Wednesday, 1 June 2011

Heads in The Cloud

It's getting Cloudy out there. The murky swirl of market change is upon us and the Blue Sly Thinkers in distribution need be on top of their game.

All the hype and buzz about The Cloud and the possibilities it opens up particularly within the SME sector is getting vendors into a lather. Microsoft 365 is being trialled with some good success offering 99.9% uptime and all at a decent price. It is now deeply imbedded in their strategy.

But what of their distributors? The behemoths like Tech Data and Ingram Micro are each putting testing toes in the water but as yet there is a distinct aversion to jumping in. Part of the problem is that these distributors are finding it difficult to see:

1) How they can play?
2) What investments do they have to make?
3) How does it change their model?
4) When will be the impact?
5) Will it impact profitability?

Frankly, I could have added many more questions but the issue clearly is having solid data upon which to make some pretty big decisions. Some distributors, as Avnet's Graeme Watt, have said is that they seem themselves as an 'aggregator of solutions' while the main challenge will be sorting out the almighty mess it will make of billing systems.

The key to the answers lies in understanding what impact The Cloud has for SMEs and how that will change their buying patterns. The fact is, as the requirement for data handling and robust applications as companies expand, The Cloud is the optimum way to smooth IT costs in line with growth rather than having to make a series of stepwise investments inevitably in technology pathways that lock companies in. The Cloud allows more flexibility, freedom and choice. It brings 'Big Company Applications' to SMEs and therein lies opportunity.

Yes, billing will be an extreme issue for many distributors but the limiting factor will not be technology or cash to invest, it will be the mindset to embrace change and capitalise on it. For those who take the plunge early, a distinct shift from sequential box sales mentality to a service led annuity model will yield greater margin opportunities but possibly at a cost of short term revenue.

That's the kind of decision making not for the faint hearted. We shall soon see who has the ability and courage to invest as surely the vendors will not wait forever to realise their aims.

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