Future of the VAR
(Part 1 of a 2 part series)
By Guest Blogger: Luke Norris, CEO and CO-Founder for Peak
Business requirements change and technology evolves. We are seeing a fundamental shift in the way businesses invest in and deploy technology. Enterprises are embracing the on-demand cloud services model more and more, instead of the traditional three to five year capital acquisition cycles they’ve operated under for decades.
Opex is the Way to Go
As the technology market shifts from Capex to Opex spending, VARs are in danger of getting left behind. But, if they embrace the cloud and the shift to on-demand/pay-as- you-go service models, not only will VARs survive, they will thrive. It all comes down to relationships, and no segment of the industry has relationships like the consultative VAR.
In the Capex model, IT is forced to anticipate business needs three to five years into the future, and make capital investments in currently available hardware and software to meet the highest watermark of future demand. In the Opex model (i.e. cloud services), flexibility is the name of the game. The enterprise can buy capacity at a much lower watermark and incrementally scale as business and application needs change.
The formula for success involves a mix of new sales and marketing skills, revamped revenue models, and shifting from helping businesses make short-term IT investments to advising them on long-term business strategies. There’s no time to waste. Experts give VARs only three to four years to make the transition before it’s too late.
So what can you do?
Cloud services liberate IT from legacy hardware platforms when the upgrade cost is too high, or the equipment runs a legacy application with suboptimal alternatives. In addition, at the rate that manufacturers are making hardware advances, the average refresh cycle is now just four years before a server and is considered obsolete. Procuring infrastructure as a service instead of hard assets allows IT to focus on adding value to the business rather than cost.
By taking the appropriate steps, customers, VARs and resellers alike can capitalize on recurring revenue streams and stronger, long-term customer relationships.
Don’t be left behind - VAR customers are demanding cloud services. They want the cost savings inherent in a pay-as-you-go model and the agility that can only be achieved when infrastructure is available on-demand.
Truly Embracing the Cloud
In response to customer demand, some VARs simply add “Cloud Services” to their line card. They have an agreement to resell cloud services if or when a customer proactively requests it. Yes, they can tell their customers they offer cloud, but they don’t have trained sales reps assigned to selling cloud and managed services (nor do they have a services-based comp plan). Additionally, they do not have control over the cloud infrastructure to deliver true integration for their customers.
VARs are truly committed to making the most of the new cloud era choose the white- label approach. These VARs use the cloud provider’s infrastructure as their own to deliver customized and tightly integrated managed services to their customers. Now, instead of consulting on servers and storage devices, they can talk about applications and the integration of these applications with cloud services. Instead of selling boxes, they can sell SLA’s. Rather than one-off sales, they lock in long-term recurring revenue streams.
Advantages of embracing an Opex model, and truly arming your team with proper cloud training and resources, can lead to definitive competitive advantages. Success will be based upon a VAR’s ability to revamp its revenue models, develop new sales and marketing skills, and focus on long-term business strategy.
We can take a closer look at successful transitions from Capex to Opex models in part 2 of this series.
Visit the Avnet Cloud Ready website to learn more about the Avnet Cloud Accelerator Program Powered by Peak®.