This is part two of a five-part series in which Freek Hemminga, LeaseWeb’s Global Channel & Strategic Alliances Manager, looks ahead to the challenges and opportunities for channel partners in the coming year. Read part 1.
As I explained during a recent interview, there’s no doubt that the rules have changed in the market. The way IT is sold, purchased and distributed is shifting dramatically and everyone involved in the business has to adapt to the new environment.
Customers under pressure
In this competitive world, solution providers’ customers are under increasing pressure to reduce their time to market in order to maintain revenues. In response, companies are striving to become ever more agile in everything they do. Product departments and lines of business are putting more and more pressure on IT departments to deliver the speed required. And IT departments are looking at new ways of doing things in order to deliver. In short, they are looking to the cloud for solutions.
Cloud as a service offering
The cloud is no longer seen as a way to save money by customers like these. Instead, it is another way of achieving their goals. This is a crucial insight for solution providers. They need to change the way they offer services to these customers and think in terms of helping them exploit new technology, helping them in their journey to the cloud. It’s no longer about selling the infrastructure itself but about finding ways to add value to the customer’s business. Or in other words, selling the outcome (in terms of improved business performance) rather than simply selling the technical performance of the infrastructure.
Get it right, and it’s a win-win situation. By creating new services on the back of new technologies, solution providers create more “stickiness” with clients as they come to depend on the new services they are receiving. It’s also an opportunity to reach out to new verticals, new segments and even new geos to bring on board a fresh generation of customers. Adopting a recurring revenue business model adds incremental value to the business which, over time, snowballs into further and ongoing success.
But get it wrong, and it could turn into a vicious circle. Failing to meet customers’ expectations will lead to lost business because the customer will find another solution provider who can match their needs. Ignoring this trend would have a dramatic effect on a solution provider’s bottom line and cash flow. Then, even if they were to belatedly recognize the need to change they would no longer have the investment resources necessary to make the transformation and so get left even further behind.