Once, there was much gnashing of teeth over public cloud providers, viewed darkly as the beginning of the end for the channel. That wariness has given way to a more accommodating, collaborative spirit.
But while channel conflict still plagues public cloud as customers find it easier to buy direct and as partner services become features of their platform, cloud vendors have slowly woken up to the channel’s value in accelerating their own success.
Why partner with an ‘everything-as-a-service’ (XaaS) vendor? Some offer little or no price discount, but have exten-sive application programming inter-faces (APIs) to help partners develop intellectual property. Other XaaS vendors are more traditional, preserving margins and offering fiscal incentives. Many are somewhere in between.
There’s no right or wrong cloud channel program, says Don McLean, managing director of Fronde Australia – a partner of Google, Salesforce, Amazon Web Services and NetSuite. He advises partners to “start with the customer and plan backwards”.
“We do an analysis that’s really quite simple: can we make money?” McLean says. “Go to the end: what do I want to achieve, then what’s the value I want to give my customer? Why do customers want to go to the cloud, how can I provide that, how can I make money from my expertise?”
McLean illustrates the point by comparing NetSuite and Salesforce. “NetSuite is absolutely serious from a [traditional] resell perspective and is absolutely committed to the channel. Salesforce [says it] won’t resell through solutions partners, but will give you access to a rich API and you can put it on AppExchange [Salesforce’s app store], make revenue there and through managed services and delivery as well.”
In Australia, Salesforce mostly sells direct to customers but has engaged in a more traditional indirect-reseller model in emerging markets, says its senior VP for partner programs, Neeracha Taychakhoonavudh. Salesforce Australia splits its partner ecosystem into consultants, such as Accenture, Infosys and Deloitte, and software makers that develop on Salesforce’s platform.
“On the edge, we have partners that don’t fit cleanly like digital agencies such as WPP, Omnicom and management consultancies like McKinsey and Bain that act as influencers,” Taychakhoonavudh says.
She points to Cloud Sherpas – which was bought by Accenture in 2015 – as a model. Using Salesforce’s ‘Fullforce’ initiative and open APIs, Accenture built systems for its customers in verticals such as healthcare and wealth management.
“Leveraging their experience doing such an implementation, they bring it forward, use the APIs, add their own IP and market it as a Fullforce solution,” Taychakhoonavudh says.
“We targeted industry solutions because that’s a way to get closer to the client and address common problems in industry.”
Show us the leads
While partners such as Fronde and Accenture maintain multiple vendor relationships, Tquila ANZ is a pure-play Salesforce consultancy. Chief executive officer Jo Masters says this guarantees vendor loyalty. “Salesforce is not worried that we will pass the lead on in another direction. They know we’ll completely support it, so there’s no conflict of interest. That puts us in a very strong position.”
Masters says Salesforce provides training to keep Tquila current and is rigorous about deal registration to ensure clients don’t slip between partners.
She says Salesforce was instrumental in a recent $3 million Queensland win: “We brought the lead to Salesforce; they were very supportive”.
However, John Orrock, a veteran of the Salesforce channel, suggests the cloud CRM company has more to learn about partnering. Orrock has set up two highly successful Salesforce consultancies, first Okere then Cloud Sherpas, both of which were sold. With his latest venture, Barhead, he snubbed Salesforce to focus instead on Microsoft Dynamics. Speaking to CRN in Toronto in July at his first Microsoft Worldwide Partner Conference, Orrock contrasted the two vendors’ partnering strategies, saying the “difference here is Microsoft allowing entrepreneurs to be entrepreneurs. Interacting with Microsoft, you are still in control. Whereas the Salesforce model, you are not so much – you are limited by what they allow you to do.”
His business partner, Ken Struthers, who runs Barhead in Australia, agrees. “At two keynotes, [Microsoft said] we are and always will be a partner company. When you have the CEO and other execs saying that, it certainly gives you a level of confidence that it’s their way of thinking.”
Of the leading public cloud vendors, AWS has been particularly active in recruiting enterprise partners in Australia. Head of channels and alliances Stefan Jansen, a veteran of Microsoft, now oversees a channel that spans myriad flavours of partner, from consultancies Deloitte and PwC, to software developers MYOB and Atlassian, to solution providers such as Datacom, SMS Management & Technology and Bulletproof.
Jansen says that when it comes to partnering with AWS, “the conversation is not about margin per se. That is the wrong conversation. It is about how you [the partner] can add value on top of a platform that is becoming so broad and available on a global scale. It is changing the traditional, linear vendor-distributor-reseller model.”
Price vs value
Public cloud promises customers the utmost flexibility, so holding onto clients might mean winning them back day after day. That’s tough when prices are falling and your vendor competes with you. The answer could come from investment oracle Warren Buffet, who said: “Price is what you pay, value is what you get.”
Stephen Parker, formerly of distributor Rhipe and now an analyst with 1 Vision OT, says this principle should guide local cloud resellers as they compete with deep-pocketed vendors that seek to buy market share. “Price is easy to beat,” Parker says. “While price has to be in a right range, people’s buying decisions are rarely price-driven.”
Partners that understand their customer’s needs intimately and are easy to trade with, differentiate on services and IP and offer unique value, will hold on to their customers, Parker says. This is important because subscription models require partners to provide detailed, timely and accurate reporting against costs and future plans essential.
While traditional vendors often make tentative steps into public cloud, they’re still dominated by a big-bang, lock-in approach. Gaps in vendor channel programs include sclerotic internal processes, conflict between traditional and cloud sales groups, commissions and incentives, and an inability to spur IP creation, he says. Smart partners will use cloud to deliver business outcomes: “It might be billing-as-a-service or marketing-as-a-service; it’s all about time to customer value, and speed to reseller revenue”.
Next: Cloud cannibalism
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