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Cloud Services: VAR Nightmare or Opportunity?


Guest Post by Irene Cortes, Channel Partner Marketing

As early as 2010, trade journals and channel analysts were debating whether “cloud” was a threat or an opportunity for value-add resellers (VARs).  Turns out, it’s both, and many resellers are in the midst of adapting their business models to the rapid emergence of cloud services and the risk that public cloud vendors present to their business.

HPE has been working with channel partners as they evolve from a traditional hardware/software resell model to include cloud services as part of their portfolio.  Patrick Verhoeven, an HPE Business Development Manager, has over 10 years of experience in the service provider industry and has been helping HPE channel partners adapt their business.  Based on his experience and that of other HPE Business Development Managers, Patrick has written a white paper that provides a detailed framework for resellers that are transforming their business around cloud services.  

In A Strategy Blueprint for Resellers Evolving To Solution Providers, Part 1: Defining Your Cloud Strategy Patrick reviews key learnings from his work with cloud channel partners.  He highlights that there is still confusion among some resellers that the only way to compete in this changing landscape is to host your own cloud infrastructure.  While this might make sense for some resellers, this may not be an appropriate strategy for all channel partners.  There are different business models and a variety of cloud services that resellers can adopt to successfully drive revenue growth.  Leveraging Gartner Research, he describes the framework that HPE developed to help partners. This framework illustrates how channel partners can adopt one or more business models below to successfully grow revenue:

  • Volume Transactions –hybrid cloud infrastructure resell and support with cloud professional services (mature model)
  • Value Driven Outcomes – hybrid IT solution provider, focused on business outcomes enabled by cloud, with a full lifecycle of services and solutions (maturing model)
  • Consumption Based – cloud service provider with on demand services and usage-based billing (emerging model)

The one common theme across all three models is that they must be solution focused and drive business outcomes for customers.  Each channel partner needs to assess its capabilities and market, and determine where and how it competes. 

Some key learnings from the paper are highlighted below:

Cloud Service Strategy

There is no ‘silver bullet’ for defining your cloud service strategy and successfully transforming into a Solution Provider.  Every organization is unique in terms of its capabilities, resources, market and competitive advantage.  However, the white paper examines three types of cloud services that resellers can pursue, including the dependencies and challenges associated with building out these services. 

  1. Cloud Professional Services (Non-Recurring Revenue)
  2. Cloud Managed Services (Recurring Revenue)
  3. Cloud Infrastructure Services (Subscription-Based Revenue) 

Cloud Identity and Differentiation

 Regardless of the business model and cloud services offered, a Solution Provider’s strategy must always be grounded in a unique identity and capability that provides sustainable differentiation and competitive advantage. 

The white paper discusses four key points of differentiation including:

  1. Industry Experience
  2. Geographic Proximity. 
  3. Customer Relationships
  4. Technology Expertise.

Partner Strategy

Transforming your business from reselling infrastructure to providing services-led solutions is not easy.  It takes time and investment.  But with the right strategy and execution, channel partners can successfully navigate these disruptive market changes and remain relevant and competitive.  Success, however, does depend on having the right technology and the right partnerships. 

Hewlett Packard Enterprise has a proven track record of success enabling partners with innovative new technology and supporting partner transformation efforts.  With the industry’s leading channel program and best-in-class Partner Business Managers, HPE can help partners define and execute their transformation strategies.  Not only can HPE help deploy the right technology platforms, HPE can also help connect partners together, provide financial services and support, accelerate partner marketing efforts, and drive joint go-to-market sales strategies.

Read the A Strategy Blueprint for Resellers Evolving To Solution Providers, Part 1: Defining Your Cloud Strategy or visit our HPE Partner Ready site for more information on becoming an HPE partner.  Stay tuned for the part two of this paper, which will be focused on practical steps for executing your cloud strategy.


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About the Author


I manage the HPE Helion social media brand accounts promoting the enterprise cloud solutions at HPE for hybrid, public, and private clouds.I have put my toes in the ocean of cloud evangelism for the enterprise IT industry. But my expertise is in Social Media and Digital Marketing.