The Channel Company's NexGen Cloud Conference & Expo kicked off Wednesday in San Diego with a series of smaller business-to-business sessions preceding the main keynotes, and exhibitions that will take place Thursday and Friday.

Robert DeMarzo, senior vice president of strategic content at The Channel Company, told attendees, "Today's kind of the B-to-B intimate portion of the conference" before introducing a panel comprised of the leaders of five companies that have broken away from the traditional solution provider model to build successful cloud businesses.

The panel focused discussion on winning strategies for IT solution providers implementing cloud sales and cloud marketing strategies.

[Related: NexGen Cloud Conference To Help VARs, Vendors Team Up]

Moderating the discussion, DeMarzo noted a previous conversation with Alex Brown, CEO of Chicago-based solution provider 10^th Magnitude, in which they observed many solution providers would be out of business by 2017 because of their unwillingness to change their business models.

Brown told attendees that belief was even stronger in his mind now than it was a couple months back.

While overall IT spending is rising, Brown said, if you break down the numbers, it’s the cloud portion that's really driving the growth. The core, traditional on-premises model looks like it's on the verge of a recession, he said.

But he increasingly sees a dynamic that makes it hard for many legacy solution providers to change.

"I think a lot of people are victims of their own success," Brown said, adding that as the core legacy business recedes, it will push those solution providers harder to transform.

David Powell, vice president of managed and cloud services at TekLinks, said if those companies don't change, they could die by a thousand paper cuts. The decline in business will be slow, and they probably won't see one year of precipitous drop-off that motivates action.

Sam Coyl, president and CEO of Netrepid, an infrastructure hosting provider, added the rapidly shifting market conditions also present challenges to vendors, who need to figure out how to shift a hardware licensing model to a recurring model and subscription base. Many don't know how to compensate their sales staff, do forecasting, and make sure analysts understand what they're doing, Coyl said.

It was a tough process for Netrepid when the company went all-in on cloud.

"It is painful, it is expensive, and there were a couple months we weren't sure we were going to make it," Coyl told attendees.      

It helps to make the conscious decision at some point to just cut off the old model, he said, adding that's a tough thing to do when new business is still rolling in.

Ryan Trimberger, director of sales and business development at Nimbo, said many of the New York-headquartered solution provider's clients come from the health-care industry, and they are averse to having to deal with IT departments.

"We're having conversations outside of IT," adding, "It's the providers that can offer those types of services."

Trimberger noted that price cuts in the cloud that are announced seemingly every other week as major cloud providers try to undercut each other should be celebrated by the channel.

"Ultimately, the people that win are the people in the audience, 'cause they're really going to get more business out of that," he told attendees.

Trimberger also noted, "Salespeople are no different than the owners of the company. Change is difficult."

NEXT: A Shifting Sales Strategy