“The sales cycle is the same regardless of the buyer and as vendors and channel partners, it’s crucial to have the correct business models in place.”
Cloud creates new competition
In a customer-centric market, the concept of end-users continually transforming is one commonly grasped by the wider technology channel.
Yet as Ryan of SAP cautioned, the entire supply chain of vendors, distributors and partners must also take note and reassess, in response to an influx of new-look competitors entering the market.
“We know customers need to digitally transform, and they are pursuing those strategies, but so must the vendors and our partners,” Ryan added. “We see the difference in our SAP ecosystem, between partners coming from an on-premises background moving to the cloud, compared to a born-in-the-cloud partner.
“A partner that is born-in-the-cloud is much more comfortable in the new climate of buying because they understand the cost of early customer acquisition in the cloud.
“They realise the process that is required for the ongoing subscription model to be profitable, and that process could realistically take a few years.”
On the flip side, Ryan said partners transitioning from more conventional backgrounds - without the luxury of a legacy-free environment - must operate in parallel to current practices, in a bid to responsibly transform business models.
“Partners that are seeing success are setting up separate teams within the organisation and adopting a cloud-only or a cloud-first approach,” Ryan explained. “Our partners are making that change and as a vendor, we have to support them on that journey.
“We’re helping with the customer acquisition aspect through packaging solutions and services, but also through benchmarking partners against KPIs in the cloud.”
For Ryan, this approach - which was initially rolled out in EMEA - allows partners to be scored on different areas of the business, allowing direct comparisons between themselves and successful cloud partners.
Such a compare and contrast approach is providing a platform to create tailored enablement programs to get partners up-to-speed, fast-tracking the channel through a series of self-assessment tools.
“The channel must take ownership of this change,” Ryan added. “Like all vendors, we do not believe that all our partners will go forward and make the transition to cloud, but for the ones that are committed, we will continue to make investments to ensure they are successful.”
Ryan’s observations echo that of IDC, which claim that cloud service demand due to digital transformation is changing the delivery of business-oriented solutions, in a market shift impacting the entire supply chain.
Such change has resulted in technology providers ramping up investments in new offerings to cater for changing customer requirements - not just for new infrastructure, but also applications, and managed and professional services delivered via cloud services.
As a result, research from IDC highlights that across Asia Pacific, providers are rapidly exiting traditional business models, with only two-thirds expected to have the same route to market by 2020.
“At the minute, there’s very few businesses in Singapore that offer what we offer to the market,” said Andy Waroma, founder at Cloud Comrade. “We’re capitalising on increased demand for cloud solutions across the industry through our unique offerings.
“We’re seeing interest coming from all parts of the world, and even bigger players such as Accenture are starting to move into this space.
“But if your revenue structure is geared towards large multimillion-dollar deals and then you’re in a meeting talking about much smaller numbers, it can become difficult to compete.”
The influx of new-look partners has prompted vendors to shift focus and strategies, in a bid to capture the new wave of specialists entering the market.
“When we talk about channel partners, the one area we have traditionally struggled with has been finding those embarking on change,” said Shaw of LogMeIn. “We’re on the road to change and we want to bring our channel along as well, but that can be difficult for some.
“We could come to the table and talk about a solution that is going to create smaller amounts of revenue each month, but for a longer time period with more stickiness.
“But getting buy-in from a partner that is used to selling million dollar one-off deals can be impossible at times, the excitement isn’t there.”
Yet opportunity can be found in traditional system integrators and value-added resellers dramatically shifting business models to capitalise on such change, with only two-thirds of service providers planning to adopt the same business model by 2020.
“We’re a new vendor to the space and we’re seeking new partners,” Shaw added. “We’re part of a solution for most partners and we’re seeing great traction in the market as demand is continuing to increase.
“We’re here for the long haul and want to build reliable and sustainable business models with our partners, to deliver value to customers across Asia.”
Despite cloud creating new competitors for the traditional channel, the need for collaboration continues to heighten as customers demand tailored solutions to specific business requirements.
Therefore, partners are partnering up in the pursuit of customer value through the cloud.
“Competition is part of the market but I don’t see this impacting our business too much,” said Jeremy Tay, director of data centre services at Genesis Networks. “We work very closely with Datto and we specialise in disaster recovery and business continuity.
“Our aim is to help as many small to medium-sized businesses as possible because they are a vulnerable group, it’s important to reach out to them and add value.
“The cloud is obviously a factor in this but what’s crucial is our ability to collaborate as a service provider, rather than just compete.”
This exclusive Channel Asia Roundtable was in association with Datto, LogMeIn and SAP.