Reselling cloud services

The potential for reselling cloud services is somewhat untapped in the region.

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Reselling cloud services
By  Manda Banda Published  November 28, 2013

The potential for reselling cloud services is somewhat untapped in the region. Pierre Olivier Descoteaux (CCED) general manager - Vendor Acquisition & Cloud Computing at Ingram Micro Services, outlines what Aptec is doing in the cloud arena and the opportunities for partners in the Middle East region.

There is no doubt about the scale of interest in cloud computing at the moment, as businesses in the Middle East relax their traditional approach to ownership of their IT infrastructure and engage with the possibility of outsourcing elements to third party service providers.

Major vendors are responding by moving cloud delivery architectures into the region. Even in areas where early adopters have been thin on the ground, the market is now steadily on the rise.

According to market research firms Gartner, Forrester and IDC, the Middle East is somewhat trailing behind in terms of overall cloud adoption. However, the firms say the potential for cloud growth in this region is expected to be spectacular due to the number of SMBs operating in the region, the importance that this technology plays and the costs saving benefits that cloud proposes.

In Saudi Arabia, for example, analyst IDC expects the cloud computing market to grow annually by almost 50% into 2016.

Pierre Olivier Descoteaux (CCED) general manager - Vendor Acquisition & Cloud Computing at Ingram Micro Services, said SaaS with solutions like Business Email and Collaboration is currently one of the fastest growing segments in the cloud IT industry, if not the fastest.

Descoteaux said this is also one of the easiest segments to serve if you are going to venture into the cloud with limited knowledge and resources. He explained that IT software companies such as Microsoft, Adobe, Salesforce and SAP with cloud distributors like Ingram Micro have made it extremely simple for resellers to deploy SaaS in less than 48 hours. “I believe that resellers are very well positioned to take advantage of this exceptional opportunity. As a matter of fact, in the North America region, we have seen a growing number of hosting providers and resellers embrace this model in the past few years and their success has simply been phenomenal,” he said.

Descoteaux said at the end of the day, the benefits are for SMBs that can finally take advantage of a Fortune 500 grade software once reserved only for large enterprises.

While there is no doubt about the impact of the cloud computing model on the traditional channel, partners that embrace this model stand to earn double-digit margins on their bundled offerings.

Descoteaux concurred and said traditional hardware distribution is used to see 1% to 2% margins on products where as cloud, because of its delivery model, its bundled capabilities and its overall attraction in the market can bring in margins as high as 15% for the distributors. “The biggest investment that companies serious about cloud will have to make is hiring trained dedicated cloud resources. Companies need to make sure they get the necessary skill sets to support their cloud efforts,” he said.

“Also, restructuring the compensation plans for the sales team is a must if you will venture in the cloud.”

Aside from the investment aspect, Descoteaux said diversifying your portfolio of IT offerings including cloud services, professional services and training is the way to go for any VAD or volume distributors. “These lines of business are important since they attract new customers and generate additional revenues from the existing customer base,” he said. “In addition, they generate well above the usual 2% margin structure that the distributors are used to seeing.”

Building value in the cloud services arena has proved a challenge for most partners. What are the main challenges facing VADs with ambitions to enter the cloud services market in the region?

Descoteaux said education of resellers and vendors on the cloud value proposition for the channel remains the number one stumbling block in the Middle East.

“Ingram Micro is investing heavily in its cloud practice around the world to make sure that we follow best practices and have the right people driving the business from a marketing, sales and operations point of you,” he said. “We have made an effort to create a separate business entity that is focused solely on cloud and hiring experienced associates that have previously worked in a cloud environment.”

He reiterated that for the cloud business to continue gaining momentum in the regional channel, there is need for all involved (vendors, distributors and resellers) to change the whole mindset around the cloud computing model.

Descoteaux said building a recurring revenue model is a major driver any VAD, SI or VAR with aspirations to capitalise on the cloud boom needs to do. He said the three main opportunities to achieve this lie in managed services, cloud virtual desktop infrastructure and cloud software services.

He said in terms of sales, Ingram Micro has reviewed compensation packages for its team and has developed a specific compensation plan for the core team which is incentivised to work together with the cloud team.

Given that customers perceive cloud-based computing as a more streamlined, economic model, how is Aptec building service portfolios that are guaranteed to generate attractive revenue streams?

Descoteaux explained that Ingram Micro’s Aptec is focusing on three main pillars when building its cloud portfolio in the region. He said the first pillar is to look at what makes the basis of cloud computing and what companies need to start venturing into the cloud. Therefore, he said the company has decided to focus on security solutions, virtualisation and business email as a service, which consists of the logical first step when thinking of deploying any cloud solutions.

Experts say channel partners can engage in reselling integrated managed services and hybrid managed/cloud services, focusing on networking and telecommunications, IT infrastructure, applications and security.

Descoteaux agreed and said what is the most important aspect for any players with cloud ambitions is to acquire the necessary training, selling, marketing and positioning skills. “Partners will need to know what the true value proposition of cloud is and learn how to position it in a conversation with CEOs and CIOs. They will  also need to educate their customers on the differences between Capex and Opex model, and how cloud can bring better ROI,” he said.

He pointed out that supporting customers with collateral material and work session will also make the customer trust that the partner knows what they are talking about.

Looking ahead, Descoteaux said the adoption of cloud computing will drastically pick up in the Middle East region in the next 12 to 18 months starting from solutions around SaaS like Microsoft Office 365 and McAfee Email Filtering and then going into infrastructure as a service (IaaS) and eventually more complex solutions like ERP and CRM in the cloud.

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