Google Cloud, SADA, Ensono on Segmentation, Margin, More
MSPs AllCloud, Ensono and SADA, plus Google Cloud, cover various changes and challenges within the channel.
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Almost no business can thrive these days with just a brick-and-mortar strategy. Colliding forces — COVID-19, ubiquity and ease of cloud services and infrastructure, customer demands — make the digital enablement of business a necessity.
No matter the vertical or segment, “lines are blurring,” said Duan van der Westhuizen, senior vice president of public cloud at Ensono. What is happening is that end-user organizations are “differentiating on the ecommerce experience” — largely with the help of the channel.
SADA CEO Tony Safoian agreed. He cited pizza chain Domino’s as a prime example.
“Domino’s is a great customer of SADA’s,” he said. “They have a visionary CTO. There’s an opportunity for all the traditional enterprises to mirror Domino’s. … For every traditional customer we have, we have a hundred digital ones trying to eat their lunch.”
Channel partners need get rid of the notion that pursuing the big customers is the best path to profit. Instead, when it comes to cloud, don’t overlook the small and medium business market. The end-user organization does not necessarily have to be large use a lot of cloud services and infrastructure.
“These could be companies with 100 people but their consumption of cloud is hundreds of millions a year,” said Eran Gil, CEO of AllCloud.
It’s true, Safoian said. SADA is signing “nine-figure deals” with customers on a regular basis, and they are not big companies. “They’re like 115 people,” Safoain said.
At the same time, channel partners shouldn’t fret being small themselves.
“You don’t need 1,000 people to serve 10,000 customers,” Gil said. “It’s about scale.”
This shift in thinking about consumption instead of size translates into new debates about customer segmentation. Cloud not only heralds change in how organizations consume technology, it’s changing how providers (including channel partners) define and serve their clientele.
“A per-seat SaaS still is how you should do it,” said SADA’s Safoian. “But we’re selling consumption, which is completely divorced from employee count, revenue, are you public or not.”
But helping vendors (not just partners) segment better and more appropriately for a cloud world will take time.
“It’s a big challenge,” Safoian said. “Google is figuring out,” he added. (SADA is a Google Cloud-only managed service provider).
Terminology needs to become more broad and widely applicable, too, AllCloud’s Gil pointed out.
“You can’t go to Israel and say an enterprise client there is also an enterprise client in the U.S.,” he said. AllCloud, an Amazon Web Services MSP, has operations in Israel and sees the disparities among definitions and segmentation every day. Europe, too, varies, he said.
“In Europe, $5 billion old-school companies are considered middle market.”
The solution might lie in looking at a “propensity to spend” segmentation, Safoian suggested.
Jennifer Chason, director, Google Cloud Enterprise — western states and southern California, agreed.
“My customers are defined as enterprise,” she said. “But the book of business looks like midmarket, not just enterprise.”
The issue, she added, concerns “propensity to consume.” And that starts to differ depending on whether a client already uses cloud resources or if the deployment is brand-new.
“So we have to balance where to invest resources and time, and grow the middle,” she said.
Might we see the death of multicloud hype in 2022? If these MSPs’ observations are on point, that could be the case.
Indeed, multicloud deployments appear to have saved organizations rushing to the cloud during COVID-19. Different divisions within a global enterprise, for example, often stood up their own environments to suit their unique needs as the pandemic forced people to work from home. IT experts spent much of 2021 figuring out what the organization was paying for and whether the data were secure. Using different cloud providers contributed to the complexity. And it became clear that internal IT staff might lack the skills required to keep those different clouds running properly.
“I used to believe multicloud was the next wave,” Ensono’s van der Westhuizen said. Ultimately, though, “it’s too complicated,” he said.
SADA’s Safoian agreed.
“It’s very hard, operationally. … You have to be super sophisticated,” he said.
To that point, some channel partners might even “fake” being multicloud providers to appeal to potential clients, AllCloud’s Gil said. In other words, he said, it can be easy to spend “a dollar a year” with a certain cloud vendor and proclaim multicloud expertise. When asked if this is a common practice within the channel, Gil said no — some partners play games, he noted, but “the majority don’t.”
Another part of the problem with multicloud lies in interoperability. Data sets across platforms do not just sync into one data lake and magically work together, Gil said.
Safaoian concurred.
“You could run infrastructure on one and data on another … but it can’t be a mixed data lake or infrastructure. That requires lots of sophisticated engineering.”
Keep an eye on customers’ multicloud setups in 2022. They may need to trim down the number of vendors they use or turn to a skilled channel partner for help managing the different requirements.
It’s no secret that the IT talent shortage is a problem. But so far, most people tend to blame recent societal changes (COVID-19, stimulus packages) for the upheaval. There’s another aspect that will continue to affect talent acquisition throughout 2022: field compensation strategies, SADA’s Safoian said. Winning greenfield (or all-new) cloud deals “takes a very long time” and does not pay the same as other types of sales. This results in more churn and contributes to the talent shortage, Safoian said.
(As an aside, selling greenfield is indeed very different from helping clients who are already in the cloud, Google Cloud’s Chason said. Salespeople — channel partners included — have to conduct different conversations with the C-suite, she said.)
Another change in 2022 ties to more co-selling between vendors’ internal sales teams and indirect channel partners. Vendors need to keep beefing up the perks tied to co-selling. For instance, Google Cloud, Chason said, “is incentivizing our sales teams to think partner every time. … Every account executive needs partners in their business plan.”
But getting direct sales to incorporate indirect often depends on mentality. Too many people in the sales world still don’t have experience with the channel and don’t understand what partners bring in terms of expertise and capabilities. It’s going to take concerted effort from vendors — under pressure from partners — to change that.
One complaint across the cloud MSPs participating in the inaugural Cloud Roundtable? Vendor compensation. Each MSP agreed that vendors have created overly complicated incentives that they don’t package well for partners’ salespeople. Vendors need to simplify their programs, the MSPs agreed, and stop overengineering to the point of overwhelm.
The MSPs understand how this happened. In years past, they got burned by partners who abused the system, they said. But the time has come to simplify compensation.
At the same time, more partners need to take more initiative to obtain their own business. Too many rely on vendors to give them leads, Safoian said. SADA has combated this internally. The MSP spent three years teaching partners how to earn their own business independent of providers, Safoian said.
Gaining leads without providers’ help can be tough, though, AllCloud’s Gil said. Small customers, especially, don’t have strong marketing departments. This makes it harder to target potential clients.
Safoian agreed but said he wants partners to erase that “victim mentality” and make more business happen. True, AllCloud’s Gil said, but vendors hold some blame for that old way of thinking. It’s time to transition mindsets and for providers to extend more margin so partners can spend on people. (Ensono’s van der Westhuizen agreed — “more margin,” he said.)
Finally, Safoian said, vendors need to do better at knowing how much business each channel partner brings. Executives need to understand the ROI of their partners so they grasp what a partner is worth them, he said.
One complaint across the cloud MSPs participating in the inaugural Cloud Roundtable? Vendor compensation. Each MSP agreed that vendors have created overly complicated incentives that they don’t package well for partners’ salespeople. Vendors need to simplify their programs, the MSPs agreed, and stop overengineering to the point of overwhelm.
The MSPs understand how this happened. In years past, they got burned by partners who abused the system, they said. But the time has come to simplify compensation.
At the same time, more partners need to take more initiative to obtain their own business. Too many rely on vendors to give them leads, Safoian said. SADA has combated this internally. The MSP spent three years teaching partners how to earn their own business independent of providers, Safoian said.
Gaining leads without providers’ help can be tough, though, AllCloud’s Gil said. Small customers, especially, don’t have strong marketing departments. This makes it harder to target potential clients.
Safoian agreed but said he wants partners to erase that “victim mentality” and make more business happen. True, AllCloud’s Gil said, but vendors hold some blame for that old way of thinking. It’s time to transition mindsets and for providers to extend more margin so partners can spend on people. (Ensono’s van der Westhuizen agreed — “more margin,” he said.)
Finally, Safoian said, vendors need to do better at knowing how much business each channel partner brings. Executives need to understand the ROI of their partners so they grasp what a partner is worth them, he said.
Cloud computing represents arguably the greatest business enabler in modern memory. Because of its impact and importance, Channel Futures held its first-ever, closed-door Cloud Roundtable at the recent Channel Partners Conference & Expo. We invited a number of participants and were honored to host managed service providers AllCloud, Ensono and SADA, as well as Google Cloud.
We’ve already published two other slideshows on different discussions that took place at the 2021 Cloud Roundtable. This final installment features more stream-of-consciousness conversations that happened as participants took inspiration from one another. Here we cover critical changes happening for end-user organizations as well as for the channel (including compensation). The cloud upends a lot of the old ways partners do business; participants didn’t shy away from being vocal about that.
Click through the slideshow above to find out what they had to say.
Want to contact the author directly about this story? Have ideas for a follow-up article? Email Kelly Teal or connect with her on LinkedIn. |
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