The increasing demand for cloud services is forcing value-added resellers (VARs) and solution providers to assess their current business models and the services they provide to their clientele. Many times, that leads to talk of becoming a new kind of VAR or a "Hybrid VAR" (I’ll utilize VAR and solution provider interchangeably).
I’m a major proponent of tracking technology trends and evolving your business to drive growth. However, my belief is that you also have three years to make the journey from your current model to a fully-considered hybrid VAR model.
It’s important that you begin to alter your business model and solution-stack to reflect your clients’ desire to consume IT services in new and different ways. And, (as I’ve mentioned in recent posts) don’t think for a minute that some of your deals aren’t slipping from your sales pipeline to someone else’s. They are.
Remember, once you lose a deal or a client to the cloud. Those deals don’t return in three years for a refresh, they’re gone forever.
So, it’s important to start your journey towards becoming a Hybrid VAR. But you need to do it in a way that makes sense for your business and the culture you’ve created. The first step should be to become cloud-savvy, as the cloud is the gateway to the Internet-of-Things (IoT) and other transformational business technologies.
By the way if you’re not convinced that the IoT is the new black, check out the amount of money flowing into mergers and acquisitions in the space and the number of articles on the subject. The real-world use cases are showcasing the business impact of the technology today in multiple market segments, from consumer to manufacturing to healthcare.
Your 1st Step
Organizations making the move to the cloud services space have three uncomfortable episodes that afflict them. challenges that typically occur early on:
- They don’t spend enough time assessing and altering their business model, sales model and plan, nor do they properly assess the investments they’ll require to make the transition to a recurring revenue-centric approach.
- They spend too much time coming up with elaborate solution-stacks and solutions that prove impractical. The provider is just beginning their move to the cloud and earning credibility with clients and partners.
- They have a tough time determining where they truly provide value and how they’ll craft a story that clearly tells people where they play, what they provide and why it’s important to their customers and partners.
In this post, I’d like to focus on item 3 above, as I’ve found a pretty simple approach that’s worked time and time again. My hope is that it will help you and provide a small catalyst to begin altering your model and generating significant recurring revenue.
I’d like to use several examples to showcase my approach:
- If you are a network infrastructure or connectivity expert, build your story around being a cloud connectivity expert who is fluent in connecting private and public clouds to legacy infrastructures
- If you are a data center-centric company, build your story and capabilities around compute-and-craft solutions that focus on moving workloads to the cloud and allowing your clients to scale on demand, implement open stack infrastructures and allow your customers to consume applications seamlessly.
- If you focus on the end user, build your story around desktop as a service (DaaS) and platforms that allow for "anytime + anywhere" access. Add alternatives that may better meet their consumption needs and allow you to increase your margins in the long-term by growing your recurring revenue composite.
- If you are a storage expert – build your story around being a cloud storage expert who is fluent in on-demand storage and recovery services. Also, if you develop analytics capabilities, it’s a natural extension and you’ll command instant credibility.
It’s important to keep in mind that many of the things you’re providing today will be relevant in the cloud and that your initial approach should be to add a new way for your customers to consume IT and for you to leverage your current skill-sets. All this happens while growing your recurring revenue base and expanding your skill-set to claim a larger cloud services footprint over time.
What is a Hybrid VAR?
A hybrid VAR is (there are several definitions based on context and viewpoints) a value-added reseller who has transitioned from a product-centric model with traditional professional and support services that allow for the deployment and ongoing maintenance of the "product" - to one who typically provides cloud services, has IoT capabilities or strong network or data security skills and has a valid analytics and Big Data practice. Feel free to configure any of the megatrends affecting our industry to come up with your own hybrid VAR mix.
In the End
It’s important that you don’t overreact, but that you do react. The world is changing, and this change isn’t because the vendors have come up with the latest and greatest flavor of the week by repackaging an existing solution and rebranding it., It’s because this is the first major dramatic business shift we've seen in 15 years, and customers are voting with their IT budgets. 78% of them will be choosing to spend in the cloud and you need to make sure you get your fair share and continue to truly own that client relationship.