Jonathan Wagstaff, UK country manager at Context, looks at how firms in the channel are adapting to cloud services as the market expands.
There’s talk in the IT world at the moment that the word ‘channel’ should be dropped as the appropriate noun describing the route to market.
The word’s critics claim that it doesn’t effectively communicate the lateral functions of distributors. If you really want to sow confusion and sound progressive, then you could do worse than mention ‘the cloud’. This category is arguably far more gnomic than the product pipeline, and only marginally less mysterious than financial derivatives. The effects of the cloud are profound and clear when we look at what companies such as Uber or Airbnb have done to their respective industry sectors, but its full impact on the channel is not immediately obvious.
Many of those who have worked in the industry for much of their careers struggle with the concept and what it fully means to the channel.
One director of a US-based cloud provider confessed to me recently that a large portion of his business stemmed from European distributors and resellers attempting to set up their own services, before admitting defeat in the face of complexity and instead choosing to resell. This new and burgeoning sector has government regulators scrambling to spot and police malpractice, such as the ongoing probe of the cloud storage sector in the UK by The Competition and Markets Authority.
One thing channel players frequently agree on is that they need to be getting a piece of the pie. Entatech’s new head of cloud services Paul Lloyd stated that its Entacloud business had seen “phenomenal” interest.
The big players are happy to set up their own cloud platforms or even acquire existing providers, as Ingram Micro has done with its absorption of Parallels’ Odin Service Automation platform. In another unique play,
Westcoast is now teaming up to make ALSO’s cloud services available to their customers in the UK, creating an impressive new platform for Microsoft’s CSP, which makes sound business sense. All credit has to be given to IT distributors who continue to uphold their reputation as industry chameleons.
Part of the disruption is being led by vendors. Microsoft stopped selling Small Business Server a few years ago and has been trying to redirect traffic to its cloud services. From what we have been seeing at Context, the story of distribution and cloud is one where Microsoft is a main protagonist. Microsoft’s cloud offerings are no longer restricted by the older seat-caps – often benchmarked around 250 – meaning great ease of scalability, aiding the predictability of monthly expenditure and removing the necessity for big initial spending on hardware.
UK distributors can see these trends clearly through the cloudy mist and are making their moves in this huge land grab. Traditional license resellers – ignore this at your peril.
Jonathan Wagstaff is UK country manager at analyst Context.