The disruption every business experienced in 2020 has pushed forward cloud adoption in the UK. Comms Business looks at the lay of the land, and the opportunities that remain.
The cloud has long offered partners new revenue opportunities and the ability to solve problems for their customers. The UK has been ahead of the curve in terms of cloud adoption for several years, but the pandemic has moved the needle even further.
In fact, some say cloud adoption has been vital in allowing many businesses to weather the difficult trading environment created by the pandemic. Justin Hamilton-Martin, sales director UK, Enreach for Service Providers, explained, “2020 meant that most businesses had to rapidly bring together different teams in a new remote way and with this trend likely to remain pervasive beyond the pandemic, cloud is now the only way to go. Many businesses would not have survived last year without cloud technology. After all, even if they don’t call it the cloud, employees use cloud-based services every day, both at work and in their personal lives.”
That chimed with the view of Andy Bannister, Tollring’s newly appointed global head of sales. He said, “We could never have envisioned the explosion in cloud adoption that has happened over the last 12 months. As the pandemic hit the UK last year, there was a steeper decline in on-premise deployments with more businesses looking to cloud-based solutions to keep their businesses operational. Most opted for a collaboration platform that they already had access to, like MS Teams or Zoom, to fill the gap in internal and external meeting capabilities.
“Having made those tactical decisions about cloud services to enable the transition of workers from the office to the home, businesses are now finding themselves with a patchwork quilt of solutions and shadow IT. Systems that were chosen and deployed in haste must now be aligned with overall comms strategy to ensure they are effective in terms of productivity and cost. This means consolidating what they have with a solution that covers the full stack of business communications from internal, external, CX, meetings as well as being able to understand how their business is using these tools in order to drive improvement.”
Resellers and managed services providers that add cloud services to their offerings can benefit from both customer satisfaction and additional revenue. Will Morey, director, Pragma, discussed the role resellers can play in guiding businesses through cloud projects. He said, “The opportunities created for resellers by cloud are limitless. Once you have established a billing relationship with the customer and demonstrated your ability to add value to a business through a single cloud service then the options are limitless.
“Since the pandemic most organisations are leaner and resources are tight. Resellers can fill that gap by supporting adoption of new technologies and de-risking cloud projects and the business with their experience and capability. Resellers are now engaging businesses in the role technology can play in their post-Covid recovery. Many organisations are keen to return to a growth mindset and want to utilise technology to recover their business and return to growth. This creates huge opportunities for resellers.”
What’s more, a larger proportion of UK businesses are now looking to the cloud, so resellers have a wider prospective customer base. Jonathan Rigg, head of networks at truSIP, said, “Cloud offers the same opportunities it always did, but to a larger share of the market – collaboration has been the main change and even post pandemic it is sure to continue to be an important aspect of communications. Resellers have the ability to offer cloud solutions to their customers that are hosted 100 per cent off site, as well as having the ability to sell additional functionality and cloud-based applications onto existing on-prem solutions within their base. They can offer customers wishing to transition to cloud solutions a journey that can be much easier and more affordable.”
Ali Hastings, regional channel leader for the UK and Ireland, Avaya, added, “The cloud offers agility, flexibility and speed to market but it’s important to enable channel partners and their customers to go at their own pace on their transformation journey whilst delivering business value for the customer and enabling the reseller to differentiate in the market.”
Jeremy Keefe, CEO, Nuvias UC (pictured right), discussed the potential of cloud communications. He said, “A huge proportion of communications for businesses is moving to the cloud, the same can be said for infrastructure and security. If resellers do not also embrace cloud technology, as end-users are doing in huge numbers, they will no longer be relevant.
“As many cloud vendors are now offering their products as a service and providing the technical expertise themselves, this no longer requires resellers to hold that technical expertise in-house. This means, resellers can outsource that cost to the cloud vendor which can lead to higher margins for them.”
Robert Belgrave, CEO, Pax8 UK, highlighted the significance of value-added services. He said, “Product resale in the cloud era is all about value creation. Gone are the days of simply passing through products and making a healthy margin. As a general rule, 5 per cent margin for product resale pales in insignificance compared to the 35 to 65 per cent margin achieved through project services, managed services, and packaged IP, respectively. The big opportunity is building packaged IP on top of the cloud solutions.”
There is also potential for channel partners to help their customers put sustainable hybrid working technology solutions in place. Tollring’s Bannister said, “The hybrid approach to work isn’t going away any time soon. This presents a huge opportunity for the channel to help businesses to take stock of and re-evaluate their communications and collaboration infrastructure. How many resellers can truthfully say that, after this year of disruption, they know exactly which systems are currently in use within their customer base, right now? Are they only using solutions that the partner has provided, or have other technologies, and resellers, crept in?
“Key areas for resellers to focus on are the need to consolidate disparate solutions, and to provide insight into how remote teams are working – whether that’s from a workflow, efficiency or wellbeing perspective. Channel partners must start having these conversations with their customers because if they don’t, someone else will.”
Martin Taylor, deputy CEO and co-founder of Content Guru, contextualised the cloud opportunity within the contact centre space. He said, “Pre-Covid, only around 10 per cent of the contact centre market had moved to the cloud, but we can now expect it to see this figure accelerate to 90 per cent by 2025. As such, there is a huge opportunity for any reseller offering a scalable and reliable cloud solution that enables flexible working, improves CX, integrates with UC – and especially Teams and Zoom – and has scope for implementing AI technology.”
The business models made necessary by cloud services can be fruitful for channel companies. Christian Bleakley, CEO of Firstcom Europe, explained, “Resellers can benefit from having a recurring revenue stream with cloud products, instead of having one-off purchases of a PBX in the cloud telephony space. This provides a more predictable revenue stream. Cloud offers greater ease of provisioning for moves, adds and changes and avoids the necessity of going on-site in many cases, allowing a reseller to focus on winning more customers.”
To convert those opportunities into results, the channel needs to tackle the knowledge gap between SMBs and large enterprises. Karl Roe, vice president for digital transformation and customer success at Nuvias Group, said, “The knowledge gap persists in terms of both the risk and benefits associated with the cloud. At an enterprise level, we are accustomed to calculating risks and invest in securing our workloads; this does not necessarily happen for SMBs, who may not have the bandwidth and the means to do a full risk-analysis and who tend to use off-the-shelf packages.”
The good news, Roe explained, is resellers can help bridge this gap. He said, “Resellers have a major opportunity when it comes to the cloud, in providing cloud managed services for the end user – especially in the SMB space – helping to bridge that knowledge gap and fully assess the risk and implement data protection solutions. Microsoft 365 solution providers for example, have a great opportunity in offering administration and security ancillary services.”
Resellers also need to ensure their offerings are right for smaller businesses. Morey, from Pragma, said, “SMB are incredibly sophisticated buyers and demand extensive features and functionality. The divide between SMB and enterprise is about scale not sophistication. As SaaS technologies permeate every aspect of our consumer lives, SMB owners and managers seek out technology that supports new ways of working and their transition to digital first thinking. The democratisation of access to technology has meant UCaaS and SaaS vendors have had to deliver huge functionality but with minimal services and set up costs.”
Taylor, from Content Guru, added, “While there is no longer so much of a ‘knowledge gap’ between SMBs and large enterprises, there is of course a gap in the amount of capital available to invest in new technology. To encourage SMBs to consider putting scarce resources into cloud solutions, resellers would be wise to look
for a vendor that offers a ‘light’ version of their services for smaller businesses. Ideally, this should offer full flexibility to add extra functionality as and when needed, so that it can grow with the customer’s business.”
Public vs private cloud
When asked whether multi-cloud, public cloud, or private cloud is still up for debate, Tollring’s Bannister argued that this depends on the problem being addressed. He said, “Customers are at different places so the path to the cloud will be different for each. Some will find an on premise to private cloud move delivers the busines benefits they are looking for, giving them more control with bespoke service wraps and financial engineering of the solution with a trusted partner. This is perhaps more important for larger service providers, where they can deliver customisation, control and competitive differentiation. For others the rip and replace to a public cloud will make sense. This delivers all the benefits of modern tools, regular updates, global reach and predictable OPEX spend.”
Keefe, from Nuvias UC, had a similar view. He said, “Ultimately it comes down to end-user preference. There are still lots of end-users that need private cloud due to working in highly regulated industries with the need for much more secure storage, for example a financial organisation. Using private cloud removes some of the risk of using the cloud compared to potentially using public cloud. That is where the end-user needs to carry out an in-depth requirements assessment. Overall, private cloud is traditionally seen as more costly but for some businesses, the risk of not having this additional security far outweighs the financial cost. Other businesses may be happy to take on slightly more risk from a security perspective – although minimal – because the financial cost does not outweigh their acceptable level of risk.”
Pax8 UK’s Belgrave (pictured below) disagreed with the notion that this is still up for debate. He said, “Public cloud is almost always the answer in 2021. There are very specific use cases that still make the private cloud look compelling. Still, multi-cloud is largely agreed to be a misnomer due to the dilution of talent and incremental engineering and compliance workload it creates.”
For resellers that are weighing up their options, there are various factors to consider. Nuvias Group’s Roe said, “Cloud partners should be selected based on their credibility, scalability and resilience to provide the required Cloud services. A strong SLA level is essential. Look for indicators such as ISO industry standards certification.”
The cloud is also evolving, so channel partners should keep an eye on new possibilities to ensure they are able to meet customer needs both today and into the future. Roe added, “Cloud technologies are becoming more pervasive; in our life as consumers, almost everything we consume online, news, entertainment is cloud-based, driven by cloud technologies. It is becoming an expectation in the enterprise too that content should be available in a pervasive manner; what we must ensure in our industry, is that the data stored in the cloud is secured and protected.
There are other areas to consider, from flexibility and reliability through to security. Hamilton-Martin, from Enreach for Service Providers, explained, “A rapid evolution we are seeing is towards cloud-native powered applications, and cloud orchestration technology helps pave the way towards microservices, which is basically a toolset used to create more flexibility and reliable hosting of applications. By breaking out applications into microservices it makes it possible to have an application running on multiple cloud platforms. This combined with more ubiquitous use of authentication and encryption is simultaneously helping to improve security.”
Belgrave, from Pax8 UK, added, “The market is maturing. Complex features are becoming increasingly commoditised with services like machine learning, which is now at the buyers’ fingertips through initiatives like Microsoft’s Cognitive Services. I believe over time, all software inevitably gravitates towards a full SaaS model, and that certainly seems to stand up to scrutiny over the last few years. Cloud is no exception to this, with the big public cloud product portfolios bursting at the seams with capable PaaS offerings to solve everything from simple email management to facial recognition.