As part of its value-add to the channel, analyst firm Larato measures buyer intent and sentiment among business leaders from UK small and mid-sized Enterprises. Exclusively for Comms Business, Larato has updated its research to provide a fresh look at the importance of cloud and IT services to the voice reseller.
This issue sees Comms Business Magazine firmly addressing the cloud based opportunity for resellers (see main article on p26). One of the key questions examined in that article was ‘Are cloud based services a key to building business value for the reseller?’ and here we have sourced exclusive opinion from Lucy Green and her team at Larato on that same question.
Green says: The answer to this question depends on two key factors. Firstly, what does a reseller mean by ‘business value’? Secondly, what are customers of the channel planning to buy over the next year and how much are they intending to invest?
We estimate the total substitutional spend from premise to hosted over the next two years in the UK to be between £400m and £450m, a figure that agrees with other industry analyst forecasts. Once this money has been invested in hosted managed services, it is clearly unavailable to the premise-based seller. This not only negatively impacts revenues, it can diminish business valuations. Companies with cloudy customer bases are able to attract higher valuations because a proportion of their revenues tend to be under contract for the mid to long term so they are viewed as lower risk. That said, if you are selling premise-based voice today and want short-term, higher margin, returns from equipment and maintenance, then cloud may not add value for you provided you are prepared for your business to shrink over time. If you want to sustain and grow your business then you need to have cloud services within your portfolio.
What are the first steps that resellers should take to their journey in the cloud?
The first step is to create a plan that will underpin your growth. Remember that it costs about five times as much to win a new customer as keep an existing one, so plan to grow from your existing base and use your current strengths. Look at why your business is successful now and what it is that your existing customers value about you. Find out about their plans for adopting cloud services. This can flush out new opportunities as well as gather valuable input about the services you need to have in your hosted portfolio. Find out how quickly your customers’ communications estates are changing and how you can keep pace with these changes.
Armed with this information, you will be in a position to find the best hosted supplier for your business. Choosing the right partner is probably the most important step. Selling managed services is complicated and so you should make sure your partner can help you to sell as
well as provide you with the right portfolio. Suppliers are running a lot of promotions across the channel space today, assuring support in this critical area of selling. Don’t take these at face value. Find out what support you will really get when you are out in the field and selling.
Why should voice resellers now be delivering IT services from the cloud?
Let’s not forget that voice resellers are already selling “cloudy” services in the form of PSTN and managed networks, so the step is not as great as some may believe. Today, buyers want to buy bundles of communications and IT services. In the UK’s small and medium Enterprise markets, demand for bundles can be more than 20 times the demand for a single service. The most popular services to bundle are; cloud-based voice, video conferencing, worker mobility, email, Instant Messaging, remote IT management, document collaboration and applications that give their businesses a competitive edge. Small and mid-size firms prefer to source these bundles from a reseller with specialist expertise in remotely managed IT services and Voice over IP. Importantly, almost 60% want to buy from a local reseller who can contextualise the benefits for them. By delivering IT services, voice resellers can access this strong uplift in demand, particularly if they are already respected in their locale.
How do suppliers shake resellers out of their CPE comfort zones?
In our experience, equipment suppliers support their channel partners much more effectively than their hosted counterparts. Premise-based vendors are canny marketers, provide good collateral and incentivise their resellers well.
Hosted service suppliers should learn from this and start to step-up and deliver what their partners need to succeed. Selling hosted managed services can be much tougher than selling on-premise solutions. Hosted suppliers need to help their partners navigate their way through the complexities of a cloud service sale. Branded collateral and occasional training is not enough.
What type of IT applications may be best suited to which type of reseller?
The best IT applications to choose depend on your skills and your customer base. The table summarises the most attractive bundles for small and mid-sized firms as well as the important criteria they will use to select you rather than one of your competitors.