VAR partners may not survive cloud boom: TBR Credit: Philip BirmesCreative Commons
Business Management

VAR partners may not survive cloud boom: TBR

Traditional value-added resellers (VAR) are riding a tide of decline unless they embrace a more cloud-focused business model, according to Technology Business Research (TBR).

The analyst firm claimed many of the “baby boomer-owned” channel businesses lack the incentive to change their ingrained reselling and implementation models due to the impending onset of retirement.  

According to practice manager and principal analyst Allan Krans, companies that do make the change will form the largest segment of cloud partners, while those that don’t will ultimately not survive.

However, the new breed of partner, such as those working with companies like Amazon Web Services (AWS) and Salesforce, will need to operate in a fundamentally different manner compared with traditional partner models from the likes of Microsoft, Intel and Cisco, Krans stressed.

“Rather than traditional IT vendors relying on partners to drive their business, in cloud those partners are on their own in many respects to identify and develop their own value-add,” he explained.

“Being creative, developing intellectual property and focusing on the gaps between multi-vendor solutions are much more important activities for partners in cloud programs compared with traditional ones.”

Krans suggested partners today are playing a bigger role with the likes of Salesforce and AWS - both of whom largely favoured direct sales in the past. 

However, these partners are required to create new solutions that are either unaddressed by the cloud provider or hold value for the end-user, Krans added.

Comparing the traditional networks of VARs, distributors, MSPs and systems integrators (SIs) with cloud-native start-ups, TBR said new partner programs would need to evolve. 

Read more: Michael Dell slams multi-cloud credentials of HPE

Specifically, the firm pointed to a shift away from revenue-based requirements towards a focus on customer success and lifetime value, with low initial costs for partners.

In addition, there will be more focus on self-service digital enablement, collaboration on client leads and helping partner-to-partner engagement.

According to Krans, cloud-native partners in consulting, managed services, intellectual property development and cloud solution integration hold a “small but important space in the market”.

However, their numbers are few and many are being acquired, making it difficult for vendors to work with them.

Read more: Why the world's cloud leader has made a loss in Australia

“It is also difficult to spur their creation or fit them into a traditional partner program,” added Krans. “While traditional partners are cattle that can be controlled and herded in a consistent direction, cloud-native partners are wilder animals that create, forge and follow their own path.”

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