Zero One: How Channel Pivots to the Cloud

Channel partners see a cloud bursting with opportunity, as small and mid-sized companies turn to the channel for help with cloud solutions. The problem, though, is that traditional channel models aren’t set up to take advantage of the cloud.

In order to seize the cloud opportunity, channel partners must embrace a new “co-sell” model.

These are the findings from a Concur-Wakefield Research survey of 250 senior executives at IT companies, value-added resellers and cloud providers conducted this summer. Concur, an SAP company and software developer offering an expense reporting product, launched a solution provider program last year.

“While it is clear that cloud-based solutions are integral to the future of business, the speed to market for new partners is key in a fast-moving technology landscape,” says Concur’s Sachin Vora, senior director of global business development and leader of the solution provider program, in a blog post.

“As channel partners evaluate and embrace available cloud solutions, some partnership models may have more advantages than others when it comes to building a cloud practice and being profitable,” he says.

Related: Zero One: Can Small Businesses Get in the Digital Transformation Game?

The survey found that nearly all channel companies believe offering cloud solutions will grow their business and that cloud solutions are more profitable, 97 percent and 96 percent, respectively.

However, getting to growth and profitability in the cloud is a little more complicated.

The traditional channel partner serving small and mid-sized businesses has built competency across the entire customer experience, from marketing to sales to customer support. It’s a lot, which limits the channel partner’s ability to expand and adopt emerging cloud technologies, Vora says.

Channel partners can fill this gap by striking up referral partnerships with cloud solutions providers, in what Vora calls a “co-sell” model. This way, the channel partner can offer cloud technology while avoiding investment in technical and sales expertise.

“By implementing a co-sell referral model with a cloud-solution provider, partners can focus on being a trusted business advisor without major investment in technical sales resources,” Vora says.

Related: Zero One: Salesforce Partners Must Step Up Their Game

What’s the real payoff? The survey found that 77 percent of companies offering a co-seller model have seen a direct or indirect profit increase since they began using it.

The Concur-Wakefield Research survey isn’t alone in calling for a partnership model between traditional channel companies and their cloud software developer counterparts.

Neeracha Taychakhoonavudh, senior vice president of partner and industry innovation at Salesforces, has been beating this drum for a while. Solutions integrators and independent software vendors need to join forces to create battle-tested, repeatable cloud solutions, she told Zero One last month during Dreamforce.

“You’ve got to build higher values, got to get out, got to make a leap of faith, because if you keep [doing the same thing], there’s a chance it’s not going to be a good outcome,” she says.

Tom Kaneshige writes the Zero One blog covering digital transformation, AI, marketing tech and the Internet of Things for line-of-business executives. He is based in Silicon Valley. You can reach him at [email protected].