The four pillars of cloud’s channel disruption

This article appeared in the November issue of CRN magazine alongside the feature: "Disties see the light in cloud delivery"

Nextgen Distribution has joined with Saxum Commerce to establish Nextgen Connect, a new go-to-market strategy to help resellers access cloud services. The service is built on top of Saxum’s online portal, and is “unbelievably sophisticated”, according to Tony Lorge, founder of Saxum and now managing director of Nextgen Connect. Lorge says the cloud strategy is guided by what he dubs “The Four Pillars of Disruption”. 

1. Multiple sales channels

“Whereas in the past [the channel] was a simple chain of events – it went from vendor to distributor to reseller to end customer – now that is not the case,” says Lorge. “You have web, in-app and mobile supply chains and a bunch of other go-to market channels being created. Those are all good to get your product sold but how do you  manage that? How do you engage your resellers across all those channels as well?”

2. Multiple licence types

“You have mobile licences, on-premise licences, subscriptions licences, cloud licences – and hybrid licences, where you have part of your license on-prem and part in the cloud,” says Lorge. “You can have on-premise products that have a subscription revenue model and you can have a cloud product that has a subscription-based model but you pay annually, or sign up for a three-year contract. You can have a subscription model on a product that is actually on-premise, and you have it being purchased through multiple sales channels. All of this gets pretty horrendous to manage.”

3. Changing customers

“In the past your customer would have typically engaged earlier in the sales cycle, now they engage much later – they shortlist and do all sorts of things long before they start talking to the salesperson. At the same time, you don’t want to leave that up to the gods. There’s a need to track and understand your customers and opportunities long before they engage with your sales team.”

4. You don’t know what you don’t know

Lorge says this last point covers all those extra considerations resellers may not contemplate when moving to a cloud model, such as finding additional products to create solutions tailored to customers’ specific needs. “There’s an interesting statistic from IBM that 25 percent of all salespeople’s time is spent on solution building – trying to find the product that will enhance the core to give customers a solution. [IBM] also discovered that more than 65 percent of deals that are lost are lost because they could not find the solution.”

Another example is e-commerce. “How the hell do you collect money? It is not a purchase order and a cheque any more. There are diverse payment methods being used, with different security and rules, and that is one of the unknowns.”