By Mark Davison at NetApp Insight, Dublin – Resellers who cling to their traditional ways of doing business face the very real danger of going out of business as the new era of cloud computing starts to take hold in the market.
Thomas Ehrlich, NetApp’s vice-president for partners and pathways in EMEA, says the stark reality facing today’s resellers is that they either have to adapt or die.
“I’m not going to stand in front of you and say that resellers are dead, but they do need to change their business models if they want to continue in business,” Ehrlich told journalists at an EMEA breakout session.
“Three years ago it was clear what a reseller was and what a service provider was. Today it is like a jungle. A company that resells and a company that provides services are quite different. Think about liquidity: a reseller can die in milliseconds if he moves [too quickly] from reselling high volume, low value products to services which are high margin, but are in smaller chunks.”
Ehrlich says the change in the market heralded by cloud computing is similar to other, historical trends that shifted the way the channel – and the industry – conducts business.
“Take client/server computing, for example, it didn’t hit the market like a tsunami,” he says. “These changes in the market gradually establish themselves and are usually due to economic reasons.
“There are a couple of good reasons why customers want to use the cloud,” he adds. “But there are also a couple of reasons why they don’t want to use the cloud. The days when no-one got fired for selling whatever are over. You could get fired for putting a customer in the cloud because of governance issues, or you could get fired for not putting him in the cloud and saving him money.”
Ehrlich says that he sees the future role of resellers mainly as advisors to their customers on what path they should take.
“Resellers are still an important and integral part of the industry and will always be that important interface with the customer,” he says. “But they can’t just continue reselling to business, they have to start giving credible advice to their customers regarding services, business models and strategies.
“A lot of resellers have tried to liberate themselves from product to support and now they are looking at services and integration,” Ehrlich says.
“As a reseller, you only have a choice to become more and more of an advisor offering something and hoping that the customer will buy it. But the market today is all about the ecosystem. Resellers have to think as a company that sells not just product, but also hours. And are these low-level hours or high-level hours – they have to decide where they can charge more by the hour.
“Today, we are faced with not only a technology change, but also an ecosystem change … a business change,” he says. “And resellers have to adapt to this.”