The cloud market is now made up of a healthy mix of startups who made their name in cloud computing and IT giants who are shifting a significant portion of their business from on-premise to the cloud.
Nevertheless, the vast majority of our respondents (81%) do not believe that on-premise software vendors should shift their overall strategy to cloud, leading us to assume that those companies who were made by selling on-premise software still see cloud as a great addition to the portfolio rather than a replacement.
The benefits of switching from offering on-premise solutions to cloud services are relatively obvious. Even though the revenue up-front is generally lower, by shifting a client from a product to a service, the total income over the lifetime is higher (as long as the service offered is good and you can keep the client). Economies of scale mean that in most cases the total cost of ownership for the end-user is lower too, so practically everybody wins.
Cloud services also offer quasi-guaranteed recurring revenue, giving you a steady income and making financial projections much easier in the process. It also creates new opportunities for the channel, as Vice President of Product Management at StorageCraft, Brandon Nordquist put it: “for resellers, this opens up a monthly service model, with predictable revenue streams, whereas previously resellers may have only been able to offer break-fix services.”
Given that you remove the initial investment, and therefore the major barrier to pick-up, it is also effectively simpler to sell more solutions to smaller companies when packaging them as a service, increasing the pool of potential customers dramatically for companies which have offered enterprise-level solutions.
It would seem that the channel should be embracing cloud technology wholeheartedly given the lower barrier to entry for clients, the recurring income and the fact that cloud vendors are quite convinced that cloud solutions offer more profits to the channel than other types of solutions.
When asked about the most important aspects of being leaders in cloud computing, most of the vendors we polled seemed to agree that innovation is the most crucial aspect of being an industry leader. A third of them, however, mentioned channel partners as being essential to long-term success.