BUSINESS TRANSFORMATION ater adoption of the cloud
by the data and IT solution resellers who are expanding their range of solutions to include telephony.”
Balanced view
Shane does not subscribe to the view that cloud and SaaS solutions are the displacement technologies that many pundits suggest. “We do not believe that the SaaS model will totally displace CPE solutions in telecoms or replace software ownership as CDs did for vinyl,” Shane added. “ICON distributes a CPE and a cloud-based version of the Unified Messaging solution MESSAGEmanager and there is currently no evidence of a trend for the market shifting wholeheartedly to the cloud- based solution. Some firms may see strategic value in owning the assets whereas others may prefer to fund the service from revenue rather than have a wasting capital asset on their balance sheet.”
The convergence of voice and data will inevitably see traditional voice distributors shift there focus more onto IT solutions resellers, but it will essentially remain an equipment distribution model, says Shane. “However, channel partners selling CPE or on-site software solutions against cloud-based and SaaS solutions will need to become more skilled at the total solutions sale,” he added. “What this means for the reseller is that the winning features of a sale move away from the feature and benefits of the solution and become more focused on the commercial benefits of renting versus buying.”
The issue isn’t the model, it’s the take-up of the model and the changes that resellers
need to make to the structure of their organisations, says Ian Kilpatrick, Chairman Wick Hill Group. “SaaS is a different model, but not greatly different to other models that the comms channel is familiar with,” he said. “The concept of SaaS-type solutions where there are commission payments doesn’t work for some resellers because they like to see revenue going through their books. But it does work for many of the new business model resellers who only operate selling cloud services.”
SaaS can be delivered on a commission-based structure, which is not typical in the comms market, or via a billing-based model where the billing cascades from the supplier through the channel to the customer. This is a familiar model for any business selling minutes. “The SaaS model is clearly workable and within the scope of the established remuneration structures of most in the comms channel,” noted Kilpatrick. “Virtualisation is different in that we are moving from an appliance-based solution to a server-based solution, with potentially multiple appliances supported in one server, where the branding and delivery move from the box to the services and software.”
For those VARs strongly focused on appliance sales there will be some adjustments required to move to this, the biggest of which is that the value of the deal will lie around the software and services, not the value of the box. However, practically speaking, notes Kilpatrick, it only involves a shift of the value-add sell from the box to
Ian Kilpatrick Top tips on adopting the SaaS business model:
• Seek out products that are complementary to existing portfolios for easy add on sales.
• Find products and suppliers that you are comfortable with and can trust will work with you now and in the future.
• Get training and support on how to take the model to your current customers and prospects.
• Ensure that the remuneration model encourages and supports SaaS sales and drives sales behaviour in that direction.
• Get management buy in, without that it will fail.
• Accept that initial revenues may be low, but that there can be a strategic benefit of having business in this area.
a server. “SaaS is attractive in that it provides the customer with a pay-as-you-go route to services, without any need for capital investment,” he added. “For the channel it generates a strong consistent repetitive revenue stream. That gives sales teams a consistent base level of OTE and it provides a better valuation route and more predictable revenue streams for the company owners.”
Toe dipping Despite roots firmly entrenched in the traditional voice arena distributor Nimans has also dipped its own toes into the cloud- based world for the first time, teaming up with SaaS specialist Akixi. “As a distributor we continually assess the latest market
2011
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Marriot St. Pierre, Chepstow,Gwent. 16th June 2011
developments and offer a choice to our customers so that they can cherry pick what are the most suitable solutions for them,” said Dealer Sales Director, Tom Maxwell. “In many ways, distributors play a pivotal role in driving the adoption of new technologies. We can advise, guide and offer a range of service- based elements.”
He says the progressive uptake and stronger foothold of hosted telephony, for example, is likely to increase at the expense of the traditional PBX as more and more software applications are introduced. “It’s something for resellers to be embracing or at least keeping a very close eye on,” pointed out Maxwell.
“You only need to look at the world of applications on mobile devices. There are billions of apps being downloaded every year. These are all software packages being hosted in the cloud and this trend will naturally filter through in areas such as videoconferencing, voice recording and traditional telephony. It’s the next chapter of convergence and who knows where it will take us. In the future there will be even more natural migration of applications from the mobile arena into the traditional telephony environment. That’s something I am sure will happen.”
The 4Com distribution model has been built on delivering services that help resellers increase their business levels and efficiency, according to Neil Moulton, Sales Director at the company. “We see the cloud and the SaaS model as more of an opportunity than a threat. There will always be resellers who are ahead of the technology adoption curve with innovative distributors backing the right manufacturers to capitalise on this opportunity,” noted Moulton. “The trick is balancing the investment to ensure that we do a good job in both traditional and new markets.”
He observed that 4Com’s vendors all have a strategy around cloud-based solutions. “It’s really a question of ensuring we communicate these opportunities to our partners and assist in deployment. The basic business relationship between reseller and VAD is not fundamentally affected by the move towards cloud- based computing.”
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COMMS DEALER MARCH 2011 41
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