CSPs, Storage

MSP Cloud Investments Generate Revenue Growth

Joan Spindel
Joan Spindel

There’s money to be had in the cloud. So says a study from Westcon-Comstor. It shows solution providers that focus on cloud grow their overall revenues faster than cloud laggards that remain focused on traditional IT products.

Among respondents that derive 40% or more of their overall sales from cloud, 77% reported an overall increase in revenue, Westcon-Comstor says. Meanwhile, only 59% of those that sell no cloud reported an overall increase in revenue, the research found.

The study reinforces similar findings from Ingram Micro, which says hybrid IT partners are growing 5 times faster than their on-premises counterparts.

The cloud journey for Westcon-Comstor and its partners started more than two years ago. Westcon-Comstor acquired Verecloud in Septemner 2014, and leveraged that company’s tech to form the basis of a cloud service management platform called BlueSky.

Since then Westcon has been quite active in cloud services. That prompted the distributor to undertake this study according to Joan Spindel, chief go-to-market strategist at Westcon-Comstor. “At the simplest level we really wanted to just understand our customers and where they were in their cloud journey,” she says.

Researchers set out to understand how much cloud technology was being embraced by partners. “The channel is in the midst of a transformation,” says Spindel.

Spindel tells ChannelE2E the study shows that providers who do invest in cloud are finding success, but many channel partners have been slow to transition:

  • 60% of partners said they do not yet have a cloud-focused sales compensation plan;
  • 44% do not offer cloud solution bundles; and
  • 22% report no revenue from recurring cloud services.

Success Is In The Cloud

The global study examined companies in all stages of the cloud journey. From those just beginning their transition to ones that were born there.

The study demonstrated there are clear benefits for companies offering cloud-based solutions. “People told us that if they were focused on cloud they were seeing significantly greater revenue increases compared to those companies that were not selling cloud,” says Spindel.

Still, only 60% of companies are at the beginning of their transition. “That tells you moving to the cloud and moving to a digital model is really a work in progress for these companies,” says Spindel.

Some Help Along The Way

For this reason, according to the study’s author, many companies need help with the transition. The study says MSPs are more likely to invest in cloud capabilities and report 40% of their income comes from the cloud. But traditional VARs (value added resellers) are less likely to say cloud is part of their business.

Clearly, partners need help. And distributors stand ready to assist. “Things like training programs, finance programs, the ability to sell solutions – these are things that distributors are really good at,” says Spindel.

Different Journeys

Not all channel partners are created equal. Spindel says that transitioning to the cloud affects different channel types differently.

MSPs that are more likely to have a global reach “realize revenue from cloud more quickly report an increase in revenue,” says Spindel. Traditional reseller serving a single region will see most of their revenue coming from wireless and mobility, she adds.

Some partners were late to cloud services because of security concerns. But Spindel believes that’s not a valid excuse anymore. “There are some awesome partners that are providing great services that help to secure the platform,” she says. “So that hurdle, I think people are addressing and people have overcome.”

Cloud Distribution Rivalries

No doubt, multiple distributors are assisting channel partners with their cloud journeys. Ingram Micro, for instance, recently upgraded its Odin cloud automation platform for partners, and the company will host the Ingram Micro Cloud Summit in April. Also, Tech Data recently acquired Avnet Technology Solutions, and the company is now balancing two cloud platforms and marketplaces for partners. And Synnex has a growing CloudSolv business that works closely with Microsoft, Google G Suite and Docker, among others.

Pure cloud distributors also have emerged. Pax 8, for instance, has been ramping up cloud-oriented distribution services for security, storage and other types of platforms.

Additional insights from Joe Panettieri.