VARs and systems integrators were quick to adopt virtualization strategies to capitalize on the profound value proposition of server consolidation, they’ve mostly struggled to crystalize any vision of who and what they’ll become in the post-VM market, which is rapidly arriving. The appetite of businesses for IT is certainly not diminishing. Quite the contrary. However, the preferred consumption and financial models are changing right before our very eyes. Most businesses do not want to make capital investments in IT infrastructure or build armies of expensive IT personnel to manage them. Everything “as a Service” is the order of the day. Simple monthly operating fees to consume IT resources owned and managed by someone else. CFO nirvana!
Some Options for VARs
So, VARs, if your business has always been selling “stuff” and attaching services opportunistically, how do you adapt to this profound change in market demands? There are no easy answers, but there ARE answers. So far, the predictable early trend has been to become a Cloud provider yourself by building a datacenter or acquiring or partnering with a hosting company. But can VARs compete in the long term against Amazon Web Services, Microsoft Azure, and the other behemoths who certainly will be able to parse out Cloud services at a fraction of the cost of small local or regional providers? It doesn’t seem promising.
What does seem promising is the prospect of specialization. There are several huge trends running parallel to Cloud which are ripe for VARs willing to narrow their focus and sharpen their skill sets. It goes without saying that 1) Security is the single biggest concern of CIOs today. And while there are certainly some credible Security providers in the VAR space, there appears to be a huge opportunity for consulting services and partnership with Security product/software manufacturers to resell “as a Service” solutions.
Another specialty area begging for attention is 2) Mobility and, frankly, anything to do with the exploding end-user computing (EUC) space. Most VARs walked away from EUC in the early 2000’s as the PC market became highly commoditized. But today BYOD, VDI, Desktop-as-a-Service, remote workers, and the non-stop evolution of devices are making EUC an enormous challenge for businesses. Businesses are placing a huge premium on end-user productivity, but security, management, and cost concerns abound. A VAR with the right toolsets, practices, and partnership might just clean up.
A third and perhaps the most appealing specialty option is building a true 3) Managed Services Practice. Ah, the dream of recurring revenue! As businesses continue to move away from building and running IT infrastructure themselves, they need outsourcing partners. Those organizations building their own private clouds will have ever-increasing interest in outsourcing datacenter operations. And all those finicky end-users will continue to need a Help Desk to call and a technician to show up (perhaps at their home) to help them solve the inevitable hardware/software challenges. Lastly, simply changing the financial modeling of product/service resale can create profitable, sticky, recurring revenue streams for VARs. Presenting customers with a “Workplace-as-a-Service” model where they own no assets and simply pay a monthly fee per end-user (or per gigabyte of storage, etc.) is not only appealing to the customer but easily doable with some creative financing on VAR side.
As the great philosopher Babe Ruth once said, “yesterday’s home runs don’t win today’s games.” So, where will VARs find tomorrow’s home runs? Cloud? Specialization? Clever financing? Ultimately, one thing is for sure. Life does move fast! And those unable to adapt quickly and purposefully are likely to become extinct. This is especially true for VARs.
About the Author
Thom McAleer is a self-proclaimed IT evangelist, sales expert, sports junky, and family man with over 20 years’ experience in the IT industry. He has led successful sales organizations for multiple VARs and sat on the partner advisory board of one of the premier software companies in the world. A native of Chicago, Thom, his wife, and three children reside in the Kansas City metropolitan area.
Thom and I welcome any comments below — And make sure you “Follow” this Blog (look for the “Follow” link on the upper left) and have your say. I’m also available as a public speaker, to support local and global events in Silicon Valley, or the rest of the flattening world… For more details, contact me via the form below.
“Climbing Out of the Box”™ 