How are Solution Providers Making Money in the Cloud?

May 12, 2010 at 8:25 pm Leave a comment

There’s plenty of value for solution providers to provide around the cloud

Beth Vanni – Director, Market Intelligence

Solution providers of all business models including managed service providers, ISVs, systems integrators and even traditional resellers, are all eager to capitalize on the revolution of cloud-based solutions. Here are some of the most common ways solution providers are making money around cloud services today.

Agent/Affiliate influence –  companies with vertical industry or unique business process insights are more valuable now than ever.  With the complexity of the application or infrastructure deployment out of the way, these business specialists will be more highly sought after than ever.  And, many traditional (on-premise) IT vendors and cloud vendors alike have affiliate or influencer programs with attractive fees for referrals.
Reselling –  this is the function acting as the hotbed of debate.  But, yes, many cloud vendors still allow partners to front-end the customer relationship and in some cases even do the billing automation.  Most agree channel partners performing this function alone won’t survive.  But, the vendors still need customer reach, relationships and cloud evangelism.
Virtualized/On-Demand Infrastructure –  those early adopters of the MSP business model are dancing in the streets right now.  As VMware, Microsoft and others push companies to virtualize their basic IT infrastructure on their “journey to the cloud,” those organizations with robust data centers and 100% virtualized infrastructure available on a capacity-basis are well poised for growth.   Some MSPs are building it themselves and some are actively recruiting resellers or agents.
On/Off Premise Architectures –  what stays, what gets outsourced to the cloud and how to glue it all together for optimal service levels are decisions that many IT shops don’t want to make by themselves.  Solution providers who are SaaS and managed service-aware but are still conscious of the need for control and security of mission critical on-premise computing, will be the darlings of CIOs.  This architectural planning will take both tech and business savvy, but smart integrators will jump on the opportunity to help companies plan for their migration.
Application customization – just because Salesforce.com and Google are robust applications and available to everyone online doesn’t mean their workflows are going to meet the needs of every business.  Many of the leading cloud integrators we talk to are making a sizeable percentage of their revenues from light to heavy customization of these applications –  some over 50% of their revenues.  Their understanding of their clients’ business processes makes them the perfect translator of business needs to application interface and flow.  This brings together SI and ISV skill-sets, and represents an emerging cloud solution provider business model.
Post-sale integration – this is arguably the largest revenue opportunity for any solution provider dipping their toe in the cloud computing.  Integrating front-office or mobility SaaS applications to legacy ERP systems.  Anticipating SaaS email and collaboration tool usage by mobile users and integrating that with the size/capacity of server and storage farms.  Integrating Google or Salesforce.com apps into other financial forecasting systems and customer databases.  Yikes!  This is where CIOs will delay cloud deployment, if what’s on premise and what’s in the cloud aren’t fluidly integrated.   Tech savvy infrastructure resellers and SIs will be the agents for change and migration here.

Excerpted from Amazon Consulting’s Thought Leadership Brief, The Ecosystem of the Cloud: A Primer on Solution Provider Business Models and Roles in the Customer Management Lifecycle

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Entry filed under: Industry Perspective.

Cisco Partner Summit – Day 3 The Five Business Models of Cloud Providers

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