Techaisle Blog

The past 15 years have been tough for traditional resellers. Digital transformation will benefit the reseller channel. Today, the IT industry is abuzz with discussion of digital transformation. Unlike smartphones and cloud, however, DX may actually provide upside for traditional channel members. In this document, Techaisle, in its latest white paper argues in favor of the proposition “DX will deliver new opportunity for traditional VAR businesses”. VARs are best positioned to scale “the twin ladders” to deliver digital transformation technology building blocks and the Interwork platform helps the channel position digital transformation initiatives in successfully navigating through and across digital transformation delivery stages.

In many cases, channel organizations that describe digital transformation to prospective clients are really talking about digitization, or some combination of digitization and digitalization. This is particularly true of MSPs or cloud (SaaS, IaaS) suppliers who are positioning their infrastructure management offerings – which are, for the most part, vehicles for augmentation – as a means of achieving DX. However, in its transformational end stages, DX is defined not by supplier delivery but by customer processes and objectives.

Data gathered through the Techaisle SMB Channel surveys in US, Europe and Asia/Pacific shows that half of channel firms that have launched cloud businesses are primarily focused on “cloud builder” activity, which in many cases is an extension of existing resale business, and which is leading the channel partners down the path of specializing in virtualization and converged infrastructure. This naturally bodes well for channel partners of Dell, VMware and even Cisco although it must be said that VMware SMB channel strategy is yet to take center stage and Cisco is most famously focused on midmarket customers.

The three approaches to establishing a channel cloud business covered in Techaisle study include:

1. “Cloud builders” who are typically engaged in creating private clouds for customers,
2. “Cloud resellers” who resell third party cloud capabilities (often, SaaS applications), and who may also integrate multiple third party offerings, and
3. “Cloud providers” who have built their own infrastructure and are selling access/capacity to SMB customers

Cloud builder, cloud reseller and cloud provider approaches to building cloud practices within SMB channel businesses all address common SMB customer needs, but have unique challenges. Survey data also reveals that cloud optimism and success is highest among cloud builders.

“Cloud resellers” is the second largest cloud business approach. About one-third of US & Europe SMB channel partners with cloud businesses are primarily focused on reselling cloud capabilities but the proportion of “cloud resellers” increases to 39 percent in Asia/Pacific. However, many cloud resellers are still not very successful (see figure below) in their cloud endeavors, again proving the fact that simply reselling cloud solutions is not a viable long-term business.

The third approach, “cloud provider”, chosen by less than 1/5th of SMB cloud channel partners, offers a high degree of control but requires reserves of investment capital and operational expertise that are beyond many channel firms.