The Changing Dynamic of the Channel

Phil Smith, the UK and Ireland Channel Director at WAN optimisation vendor Ipanema, says we’re seeing a fundamental shift in the relationship between the channel and SMEs and this means the roles of key channel players are also changing. He explains.

Factors such as the introduction of cloud-based services and reduced IT budgets have had a significant impact on the way in which SMEs use and invest in technology. The channel will have to adapt their approach accordingly, and move away from commodity-based relationships with clients towards more consultative ones. It’s increasingly important for resellers to embed themselves in their customers’ organisation, and pave the way for a lasting client relationship.

Companies’ IT appetites have changed over the last few years. Cloud-based and hosted services are in demand, and their popularity is likely to increase. A recent study from Google noted that 96% of CFOs believe that ‘cloud computing provides their business with quantifiable benefits.’  With cloud-based services making up a large proportion of the market, it’s a crucial area of focus.

SMEs in particular will prefer to buy cloud-based services from a person rather than a website, so if a reseller can prove they have the right portfolio of cloud-based applications, then they’re in an advantageous position. Hosted services such as mobile, voice, and Ethernet are often sold as bundles, which makes it more difficult for competitors, who won’t necessarily have the right combination. Contract-wise, this is excellent for the reseller; longer contracts reduces customer churn, a clear advantage.

What does cloud computing mean for your customers’ networks?

Companies are increasingly leaning on cloud-based services, so the impact on their networks needs to be understood. The reseller is in a position where they can foresee potential issues, but also upsell where needed, based on this understanding. This again comes back to fostering a more end-to-end relationship with the client, which can only be achieved through intimate knowledge of their systems.

Services used by companies are increasingly provided from both private clouds and the public cloud. This trend is forcing enterprises to operate with hybrid MPLS, Ethernet and internet based IP-VPNs.

The structure of companies’ networks is important. As cloud computing becomes more common, branch offices are being transformed from passive network ‘spokes’ to network hubs in their own right. They no longer communicate with just a handful of local servers, but instead pull applications from public and private clouds. The branch is now drawing on multiple sources and transferring data to remote workers in multiple locations, increasing complexity.

The cross-mixture of networks and servers puts immediate pressure on the Wide Area Network (WAN.) Applications such as SAP, Oracle, Unified Communications and VoIP, all run over the WAN, and place different demands upon it; as such, they need to be treated individually to ensure effective performance. It’s a tricky ask to ensure that all the applications’ demands are sufficiently attended, with their performance guaranteed at all times.

If an application fails to perform, end-users will be quick to notice. If there’s too much traffic for the network to cope with, then business-critical apps can falter. It’s impossible to conduct a video Skype call if the voice keeps dropping out, or a person’s face is rendered Picasso-esque by jittery graphics. The issue will be exacerbated as employees stream non-business related content, such as YouTube or BBC iPlayer. If a critical app fails, then businesses can pay a heavy price in productivity, and ultimately profit.

How the channel can capitalise 

Against the backdrop of inefficient networks, VARs have an influential role to play. A study we conducted with Easynet, KillerApps 2013, revealed almost a third of CIOs don’t know what’s happening across their networks. If resellers can position themselves to offer a consultative service, and be the ‘eyes’ for the CIO’s network, then they’re in a very powerful position.

If VARs are to be the ‘eyes’ for CIOs, then they first need to be able to ‘see’ into their client’s networks. This is where a WAN optimisation solution comes into play. These solutions allow for transparency over the network, offering the user insight into how applications are flowing over the network, and where issues are occurring, or liable to occur.

We believe that the market for WAN Optimisation Solutions is changing, and SMEs are becoming far more receptive to the idea of network management. As it stands today, the Wan Optimisation Solution market is valued at $450m for large enterprises, and $13m for SMEs. Given SMEs often won’t have in-house IT teams, they will increasingly look to VARs to provide the relevant insight into their networks.

Benefits of WAN optimisation for the channel

If a reseller can guarantee performance of new cloud-based apps, and minimise disruption caused by migration, then that’s advantageous. The majority of vendors will sell commoditised cloud services, due to market appetite, but this is not a differentiator. Instead, a unique selling point will be around guaranteeing the performance of the cloud-based apps, which few vendors can do.


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David Dungay

Editor - Comms Business Magazine
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