Cloud is an integral part of our everyday lives. It’s the backbone of services from Netflix to Google but, for most B2B organizations, making significant revenue from cloud services requires a shift in operational practice, and a refocusing of traditional marketing and selling efforts. The same commitment is required from channel partners too.
It’s easy to see why vendors and partners alike are put off, especially when revenues from on-premise or traditional services remain strong. But time could be running out. A recent survey found the average millennial spends more than £475 a year on subscriptions to streaming services such as Netflix and Spotify and Volvo predicts that, by 2025, 50% of its cars will be sold by subscription. When you consider that millennials will make up 75% of the working population in just over five years, it’s fair to say a new breed of cloud-native customer is about to start demanding cloud solutions and services in their professional as well as their private life.
As a channel business leader, how do you your help your organization successfully transition to cloud. How do you identify which of your partners are the right ones to transition to cloud you with, and what do you need to do to make sure your move to cloud is a success?
An appetite for change
Firstly, acknowledge that changes to sales and marketing behaviours are essential from both partner and vendor to drive your cloud vision to reality. Done correctly it is a short but intense period of course correction to set you, and your channel partners, on a path towards recurring revenue and continuous growth for the future. So, look at your partner system and identify the partners where movement to cloud is seen as a strategic imperative at the C-level. Next, check that they understand the behavioural changes required to move to cloud. There will always be bumps in the road, but mountains can be moved if there is a clarity of vision, strategic support and good will on both sides.
You think you have a short list of partners ready to make the move to cloud but that doesn’t mean they don’t have work to do. Moving to cloud is a big transition and partners may have to change sales team structures, compensation models, marketing messages and even their infrastructure. There’s a certain level of support you should be prepared to give as the vendor but, ultimately, if you feel your partners aren’t prepared to make that change; be prepared to look elsewhere. Remember, that the ideal channel partner for cloud might be a different type of partner to those you currently work with. Whichever route you take once you’ve identified existing partners or found new ones who understand and support your vision make sure you support them.
Strengthen your team
Partners want to see commitment from your organization not just you as the channel leader. They need to see that transitioning to cloud is being given equal investment of time and thought on your side too. Case studies, like this one, offer great insight on how to support your internal channel team to coach your partners to cloud success. It starts with arming your channel team with the skills, knowledge and business acumen to help partners build solid business plans, and forecasting models. Investing in coaching and development programs for even a small channel development team can deliver exponential results. It’s also one of the most over-looked aspects of any cloud transition programs.
Build a financial bridge
The single greatest challenge partners face when moving to a cloud model is cash flow. Cloud economics are radically different from on-premise. You’re asking partners to move from a model of payment upfront, as is typical with on premise sales, to a recurring revenue model, where payment might be spread over 3-4 years. You need a support plan to make that work.
Don’t even try to do this alone. Your finance team will be your go-to. They’ll share your organizations economic modelling with partners. Coordinated teams will work to help partners to identify the break-even points and lay out plans and even finance support to make the transition to cloud a viable business option.
Consider service revenues too – your partners certainly will be. As opportunities move from potential large integration and install projects to one-click installations, their services revenue might be dramatically impacted. You can help your partners determine how to evolve their services by being the ones to help customers prepare themselves for a click-to-install world.
Review, review, review
This goes back to my first point: bumps in the road. Don’t let those bumps derail you. In a transformational move of this nature there will always be unknowns. With a clear vision, a plan, and a collaborative attitude you and your partner should be able to navigate obstacles and course-correct your actions to deliver your end goal: a profitable cloud business for both you and your partner.
Robert Fox is SVP Sales, North America at Strategy to Revenue, the award-winning sales enablement consultancy.
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