In the last year or two, the IT industry has spent ample time investigating, pondering, and debating the impact that the cloud and IT-as-a-Service would have on the IT channel and on the IT reseller business model, writes Jason Beal.
Undoubtedly you have attended a number of industry events to learn more about cloud solutions and best practices for moving to a cloud and managed services-centric business.
By now your internal management team has probably made decisions about new cloud vendor partnerships, about the specific value-added services that your company could wrap around other vendors' cloud solutions to generate profits, and about ways to differentiate your company in the local market from your competitors.
Your company has made the deliberate decision not to take a "wait-and-see" approach to cloud, but rather to become active in this space and get out in front of the cloud and managed services opportunity.
Identifying new cloud solutions, forming new vendor partnerships and strategies to differentiate your offerings through complementary value-added technical services is a great start to building your cloud computing practice.
However, there are two areas in particular where the "rubber really meets the road" in terms of your company seriously accelerating its transformation to the cloud and managed services annuity-based business model.
You'll know that your organisation is truly committed to accelerating change and making progress when your company has implemented these two best practices:
- Changed compensation plans and performance metrics for your sales team and your technical teams.
- Set a specific, incremental marketing budget in your annual plan for cloud and managed services and spent part of that marketing budget already on demand generation activities.
Few things are as true in this world as the old adage, "compensation drives behaviour." You may want your sales team to shift from selling products to selling cloud services, but unless you change their comp plans to change their behaviour, chances are you won't see noticeable pipeline increase for cloud services.
Sales professionals will not voluntarily walk away from those large one-time, quota-busting sales deals; your organisation will need to realign quota and comp plans to encourage them to focus on longer-term services contracts.
You'll need to stop paying them strictly on metrics like upfront Revenue and Gross Margin, and start to pay them on Monthly Recurring Revenue (MRR) and Total Contract Value (TCV).
You may want your engineers to stop being focused on billable hours and one-to-one client engagements and putting out IT fires, but unless you change their comp plans to reward them for working proactively, remotely, in a one-to-many fashion, chances are you won't see noticeable differences in your pre- and post-sales technical services organization. This step is not easy, however it is of critical importance in order to drive the proper change in your company and accelerate your progress towards the new IT-as-a-Service model.
IT industry manufacturers, software vendors, and service providers are spending millions of dollars every month to promote their cloud computing solutions.
We see advertising on television, in magazines, on billboards, in airports, and in countless other marketing vehicles.
Our vendor partners are helping to educate the general public about the cloud. This "rising tide will float all boats" in the industry, including the resellers' proverbial boats. Take advantage of this rising time, of the millions and millions that our vendor partners are spending to increase awareness and generate demand within your customer base.
It is time that your company allocates a specific amount of incremental budget to start marketing your company as a cloud computing and managed services expert.
It is time to implement a deliberate and proactive marketing strategy to play both "offense" and "defence" in your local, regional, or national market. Offense means strategies to generate new leads, fill your pipeline of new prospects, and ultimately acquire new clients. Defence means strategies to protect your current client base and to solidify relationships with your clients so that the emerging competitors cannot steal them.
If your company has accepted that the IT industry is undergoing a fundamental evolution towards the cloud and IT-as-a-Service, then the time is now to implement these two critical success factors and best practices.
Change your compensation plans to drive the proper behavior of your staff and to reward them for selling the annuities. Commit a specific budget to marketing in order to position your company as a cloud expert, to protect your current customer base, and to accelerate efforts to fill the pipeline with new prospects.
In a dynamic, emerging market like cloud and managed services, your company will be able to ride the growth wave as compensation plans are aligned and marketing strategies are implemented.
Jason Beal is executive director, Advanced Solutions Division, Europe at Ingram Micro
This was first published in February 2012