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The year of Cloud adoption by the Channel


Looking back on 2012, it is true to say it was a year that saw tremendous progress in terms of Cloud adoption in Europe. More than ever before the development of the Cloud & SaaS is really changing the IT landscape and dealing a new hand to the IT distribution eco-system - particularly the distribution landscape since even the term “distribution” is not really suited to Cloud and SaaS product types.
Resellers are no longer simple product suppliers, but are seeing their role evolve towards that of a supplier of means. It is not surprising then that the expression “IT Partner” is more and more often preferred to that of “reseller” which has too restricted a role.

The Cloud (or SaaS) model has no physical need for indirect distribution since it is not distributed physically and is deployed almost instantaneously. This begs the question: "Why bother with partners or integrators who will only add to the final cost for the client?" Indeed, the first wave of SaaS companies built their own economic model without including partner remuneration in their pricing structure, (except when there were certain existing affiliations). It has not been easy for traditional software publishers to enter into the SaaS model. Firstly, because the SaaS model does not bring them the same income structure, secondly, because continuing to work with a distribution network was decreasing their profit margins and was damaging to the competitiveness of their product pricing.

However, all IT market players know that a distribution network soon becomes important if one wants to address the SME market or if market competition increases. Pure player SaaS publishers have realized, as the product offering has evolved, that the visibility of each market player is reduced. The market has become more competitive and support from established relay partners has taken on more importance.

Today a landscape is taking shape with SaaS and managed service players who combine the indirect sales model with their own existing business model, and those who seek to redefine their role within the 3.0 IT economy.

The relationship between suppliers and IT & Telecom partners can be seen in 3 different ways:

  • The partner is the extension of the software publisher or manufacturer’s sales force.
  • The partner is a necessary evil to ensure full coverage of one’s ecosystem.
  • The partner has a symbiotic relationship with the publisher's offering to promote the development of their own ecosystem.
 
This latter view corresponds best to what we call the 3.0 IT economy where the partner is no longer a simple promoter of the offering but an intrinsic part of it. The partner no longer distributes but proposes solutions whose basic elements, are longer conceived in-house but are assembled using their own specific skills to match the requirements of their clients. The technical solution is secondary; greater importance is given to usage, and infrastructure, be it software or hardware based, has to become transparent.
In this process of transformation not all client ecosystems will evolve at the same rate.

Traditional and Cloud/SaaS distribution

The year of Cloud adoption by the Channel
Traditional IT distribution

1 - Vendors support wholesalers with marketing programs and stock protection
2 - Vendors with their wholesalers animate the distribution network with discount operations and co-marketing programs (MDF)
3-  Vendors influence the market to find clients and to incite them to turn to the resellers


Cloud and SaaS distribution

1 -Vendors supply equipment to or are associated with hosting centres which they support in their ISV hosting policies 
2- Vendors support ISVs via programs to help them migrate to the SaaS model and marketing programs to find them new clients
3- Software publishers make up an ecosystem of partners to promote their offers and to offer financial support
4- Software publishers and their ecosystem influence the market to find new clients and to incite them to subscribe to the services and solutions

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