The impact of cloud on the IT supply chain | Cloud industry forum

The impact of cloud on the IT supply chain

A summary of November’s CIF Executive Members Event

By Alex Hilton, CEO Cloud Industry Forum

Over the last ten years the IT supply chain has been challenged to evolve new business models to serve the demand for cloud computing.   IT is now truly delivered as a service, this has put a strain on skills, recruitment, revenue recognition, remuneration and culture.  

In mid-November, the Cloud Industry Forum hosted an Executive meeting to discuss this and many broader challenges facing the IT industry.  The meeting, hosted at Trend Micro’s prestigious London office was moderated by CIF’s Deputy Chair, Frank Bennett, included the following speakers:

  • Mitchell Feldman, Chief Digital Officer, RedPixie
  • Apay Obang-Oyway, Director - Cloud & Software, UK & I, Ingram Micro
  • Pontus Noren, CEO & Co-founder at Cloudreach
  • Ray Bricknell, CEO, Behind Every Cloud; Founder, Clover index
  • Alan Simpson, Advisory Lead Cloud Workload Platforms, DXC
  • Bill Mew, Cloud Strategist, UK Cloud 
  • Bharat Mistry, Principal Security Strategist, Trend Micro

What impact is cloud having on the channel supply chain (and IT distribution)?

The speakers were a diverse mix of established traditional IT firms industry analysts and born in the cloud disruptors who are forcing change.  What came through very clearly is the degree to which cloud computing has forced the IT channel supply chain to transform both culturally and how it interacts with customers. The transition from shifting products to providing cloud services is a fundamental realignment which has seen new organisations coming to market with business models built from the ground up for cloud based clients through to legacy incumbents who have embraced new ways of working. Conscious of maintaining their existing revenue streams some organisations have created cloud divisions which are now being integrated in to the mainstream as they have become proven.

One of the biggest challenges is adjusting to a new kind of relationship with customers. As opposed to a single transaction, cloud computing's as-a-Service model requires a level of continuity in the relationship to maintain customer satisfaction. At the very least, it necessitates a level of servicing that was simply not present in the past and this means providers need to adjust the structure of their business and their teams accordingly, which has been challenging as some don’t make the grade.   Speakers from the larger, more traditional firms, discussed the huge transformation their businesses have undergone to become credible cloud suppliers.

Are there any areas where resellers are failing to make the transition?

There are some resellers who are simply attempting to copy-and-paste cloud computing capabilities on top of their previous models. This has resulted in some channel organisations providing cloud services with a commodity mindset, and therefore coming to market with an undifferentiated service. To take full advantage of the potential of cloud requires a different approach - one that takes into account the reality that cloud computing is a fundamentally different way for the channel to serve end users and make money.  

Training and internal skill-sets have been difficult for both customers and channel alike.  Some larger businesses had the mindset that any cloud project that takes less than a year to implement cannot be a “real” project, the more agile providers have proven this not to be the case. Cloud computing demands different capabilities from the previous way of profitably doing business in the channel - not just on the technical side, but in sales and account management too. 

Any predictions for the road ahead in 2018 and beyond?

In order to differentiate and make the most of cloud, many savvy resellers will accelerate their specialisation. Different sectors have distinct requirements from cloud computing, and adoption rates can vary dramatically between industries, making specialisation along the lines of sectors a competitive point of differentiation. This also applies to areas of cloud specialisation - as cloud computing becomes embedded as the norm, so will it make sense for some resellers to compete on specific areas of cloud expertise rather than looking to be a jack-of-all-cloud-trades. One speaker defined the opportunity as “get big, get niche, or get out”. Vertical market customers need specialist cloud suppliers.  CIF has recently backed this up with the creation of a Financial Services Special Interest Group (SIG) and also a Public Sector SIG. 

Moreover, in many sectors - including the public sector - cloud adoption has been concentrated on the low-hanging fruit - applications that are relatively easy to transition and that don't constitute the core IT infrastructure. We expect 2018 to see these sectors to deepen their adoption of cloud beyond this low-hanging fruit in order to adapt to an increasingly fast-moving technological environment and address real-life production environments at scale and depth. This will demand a higher level of involvement and expertise from resellers, benefiting those who are able to understand end-users needs and wrap cloud services around those. 

Anything else you think is relevant to a channel audience?

CIF’s last channel research paper identified a significant skills gap between what is required to successfully provision cloud services and what channel organisations currently have within their businesses. In looking to address this, it’s worth noting that Professional CIF membership is not just aimed at end-users – it is also geared towards helping channel organisations better understand and upskill their staff for cloud sales and procurement.