Bright blue sky appears through the cloud

Opinion

Bright blue sky appears through the cloud

Welcome to Reseller Radar, a blog that aims to inform, provoke and raise a wry smile. After more than a decade spent at MicroScope analysing the channel, it is clear that reseller market is at an inflection point.

The role of the traditional reseller has been under close scrutiny for years but the recession has acted as a catalyst for change in terms of the way that customers want technology delivered and the method of paying for it.

The ubiquitous cloud has engulfed the IT industry and while some resellers have embraced it and have or are pushing through the requisite changes to their business model, others are scared to death of it.

Microsoft this week ran the first of many reseller workshops to give them a better understanding of how the Business Productivity Online Standard Suite (BPOS) will impact their business.

The fear factor of the fundamental shift from chunky upfront revenues paid at the start of the project to making the same money over the lifetime of a contract is a tangible challenge.

It changes the entire dynamics of a business with costly field sales teams and if you have not re-engineered your business to take out cost to deal with the issue it will be painful.

Of course Microsoft is not suggesting resellers move wholesale to sell apps hosted in the cloud, after all most customers are slowly migrating applications to the cloud and maintaining some on-premise software.

Under BPOS, resellers can expect 18% of the value of the contract to be paid upfront by Microsoft and 6% per month of the monthly fees but then there is obviously a raft of support contracts, management fees and customisation work.

The concept of the cloud has resonated with customers looking to cut down on capital expenditure in favour of op-ex, and is more flexible, allowing firms to expand and contract service requirements as their business changes.

Just as important is the changing relationship with the customer; resellers that do a good job in advising the client on cloud can potentially embed themselves with that business for the long term, shutting out the competition.

There is a good reason to maintain dialogue with the customers to become a trusted advisor and technology advocate, not just a product salesman; building proof of concept and showing the impact on the customers' p&l accounts.

Bizarrely the cloud may also help smaller resellers overcome concerns that larger businesses or public sector organisations may have previously held - in BPOS Microsoft invoices the client so the client is buying the services from Microsoft.

This may give the customer piece of mind yet the reseller remains the intermediary that moves the customer from a legacy estate to a services-based IT model.

In its next financial year, Microsoft is expected to add CRM, Office and even System Centre Manager to BPOS, meaning that the functionality will expand. Announcements are expected at this year WW partner conference.

The question is, will you be knocking on customers' doors with a cloudy, hackneyed sales pitch about products or will you build a clear longer term strategic relationship with them?

Drop me a line, on the QT, off-record, very much hush hush.

paul.kunert@rbi.co.uk

This was first published in May 2010

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