As VARs and solution providers start down the cloud path, what kinds of problems are they coming to you with?

We help them with three different questions. The first two are about how to talk about (cloud) and then how to sell it, and then there's the business model discussion. The first two are very customer focused: What are we supposed to be selling? As a distributor, we already know the service providers you should be selling and the providers that make ways for (partners) to sell their services. So Amazon, for example, is a cloud service that everyone would like to sell but there's not a great way to work with them and monetize that relationship right now. But there are hundreds of other cloud providers in this space that VARs and solution providers can and should be selling and we think we did the pre-work in boiling it down to the right players, so (that's how) we help answer that first question.  

Then there (are) different reasons why each VAR should be aligned with specific - or a group of - cloud providers. For example, if you are a Cisco VAR and it’s going well, you want to find the cloud providers who are Cisco-powered, so then you can take advantage of that Cisco relationship and continue to take advantage of the rebates and enjoy all the benefits. That's something that many providers don’t understand.

How are you helping partners understand the business model transformation associated with brokering or reselling cloud services?

The business model challenge is the C-level conversation with solution providers (where we ask): Is your business ready to start selling cloud solutions because we are changing your financial position from a hardware-based, end-of-the-month, get paid-type of structure, to a slow-building monthly recurring revenue structure which could take two years to break even for you if you invest in the resources. If the VAR isn't willing to go across the chasm and make investments and feel the little bit of pain of change, then the earlier questions are irrelevant. Only a subset of the entire channel community is going to have enough money to do that or be willing to do that. More of the younger companies are saying, "We know we have to be there, because that's where the market is heading."  

Do you see the cloud brokerage model growing as partners realize cloud reselling may not put up the margins they expect?  

Absolutely. Reselling Google for partners, for example, doesn’t drive a lot of margin. It's not lucrative and if you did that as your primary business model for making money, you would fail. But what you can do is create a line of professional services that wrap around that cloud service. Like cloud transition and planning services, and then attach (those services) to help (a customer) make a shift from Microsoft Exchange to Google. That's an example of how a solution provider can create a practice around cloud services without reselling those services.

I think there is going to be a lot of different versions of this (cloud broker) model. Everyone wants to add that sticky value, so brokering anything in a sense is helping clients make choices. But cloud services are complex, so if you can add more value to the conversation, I think you are going to stick around longer with your customer and you can make that really nice recurring revenue stream. I think there is an exploding marketplace of people who are going to go in and do that. Because there is chaos and confusion on the customer side, they are spending money on getting help and that help needs to come from solution providers. If that help is set up the right way, I think the community can make a lot of money doing it.

What advice would you give to partners who want to get in on the cloud brokerage model?

My recommendation is to find a strategic partner … who (has) the history of successfully helping partners selling cloud solutions who can map out those three answers. You need someone with those answers to help you figure out supply side, how to position and sell (cloud services) and help you with that business model transformation if it's needed. I don't think many (solution providers) can go it alone. There's too much to learn and the market is moving too fast to figure out who is the right fit and then understand what clients really need or what's happening across the market.