Those of you who read It’s The Cloud Stupid! an article penned last summer by my business partner Andrew Banning, will know that for some time now we have been predicting fundamental changes in the IT channel that have the potential to disrupt – and in some cases totally undermine – the business model of VARs and MSPs.
Well last week the first part of that prediction came true, when we saw the first move by one of the public cloud giants to start transacting their cloud services direct with SMBs.
Many of you will no doubt have read in the trade press that Microsoft announced changes to the Azure buying process, revealing that SMB customers will now transact directly with the vendor. In a post on its website, the vendor introduced the Microsoft Customer Agreement (MCA), which it said will become "the primary way for small and midsize customers to buy Azure services" from March this year - replacing the current agreements.
While, according to Microsoft, the new scheme will "provide a better buying experience with a fully digital agreement and the ability to customize for specific purchases," and partners will continue to support customers with presales and post-sales Azure services, it also stated that Microsoft representatives will be the "primary contact" for customers.
For any IT sales professional worth their salt, this latter statement should be ringing major alarm bells. After all, we spend our careers fostering close working relationships with our customers, building trust and ensuring that our MSP or VAR, and our company alone, is their trusted advisor when it comes to all things IT. Not having full ownership of the customer relationship immediately opens up the possibility for misunderstandings and undermining of trust.
And of course it’s not just about ownership of the customer relationship, it’s about what happens next. Those of us who have been working in the channel for decades have seen many vendors shift between direct sales and channel partner models many times. And of course a vendor is always going to do what they consider best for their own business. The fact that you have built your business model based around their channel programme is irrelevant to them, if their belief is now that they can be more successful by contracting directly with customers and bypassing the channel. So let’s just hypothetically consider what a vendor may consider to be their most successful business model in this modern era of IT infrastructure, where the vast majority of customers are now in the cloud.
Perhaps as a public cloud vendor I would think that a channel model is potentially leaving my future success in the hands of third parties I do not know and now that we have a product that doesn’t need supporting in the way that traditional in-house hardware infrastructure did, I could bring this whole operation in house.
After all, I have the best marketing platforms available to me, (my own), a trusted brand to die for and no one understands my product like I do. So if cloud services are the way ahead and I already have a significant market share, why don’t I leverage my commercial advantages and be the first to offer an “Easy-IT” model to businesses and customers based on my own cloud offering? For sure there will be some investment involved, but what’s easier, trying to convince individual business owners with no loyalty to me to sell my products or to sell and support them myself? In terms of a long term growth model it really is a “No Brainer!”
And should Amazon, Microsoft, Google or one of the other public cloud providers make the decision to go direct to SMB customers with a fully managed and supported cloud offering, just who do you think has the deepest pockets in the dash for market share and in controlling customers requiring IT services?
But where does that leave the MSP/VAR?
In my opinion the dash for customers is well and truly on. If there is customer demand for cloud based IT services, which there clearly is, those MSP’s without a cloud offering are on borrowed time; not only are they selling to a diminishing market, they are doing so with no current ability to expand and take cloud offerings to verticalised markets, in order to transition to the safer haven of being cloud services provider.
As for those MSP’s with cloud offerings, well it is a dash for market share and building loyalty with customers before the inevitable branded vendor models hit the marketing channels; the days of waiting for customers to contact us and having no effective new business development campaigns continually running are over, if MSP’s want to survive.
Luckily all is not lost, because help is available from Virtuoso Consultancy to the owners of MSP’s and VAR’s looking for the answers to the challenges that today’s market conditions present.
My fellow directors and I have over 40 years combined experience in growing businesses and can deliver sales, business development and marketing experience that is IT sector specific, straight to your door. We know how to build these models, they are “Current” and continually evolving, we know how to target and speak to the decision makers in your target markets and most importantly, we know how to grow your business and make you money!
If this has resonated with you and you would like to explore how we can help you achieve your growth aspirations, then please do not hesitate to contact Jane Gatfield on 07788 227654, or at janeg@virtuosoconsultancy.co.uk
To read more posts covering all aspects of sales, marketing and business development for MSP’s and VAR’s, please visit our blog; https://it-business-growth-strategies.blogspot.co.uk/
