The place and role of intermediaries in a cloud IT system

Now add the picture painted above with networks of an electricity transmission and think how the described ecosystem will change. First of all, the producers releasing generators will quickly be connected to networks. Otherwise they will be excluded from business or forced out on the niche markets. Distributors will face danger to be excluded from a chain as one of their main market positions, maintenance of warehouse stocks, disappears. Time disappears need for installation and service of generators, service providers will look for different ways to bring benefit. And clients should solve, to be connected by it to the electric networks, to use the old generators or both.^[1]

Now let's return to the world of IT and we will look at effects of a similar situation for sales channels.

If you are a distributor, that time to make changes to model of your business. You are already exposed to danger to be excluded from a supply chain as more and more producers pass to sales and deliveries directly. Cloud solutions can lay classical distributors aside too. When they reach a maturity, on a share of distributors there can be only services in crediting and financing which some producers will use. In the world of cloud computing distributors should look narrowly at business models according to which they will manage to offer virtual shops, convenient for users, which will simplify to producers direct sales, and to clients will allow to find and purchase easily solutions at producers. Such mediation will allow distributors to participate in transactions and to bring benefit.

If you are VAR reseller or service provider, then for you there came the time of troubles. You deal not with physical bits or the equipment any more, and use a cloud where principal components of your service are placed. However certain opportunities are concealed here. Clients are disoriented too and will address VAR resellers and service providers for council. Such trust from clients and the close relations with them developing as a result at VAR resellers and service providers will become more and more particularly important. The VAR reseller or service provider need to use quickly outlined trend — to be trained, hold negotiations with the producers which are his suppliers and to become the expert within this new paradigm. From other opportunities it is possible to call increase in the set of applications at the expense of new cloud solutions as it does not require such costs of time as work with the physical equipment and software. Wide prospects and for search of partners which was limited before to the immediate geographical environment are now offered.

Besides, cloud computing opens a scope before application developers. Server cloud computing architectures facilitate and accelerate their work, and new generation of mobile devices, such as corporate tablets, give new opportunities for third-party developers. IT departments of many enterprises just have resources for creation no mobile applications and will address even more often external programmers for satisfaction of the requirements.

What as a result? Cloud computing comes, but they will not replace all architecture of IT. Whether it is worth using them, depends on the application, a maturity of technology and an economic benefit. During some time the help upon transition to cloud computing will be required for clients. It means for participants of sales channels that their business considerably will save the value. But it is unconditional, time to take a pro-active position came not to lag behind the happening changes and to be still useful to the clients.

Whether intermediaries in the offer of cloud services are necessary?

The institute of training and development of partners (IPED, division of UBM Channel, the publisher of CRN) conducted another survey of customers and solution providers about need of intermediaries for the offer of cloud services recently.

Gartner has in this respect the following opinion: success of strategy of cloud computing often is required to reach consolidation and mutual coordination of cloud services of one or several vendors, and one of methods they are to address the company providing the corresponding intermediary services.

The research IPED showed: 42% of respondents from among customers consider that such intermediary of a cloud "is important" or "is very important" in their today's plans of use of cloud services. Another 13% consider that the intermediary of a cloud is very important if the organization uses from three up to five or more cloud services. Besides, the customers considering services of mediation in a cloud not really important today believed that their value will grow in process of the growing use of public cloud services and creation of own private cloud in the organizations.

As for Var'ov, respondents from this group indicated the big need intermediaries of a cloud in a segment of small and medium business where it is very rare, and even there are no IT personnel capable to undertake integration and administration of this changing IT environment. If to look further, up to a corporate segment, then here intermediaries of a cloud are meanwhile less demanded, but besides, their importance will grow in process of the growing use of cloud services even if the organization has own IT personnel for administration. On average a segment above the uniform source of providing these services was called one of important motives of the address to the intermediary of a cloud.

VAR'Y clearly specified that players of the channel need to develop business of mediation in a cloud, and as soon as possible. In the February issue of CRN I already wrote about VAR'ax which performed transformation of the business to cover services of management of IT and cloud services. VAR'Y referred to category of "progressive" made efforts including in the arsenal of service, bringing permanent income, but this business did not become for them the main thing yet.

In the research IPED paid special attention to one VAR'U, namely Champion Solutions Group company from Florida. Founded in 1979, it constantly developed and rebuilt the business, having turned at first from a telemarketer into the reseller, then having passed to sale of products and services, and then and to sale of solutions, and at last, having become the intermediary in providing cloud solutions and services.

Intermediary services of CSG in a cloud include also its own additional services. For example, together with public cloud services from different suppliers it offers also the services of management of patches, bringing all this together for customers.

In an arsenal of CSG a full range of services - from infrastructure (the server, data storage, virtualization) to e-mail, platforms of development of cloud applicaions and cloud services of CRM. The company brings all these offers and services together, making out the uniform monthly bill to customers including operational support and call processing from clients, design and management of the IT environment, reaching a complete scope of all needs of the customer.

All these offers were constructed with preserving of former, core business of delivering solutions that allowed VAR'U to be entered successfully in the IT budget of customers, whether it be new features for their DPCs, own services of remote control of IT or public cloud services of third-party vendor.

Considering the possibilities of the further growth and conversion of business, Var'am should think over plans of mediation in providing cloud services along with other offers. Whether you offer services of infrastructure or application development, this trend of the address to one intermediary capable it is transparent to integrate the IT different types, will only accrue.

The value added of solutions during an era of clouds

Development of cloud computing will force suppliers of ready-made solutions to be engaged actively in application development with the purpose to increase the value added of the commodity offer.^[2]

It is hard to provide sufficient value added if everything, than your company is engaged, is a simplification of interaction between potential business partners from clients and producers. In view of quite limited set of the services necessary for support of these transactions, and the low marginality characteristic of resale of the majority of products, suppliers of ready-made solutions should rethink business value determination.

Expression 'sellers of solutions with value added (value-added reseller, or VAR)' was used in sales channels for many years. But determination of value added changes. With development of technologies of cloud computing this concept should be rethought.

The highest form of value added which the IT organization can create is the some form of intellectual property expressed in the client application created on behalf of the customer. But most of suppliers of ready-made solutions always traditionally avoided projects of development of client applications not only because the risks connected with software development are high but also because application creation requires considerable investments. However cloud computing changes the economic principles of application development.

Instead of investing in creation of the IT infrastructure necessary for support of development processes of applications, presently it is for this purpose much more convenient to use cloud PaaS-solutions (the platform as service). These platforms not only reduce cost of application development, but also help suppliers of ready-made solutions to reduce costs for management of the application from client side.

Though such category of solutions as PaaS, is rather new, suppliers of these services already realized what important role will be played by a sales channel in increase in their competitiveness. For example, the Engine Yard company providing the PaaS-platform for creating applications for PHP and the Ruby on Rails which can be placed on a set of platforms of IaaS (infrastructure as service) expanded the program for partners in a sales channel recently. According to program conditions, it will include additional resources of a financial incentive for those solution providers who will involve the startups creating new applications in work with the platform. The main idea, according to Mike Mersh, the director of global partnership of Engine Yard company — to induce suppliers of ready-made solutions to work with small firms startups which will be able to create applications with a potential of further growth.

Such corporations as Microsoft and IBM, also rely on partners in a sales channel in involvement of others of the company to the platforms of PaaS. Really, the competition in this market is so strong today that suppliers of ready-made solutions with experience in the field of PaaS are very popular.

The problem consists that most solution providers have limited experience in the field of application development, and that have it, do not locate experience in the field of PaaS. At the same time the number of the companies wishing to use possibilities of development of client applications on PaaS and thus to get additional competitive advantages, continues to grow. If to put these factors together, the ideal environment in which solution providers can generate value added so that to maintain profitability of business will turn out.

Difficulties can arise or with search of the partner organization with experience of application development, or with merger of such developer. It is possible to tell with all determinancy that in process of development of PaaS of the company, specializing today in application development, will become more, than before, to influence in what environment applications will be performed. Taking into account it the value of cloud computing for many solution providers will consist in purchasing developer company before it expands so that will be able to absorb traditional solution providers or will just cease to need their mediation.

In general concerning application development in a sales channel we reached an important milestone. Without having a certain level of opportunities for application development, solution providers will experience difficulties with ensuring acceptable marginality of business during an era of cloud computing. And if there is no acceptable value added, usually there are no methods also to provide profitability.

Notes