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Gartner talks SaaS and cloud computing

by Scott Bicheno on 13 April 2008, 11:59

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In the second of Gartner’s keynotes – or Insight Sessions, as they are calling them – WW VP of research for indirect channel programmes and sales strategies, Tiffani Bova, explored where IT resellers need to be headed if they want to stay ahead of the game.

To start, she looked at four principal ways in which a reseller can achieve growth:

- Get more customers

- Get more money from each customer

- Make more profit from each customer

- Expand into new markets

Bova explained that the best strategy is to gear a salesforce to focus on one of these four in a given period of time as it is very difficult for it to effectively address all four.

It seems that the rapid change in delivery mechanisms for IT products means that there are great opportunities for resellers to become expert in them and charge customers for their change management and consulting assistance as well as for managing these new services themselves.

Bova stressed that the growth of the managed services market is inevitable. As are many of the many other manifestations of cloud computing.

Probably the most established and best known of these is software-as-a-service (SaaS). This describes the phenomenon of subscribing to a given piece of software rather than buying it and installing it on each workstation.

Cloud computing

There were probably two main technology buzz-words at this year’s event: virtualisation and cloud computing. The former will be covered in a subsequent piece on, but cloud computing is probably the word of the moment.

Like so many nascent buzzwords, nobody really knows what it means, but it certainly makes you sound like you’re on top of things if you use it in casual conversation.

Our understanding is that it broadly encompasses all IT products that are accessed over the web, using a subscription model. The principal subdivision of it appears to be SaaS and managed services. For a more comprehensive definition, this seems to be as good as any.

Apart from getting their head around what it is and what products there are, resellers need to know why customers might want to hand over cash for cloud computing. Bova reckons that the efficiency, speed and flexibility of cloud computing make it attractive to customers, as well as the fact that it takes a lot of the cost and hassle out of software upgrades.

She also asked the unsettling hypothetical question: “If your whole sales force won the lottery and left, how long would your company survive?”

“If your whole sales force won the lottery and left, how long would your company survive?”

This was the platform to mention that CRM (customer relationship management) is a natural SaaS type of product and can lead to things like outsourced email marketing (any relation to spam? - Ed) and sales force automation.

A pioneer in this area appears to be

Most smaller resellers probably operate primarily in the SMB market, but Bova warned that it’s not an easy one. ‘They want to look like corporates without spending that kind of money,’ she said, but she also stressed that they are willing to spend if the product/service is right for them.

An interesting fact from Gartner research is that EMEA SMBs are most influenced in their IT purchasing decisions by what they read on the web, as opposed to North America and AsiaPac, where peer referals are still more influential.

Bova concluded by warning that a new breed of young reseller is emerging who will go straight into specialising in services, rather than evolving there from hardware selling and system integration as today’s reseller has.

The incumbent channel needs to ensure it has planned sufficiently far in advance to ensure it isn’t going to be rendered obsolete when this new breed matures.

She finished with this bit of counter-intuitive but sensible advice: Resellers need to learn to say no to some new business if it takes them too far from their core strengths. Easier said than done, we suspect.

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