Barry Regan (UK) - How Resellers can Prepare for Cloud Computing: 4 Essential Tips for IT Channels

IT channels have lost a considerable amount of business as major IT companies have begun to court SMEs via cloud computing. Barry Regan, UK partner manager at visionapp, looks at how UK channel businesses need to prepare in order to use cloud computing to secure business.

Cloud computing is breathing new life into the channel. It will fundamentally change how we do business. Telecommunications providers, supply chains and major IT corporations are using cloud computing to directly court small and medium-sized companies (SME), who were previously the mainstays of channel business. So in these days of cloud computing, has the channel had its day? Or do the clouds conceal genuine opportunities?

Already we're seeing that in the UK, channel players who recognise the new trends early and expand their business to include cloud components like Software-as-a-Service (SaaS) are winning new business. Those with the courage to change will be able to score points and use the breath of fresh air that is cloud computing to their benefit - as a tail wind to develop their business and take advantage of a changing market. After all, in the UK, 88.6% of businesses employ less than 10 people, and 98% employ less than 50 staff (Office for National Statistics, September 2010).

I believe that there are four main areas where UK channel businesses need to prepare in order to use cloud computing to their best advantage:

1. It's all about advisory expertise
It's no longer just expertise in the area of installations and software and hardware skills that counts, but also additional services and individual consultancy. System houses need to rethink their services and focus more on their customers' requirements and wishes. Solution-oriented work in the context of the respective SMEs business models should be of more immediate importance. Channel players that want to sell to this segment need to take time to understand smaller companies' needs and desires, looking at everything from their approach to risk to their desire for the latest software and hardware. This holds a great many opportunities to develop.

2. Adapting billing models
The IT requirements of businesses are changing constantly. At the same time, the customer wants to stay flexible and only pay for what he really needs. Large one-time agreements are a thing of the past. The channel has to adapt its compensation model and in so doing accept smaller but recurring sales. This is especially important when selling to UK SMEs, who themselves are under immense pressure to reduce overheads and capital outlay. Rather than sending out a bill to customers every two or three years, they are now being billed monthly for the services actually rendered.

3. Comparing apples and oranges
SaaS billing models need to be updated, otherwise comparison with major individual deals will be virtually impossible. But since huge discounts are often granted for more substantial orders, smaller deals with higher margins are often more worthwhile in the end. This needs to be checked carefully. Besides, flexible pricing generally makes the business easier to calculate - and much more appealing to the SME customer.

4. Extend responsibilities
It is no longer features or licenses that are sold but the solution itself. The way services are billed in the cloud computing business means more invoices. This is why it makes sense to streamline processes and resources in the accounting department, especially in order to be able to cope with the new flood of monthly bills. Among smaller channel players this will require a mindset change throughout the organisation, but with the right preparation in place, the advantages will be significant as you start to win ‘small but plentiful' deals from the UK's 2 million + small businesses.

Author: Barry Regan, UK partner manager at visionapp