Channel partner programs, CSPs

Why Some Partners Aren’t Seeing Blue Skies In the Cloud

Our vendor clients tell us they have a problem: "How do I get my partners to sell more of my cloud solutions?" Recent announcements by the big cloud providers may point to some reasons why.

Example 1: On day one of the recent re:Invent conference, Andy Jassy, CEO of Amazon Web Services (AWS) sent a warning shot to the room full of IT partners:

"The reality is we are going to direct business to our partners who are committed and who really understand the platform because our customers want partners who understand the details of our platform," he said. "I'm not suggesting that you shouldn't have other partners, that you should dump your other partnerships, but I am saying that I think a strategy of hedging is the wrong one for this time.”

Translation: Nice to see you, but you better get on the AWS train or risk being marginalized!

Example 2: Taking a very different approach, Microsoft continues to actively push the benefits of becoming a Cloud Solution Provider to its huge partner base, with the logic/lure of combining high-margin services with Microsoft Azure cloud products.

Microsoft provides the cloud services, but under the CSP program, partners remain in charge of the customer relationship, including billing and support. The emphasis in their messaging is for partners to create custom solutions bundling their own branded services – managed, project, IP – with MSFT, and delivering them to customers with one bill.

By directly provisioning and managing subscriptions and acting as first point of contact for customer support, partners can do what they have always wanted to: build ongoing, loyal customer relationships.

Translation: Please, please sell more MSFT Online Services to your customers – it’s good for you!

Example 3: …and back to Amazon. AWS recently launched AWS Managed Services to provide a full suite of infrastructure operations management for users of its public cloud. Automated services offered include: Change requests, monitoring, patch management, security, backup services and “full-lifecycle services to provision, run, and support” infrastructure.

Partners who are already concerned about loss of business to the public cloud option will ask: ‘Wait a minute, AWS … didn’t you just say 2 weeks ago that you wanted me to go all-in with AWS and you would reward me for committing to you? … and now you want to take away how I add profitable services, differentiate myself, and bond with my customers?

Translation: Let the disruption continue. MSP Partners, we’ll let you figure out how you play next.

More Info

We are currently working with our vendor clients, using ESG’s Cloud Readiness Assessment, to gauge how well their leading partners are transforming their business models to sell more recurring, cloud-based solutions. We talk to leaders of solution providers all the time that continue to sell lots of on-premises products and services, and are not transforming to cloud as fast as their vendors would like.

I wonder why?

Kevin Rhone is senior partnering consultant at ESG, where he helps clients strengthen their partner-centric strategies, programs, and go-to-market efforts. Read more ESG blogs here.