By Josh Greene, VP of Sales and Channels at OneLogin
These days, making inroads in the cloud is imperative for all channel firms. With the Software as a Service (SaaS) market projected to exceed $112.8 billion by 2019, channel providers need to strategically adapt in order to remain competitive in a market increasingly dominated by the SaaS model.
The move to the cloud isn’t without its challenges for channel partners. Perhaps the most significant issue the channel faces in the SaaS age is the lack of clarity around their role. With subscription-based and on-demand pricing models quickly becoming the norm, the relevance of on-premise solutions is diminishing. In speaking with many reseller organizations that have traditionally earned a significant amount of gross margin from on-premise revenue streams such as hardware installation and support projects, the size and frequency of these opportunities have become more scarce, and the models outmoded. This prompts the question of where the channel’s revenue, and more importantly gross margin, will come from.
In the midst of this identity crisis, the channel faces the added challenge of resistance from SaaS vendors. As industry expert Dave Key reports, many SaaS vendors are bypassing channel partners due to the perception traditional VAR and SI functionalities are no longer necessary. As SaaS adoption increases, some processes such as solution procurement and onboarding have either become simpler for end users to carry out themselves without the assistance of a channel partner, or with professional services offered directly from the SaaS provider. This direct path from vendor solution to end user implementation leads to the problem of disintermediation for channel providers, who must search for new methods to maintain strategic relevance with of their services necessary.
When it comes to selling and servicing cloud-based products, channel firms need to adopt a progressive approach. Here are some key tips firms should follow to surmount the challenges the channel faces and maximize their potential in the cloud:
- Adapt to the changing market: For channel partners to succeed in an evolving realm, they need to embrace this evolution by accepting the needs of their customers are also evolving. Whereas partners were once relied upon to install hardware and keep it supported, the widespread shift to the cloud means this function as a viable revenue stream will continue to diminish over time. Similarly, while traditional channel partners counted onboarding and configurations among their key responsibilities, the ease of some SaaS implementations means end users can now handle these tasks. Essentially, the growth of SaaS — and the convenience it brings to end users — will lead progressive channel providers to retool their expertise. Channel partners that will flourish in the changing market are those that will embrace cloud by pivoting from an outdated resell model and embrace a new role as active, strategic advisors to their customers. This means channel providers need to focus on staffing their organizations with highly experienced cloud experts who are uniquely qualified to offer the consultative services end users will increasingly expect from the channel. Moving forward, customers will turn to the channel for key help navigating the cloud.
- One word — adjacency: For channel partners approaching a cloud move, there’s an important difference between being proactive and impulsive. While firms might be tempted to spearhead a massive structural overhaul to facilitate a speedy cloud push, this is not the strategic approach. Channel partners need to approach cloud adoption as an incremental process instead of instantaneous process. To that end, it’s vital channel firms begin their cloud move by focusing on adopting solutions that are logically adjacent to their existing services, as TechTarget contributor Crystal Bedell put it. Bell offers the example of a customer relationship management reseller looking to make inroads in the cloud. For this firm, pursuing cloud-based CRM is the most logical move, since it allows the firm to tap into and expand upon its existing knowledge base.
- Emphasize quality vendor relationships: Now more than ever, it’s important for channel providers to establish strong and successful relationships with vendors. Channels need to lay a foundation for success with vendors by carefully vetting potential partnerships. This starts with channel leaders closely evaluating a prospective partner vendor’s internal organization, asking questions like, “How will our firm engage with the vendor?” and “How much time will the vendor’s sales staff invest in developing relationships with us?” Successful vendor/partner relationships have clear objectives outlined from the outset, with interests on both sides accounted for. But with many vendors looking to bypass channel firms, firms need to be especially vigilant about ensuring their needs are met. This means partnering with vendors that offer a harmonious working relationship in which the channel partner acts as an extension of the vendor’s “eyes and ears” to ensure that individual clients are satisfied over time.
While the broad adoption of SaaS solutions demands changes within the channel, it’s important channel firms take a measured approach to deploying this change. By incrementally adapting their services alongside the broader evolution of the cloud, channel companies can retain relevance and the competitive edge.
Josh brings 18 years of experience building, growing and expanding high performance teams to OneLogin. In his current role, he oversees US and APAC sales and channels. While with Softchoice Corporation, a 1B+ IT Solution Provider, he held numerous roles, including: Global Business Development and Marketing, leading the Inside Sales Organization and also building and developing a field sales organization in the US West Region that generated $250+ million in annual revenue.