Differentiation in a Cloud Environment

You can’t compete on price alone and survive in the channel today. Most IT professionals understand that philosophy and understand the implications it presents. After all, it’s been a cornerstone of the channel for as long as the term “value added reseller” has been around (if not longer). As a close industry friend always tells me when the topic of IT pricing and commoditization comes up, “Hardware and software discussions are dead; long live solutions! “    

The interesting thing is, the industry is revisiting those same discussions today around the cloud. With the cost of entry to the channel so low with the new “virtual” business models, the "race to the bottom" from a pricing perspective has become a real issue. That becomes an even bigger issue when MSPs try to compete directly with online SaaS suppliers. It’s a no win situation ̶ unless you can innovate and differentiate.  

That was the topic of conversation during one of the final sessions at ChannelCon 2016. Ken Presti, CompTIA’s Director of Industry Advisory Councils, invited three group members to share some of their insight and ideas for differentiating a solution provider business in a cloud environment. The panelists represented each channel community:

The good news? Despite all the challenges associated with building profitable cloud practices, they all believe it can be accomplished with a solid plan and the right attitude.  

  • “The concept that the cloud is a race to the bottom would be true if tweaking and tuning were required to satisfy the needs of the end users,” said Erickson. “I don’t know any solution that fits that category.”
  • “In order to survive, we need to be more proactive and have to change how we look at our business and our solutions,” stressed Keizer. “That includes educating and collaborating more with our customers.”
  • Dixon added, “The last thing you want is for your customers to ask you about cloud services. That’s too late. You need to have those conversations earlier and put together packages your customers want, something that makes your relationship ‘stickier.’

When providers are actively involved with their clients, having meaningful business discussions, it’s easier to understand their cloud needs and aspirations. That’s also a great time to leverage all your resources and relationships to develop the solutions that will meet your customers’ needs.  

“Our job (as distributors) is to help sharpen your expertise and solutions,” said Dixon. “For instance, we are very good at certain verticals and can help focus your energy in a particular area. We tend to pick the opportunities that are most profitable and build out resources our partners can put to good use.”

With narrowing margins and increased competition, MSPs need to pick the right cloud suppliers to be successful. Not just the companies that offer slightly higher profits, but those who can streamline the processes and provide other support options for their channel partners. “Everyone has a number of vendors knocking on the door, so complicated won’t work,” said Erickson. “And, to me, competency is not about certifications; it’s about keeping customers happy. Show me you have customers who love you.” Erickson also emphasized that cloud programs should be so simple that solution providers won’t need a vendor manager to handle the details. You need (and deserve) simplicity to be competitive. The rest, as they say, is up to you.