Changing the UC Channel
'If you haven't been pivoting over the past three years, you are already destroyed.'
Cloud-based services are often mentioned as the future for the communications industry, but few people consider the implications these cloud-based services have on the partner channel.
As one channel partner told me, "the pace of change and destruction is off the charts... and if you haven't already been pivoting over the past three years, you are already destroyed."
The pivot to which this partner refers is the change from selling boxes to selling solutions, a shift major vendors have required of most channel partners. But, as the major vendors change their focus toward selling multitenant cloud solutions, partners must up their game even further by becoming business consultants. The next generation of communications solutions is going to integrate more tightly with workflows and applications. Several of the latest UC offerings center around platform (i.e., Cisco Spark and Avaya Zang), and these are joined by many non-traditional entrants such as Twilio, with its communications development platform, and the hundreds of WebRTC development platforms now available. We believe Microsoft will also make its Office 365 cloud easier to integrate with, using RESTful APIs, sometime in the near future.
Public cloud communications have the potential to squeeze channel partners because they eliminate either in full or in part traditional revenue streams. The following table shows a list of some typical services provided by channel partners. Many, but not all, are adversely impacted by public cloud communications services.
| Service | Discussion | Net Partner Revenue Impact |
|---|---|---|
| Hardware Sales | In a cloud-based world, the hardware left to sell is the endpoints, phones, and video units. Phones comprise a large portion of the channel sale, but partners tell me this is slowly shrinking. Sales of video units, however, are still increasing. Networking equipment, including session border controllers, is still required. | Slightly negative |
| Software Licensing | With cloud, licensing changes from perpetual to subscription. Software maintenance disappears, subsumed by the cloud subscription. | A big negative as compared to an on-prem or managed services sale |
| Design Services | Resellers report that there will still be need for design services even if a company moves its communications to the cloud. One reseller I spoke to indicates design is even higher now. | Neutral to slightly positive |
| Installation Services | Channel partners may still see opportunities for installation services, but these will be relegated to the endpoints as opposed to standing up the entire solution, including servers. | Big negative |
| On-boarding | On-boarding is still important; however, the vendors are trying to make a lot of the on-boarding process self-service. However, customers moving to a public cloud are already looking to outsource, and resellers can still make margin on on-boarding services. | Slightly positive |
| Operations | Some partners have made good money operating solutions for customers. In a cloud-based world this goes away. But, even as some companies move to public cloud, some resellers report overall managed services are growing. | Negative if the reseller has no managed services. Otherwise, positive, at least for now |
| MACDs, Break/Fix | The need for moves, adds, changes, and deletes will not disappear; however, with cloud-based self-service, end users will undertake MACDs more and more often by themselves. Break/fix will vary. If the fix involves a phone, a six-figure employee may get involved in the absence of a contracted partner. With video endpoints, a partner will likely be called upon. | Slightly negative |
| Transformation Services | Partners that can help a business improve its top or bottom line or some of its processes stand to see significant revenue. Some resellers are not seeing a lot of demand for transformation services as this is still at the infancy stage. However, one large reseller I spoke with sees huge upside here. | Positive to very positive |
Large channel partners have already been pivoting toward selling business transformation as opposed to phone or communication or collaboration solutions. But smaller partners whose main businesses have been selling boxes, licenses, install, and break/fix services will likely find themselves squeezed in this transition.
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