Ingram Micro paints clear picture of a cloudy future
- 12 November, 2021 14:54
Nimesh Davé (Ingram Micro Cloud)
Ingram Micro Cloud’s latest industry research and analysis effort, the Cloud Technology: The 2021 State of the Channel Report, released this month, suggests what we’ve all known all along: the future of the channel is cloud, cloud and more cloud.
Of course, it should come as absolutely no surprise that a distribution business focusing solely on cloud and software-as-a-service (SaaS) would be singing such a mantra. In fact, anything less would seem strangely out of character for a company that has a vested interest in driving cloud uptake.
Additionally, it should be noted that the report is a study of the cloud market in particular, ignoring most other major segments within the broader channel, which makes sense, given that the research is coming from a dedicated cloud player.
Those points aside, the pitch of this mantra is probably spot-on.
There are, of course, plenty of areas in the channel that prominently feature other forms of technology, like server hardware, devices, networking and more, that continue to bring in serious chunks of the market’s overall IT budget.
But it’s safe to say that cloud computing and SaaS do seem to dominate the market to some degree. And their dominance only appears to be growing. As reported in March this year, 2020 marked the first year in which global enterprise spend on cloud infrastructure services outstripped enterprise spending on data centre hardware and software.
This was according to analyst firm Synergy Research Group, which suggested that enterprise spending on cloud infrastructure services continued to ramp up aggressively in 2020, growing by 35 per cent to reach almost US$130 billion.
At the same time, in 2020, worldwide spending on the enterprise data centre hardware and software typically used in on-premises environments – comprising servers, storage, networking, security and associated software – was US$89 billion.
The analyst firm pointed out at the time that this ratio continued a decade-long trend of explosive growth in cloud and virtual stagnation in the market for enterprise-owned data centre equipment.
Against this backdrop, Ingram Micro Cloud’s latest research examined three of the most important trends affecting technology resellers and service providers this year: the remote work revolution, the evolving role of the modern managed service provider (MSP) and the big three cloud infrastructure providers’ pivot toward the channel.
“In discussing the top three trends featured in Cloud Technology: The 2021 State of the Channel Report, I noted that when you look at technology consumption from any dimension, cloud, data centre, application, cyber security perspective or customer viewpoint, one thing is certain: we’re seeing an unprecedented retirement of technical debt at a speed the world has never expected,” Ingram Micro Cloud president Nimesh Davé said in the report's foreword.
“Whether it’s related to work, home, school or social media, our day-to-day reality has changed forever. And now, the transformational way of thinking we pioneered years ago is coming to fruition in the ‘more-as-a-service' economy."
“In turn, this is fuelling disruption along the entire technology supply chain – not just the physical supply chain, but also the virtual one, where the platform has become the focal point of every successful digital journey,” he added.
Broadly, the report recommends that resellers and MSPs look to power and protect the work-from-home experience; prepare for increasingly channel-centric big cloud providers and to evolve beyond the role of the usual ‘IT guy’ by offering end customers strategies to keep employees happy and safe online.
More specifically, Ingram Micro’s research paid particular attention to the dramatic effects of COVID-19 on businesses, their employees, their customers and their IT providers, with the report noting that the pandemic had made good on the boldest forecasts for digitisation, making the digital tools driving business transformation indispensable.
Most importantly for partners, according to Ingram Micro Cloud, market trends arising from the onset of the pandemic have vastly reinforced the channel’s central importance.
Meanwhile, the current circumstances have also helped to bring to fruition years-old trends that were already recasting the channel’s “principal protagonists”.
This spells big change and big opportunities for those who are aware and ready, the distributor cautioned.
One of the top trends inflicting change on the industry is, of course, the rapid shift to remote work. The second trend, from Ingram’s perspective, surrounds the changing role of value-added resellers (VARs) and MSPs.
“For two decades, the accelerating adoption of cloud technologies and subscription-based models, alongside a shift in B2B [business-to-business] buyer expectations, has gradually altered the global IT software industry, requiring IT service providers to evolve in step," the report said. "With the pandemic, these forces of change have been magnified."
A third trend noted by Ingram Micro Cloud was the observation that the top three cloud providers, Amazon Web Services (AWS), Microsoft Azure and Google Cloud, are increasingly moving towards the channel.
“Since the birth of Microsoft Azure, Amazon Web Services (AWS) and Google Cloud, the ‘big three’ have increased their stake in the channel as they’ve broadened the range of their cloud services. Recently, this gradual reorientation has accelerated with important implications for channel partners,” the report stated.
Indeed, recent research by Canalys confirms this trend, with the analyst firm suggesting that the global cloud hyperscalers were shifting their focus to advancing industry-specific service portfolios and growing their channels to help bring their products to market.
Together, these three trends, according to Ingram, are working to redefine the current state of the channel and the implications of what’s to come.
And change equates to opportunity.
Hyping up the hyperscalers
Let’s start with the hyperscalers. With AWS, Microsoft and Google all moving further toward the channel, with each of these cloud providers increasing their channel investments, it is expected that new opportunities are set to open up for their respective partners.
“Over time, as these big cloud players have broadened the range of their cloud services and generally increased their stake in the channel, the outlook for what this will mean for MSPs has evolved from anxious to optimistic,” Ingram Micro Cloud’s report noted.
“Whereas previously some analysts projected that the big players’ capacity to bring easily accessible cloud products to the channel could potentially spell an erosion of partners’ pricing power, these predictions have not been borne out.
“Even the most optimistic prognoses couldn’t have foreseen the boost in cloud demand brought on by the pandemic, nor the extent to which cloud providers would rely on the expertise of channel partners to properly sell and distribute their products."
“Amid the pandemic, these turbulent circumstances consolidated cloud’s function as a fundamental lifeline of the modern business. Meanwhile, Microsoft, AWS and Google Cloud were already betting on the channel to help further increase cloud consumption,” it added.
The report pointed out that, rather than attempting to build an aggressive, end-to-end sales pipeline, the big three cloud providers are instead ramping up investments in their channel partner ecosystems and partner programs.
“As customers deploy varying workloads across public, private and edge cloud infrastructure, they’ll seek out independent partners capable of integrating solutions from each of the top three cloud providers,” the report said.
For MSPs, this means that readying themselves for increasingly channel-centric providers should start with enrolling their teams in partner certification programs from the big cloud players.
From there, MSPs should work to shift their mindset away from focusing solely on reseller margins to taking advantage of the multiplier numbers the big three cloud providers offer—and how they can win a larger piece of this business, Ingram suggested.
Keeping pace with the remote work revolution
As the cloud infrastructure market soars to historic highs, its long-term significance has become clear as businesses have been forced to re-think their enterprise IT architecture to accommodate a more distributed workforce, according to Ingram.
And a big part of this shift has seen businesses assess the many upsides of teleworking – which appears to have become a permanent fixture for much of industry now and into the future.
As has already been widely suggested, rather than spurring a temporary uptick in remote work and cloud investments, the events of the past 18 months or more have inaugurated a new era of distributed teams and cloud sales, the report suggested.
“Within this new remote paradigm, channel partners will be tasked with the challenge of duplicating workers’ experience at corporate headquarters inside their home offices, introducing multi-cloud and hybrid cloud strategies, ensuring connection speed and reliability and expanding the security perimeter,” Ingram Micro Cloud said in its report.
For VARs and MSPs, being able to successfully underpin the work-from-home experience will require proactively guiding organisations’ adoption of multi-cloud and hybrid cloud strategies, including infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), and remote communications collaboration software-as-a-service (SaaS).
“To meet the growing demand for cloud infrastructure, software and platform services, partners will have to expand their ecosystems to encompass cloud-based solutioning for end customers,” the report stated. “This will require investment in educating team members in IaaS, SaaS and PaaS while preparing themselves to better guide their customers toward cloud success in these critical areas.”
Moreover, Ingram suggested VARs and MSPs should also look at bundling holistic SaaS solutions to meet their customers’ needs for remote communications and collaboration.
“Rather than offering piecemeal packages, successful partners will aim to incorporate components for messaging, unified communications and document collaboration into one cohesive solution,” the company said.
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Taking it to the edge
Another emerging element discussed in the report was the topic of edge computing, with Ingram Micro Cloud suggesting that the edge computing market was set to increase at a compound annual growth rate (CAGR) of 34 per cent between 2021 and 2024.
For partners, there will be a need to expand service at the edge, according to the distributor, which suggested it would be crucial for partners to identify instances where edge computing can help resolve their customers’ existing network problems.
“At present, cloud struggles to support the data-intensive and low-latency requirements of emerging applications,” the report noted. “Alternatively, edge computing helps reduce latency issues that arise when handling large amounts of data.
“What’s more, those customers that invest in edge computing now will build out infrastructures that give them a head start on accommodating 5G,” it added.
Going forward, Ingram suggested, partners will have to look beyond public and hybrid cloud strategies to offer their customers content delivery networks (CDNs), telecommunications, colocation data centre edge fabrics and domain-specific converged edge infrastructure.
Here’s where the security play comes in, according to Ingram.
“As network perimeters expand outward, an organisation’s attack surface likewise broadens, and it’s here that partners will find a third area of critical importance to their efforts at equipping organisations for remote work,” the report said.
Ingram suggested that organisations moving to hybrid cloud were struggling to meet security and compliance requirements, particularly as intrusion and attack incidents surge.
For channel partners, the issue becomes doubly complicated in that they are increasingly the targets of hackers, a trend that has been somewhat exemplified recently by the latest wave of supply chain attack activity by the Russian nation-state actor known as Nobelium.
In such an environment, partners are in a position to advise end customers on the adoption of more security measures such as multi-factor authentication (MFA), threat detection and response, security operations centre (SOC)-as-a-service, risk management, threat intelligence and backup and disaster recovery, for example.
It also means partners can define and execute their own response plan when hacked as well as investing in cyber security education for their own employees, the report suggested.
“Now and over the next few years, remote and hybrid work environments will generate new customer pain points and require innovative holistic, preventive solutions,” Ingram said, “The elite partners will be those capable of predicting changing customer needs with intelligently bundled solutions to power the work-from-home experience.”
The makings of a ‘modern’ MSP
Forming another pivotal part of the channel’s next chapter, according to the distributor, is the long-evolving chronicle of the IT service provider.
For the past two decades, two separate trends have recast the role of the service provider, the company claimed. The first of these is the evolution of a reseller’s role from simply shifting product into something much more complex, involving the implementation of holistic digital solutions made up of disparate tech vendor products and services.
The second trend, according to Ingram, is that over time, B2B buyers have come to expect the same excellent customer experiences enjoyed by B2C consumers.
“The result has been to push VARs ever closer toward the role of the MSP and to force MSPs to evolve beyond their function as the ‘IT guy,’” the report said.
With these trends in mind, Ingram pointed out that as COVID-19 has supercharged digital transformation and driven up cloud adoption, the opportunities brought on by the shift to remote workspaces have created an opening for MSPs and VARs to become “proactive change agents” and strategic partners for their customers.
“In this new landscape, partners who lack skills and resources around automation, cloud acceleration, customer and employee experience, e-commerce and marketplaces are swiftly being sifted out from those primed to control a burgeoning managed services market expected to reach [US]$492 billion by 2027,” the report stated.
“In today’s rapidly changing channel, the MSPs that make the cut will have to become channel-first experience builders, specialised strategic partners and ecosystem drivers.
“Rather than merely providing adequate IT services upon request and putting out fires when they arise, the MSPs most apt to survive will take on a far more active role in their customers’ success,” it added.
Examining the customer experience
So, how should partners make sure they’re on the winning side?
Well, Ingram suggested that a good starting point would be with the customer experience, as the sales team transforms into the “customer success army”.
In tomorrow’s channel, the distributor suggested, conversations with customers will have transitioned from a purely technology-focused dialogue to one focused on building an overall business experience.
Part of this conversation around experience is likely to involve introducing the customer to the latest billing practices – a sometimes-overlooked element of a strategic partner play.
“MSPs will take the lead in guiding their customers away from transactional and project-based billing and toward the subscription and consumption-based models being adopted in the SaaS and cloud space,” the report noted.
“Customers invariably prefer the small, regular payments of the latter models to the large, sporadic payments of the former—and the added convenience is often key to building long-lasting customer relationships,” it said.
Moreover, to provide the best possible user experience, more MSPs are expected to adopt the latest professional services automation (PSA) software to automate and streamline their billing and reconciliation processes.
In looking for ways to enhance their customers’ experience, modern MSPs should also aim to boost the skill sets of their customers, the report suggested. As part of this effort, service providers should try to constantly communicate with their customers about the latest best practices.
“One way to do this effectively is by offering ongoing IT training focused on emerging trends that cover everything from edge management and accessibility to remote cyber security,” Ingram said. “They can also designate go-to contacts from their customers’ teams to receive specialised training.
“These go-to contacts will be able to pass on newly learned skills to their colleagues while also helping keep MSPs informed about their organisation’s evolving needs,” it added.
More generally, Ingram Micro Cloud suggested that the ‘modern MSP’ is becoming a specialised strategic partner, evolving past the break-fix model of IT support and is instead all about being a partner that continuously keeps an eye on emerging pain points and is ready to educate their customers on the most cutting-solutions available.
“This requires MSPs to upgrade their own skill sets, so they can become specialised MSPs with greater domain expertise in the technology and industry verticals,” Ingram said. “Technology verticalisation is the first step toward fulfilling the role of today’s more specialised strategic partner.
“In an era of public, hybrid and multi-cloud, the need for cloud and cyber security expertise has taken on new importance. Customers will look to their service providers for assistance, especially since eight out of 10 IT professionals name their internal team’s shortage of know-how as the chief obstacle to their cloud transition. To fill the gap, MSPs will have to invest in cloud certification and in clearing audits in the cloud."
“Upskilling in key industry verticals will be equally important in fulfilling the MSP’s role as an expert strategic partner. And with 500,000 MSPs worldwide, the competition is growing,” it added.