Vendors’ wants, clients’ needs and the space between

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Billy

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5 March 2014 | 0

The results of a survey into what cloud services customers are demanding from resellers and service providers in the UK make for interesting reading (even on this side of the Irish Sea). The survey, undertaken on behalf of global solutions and services provider MTI, found that the service most commonly demanded by customers was infrastructure-as-a-service (IaaS). Nearly eight out of 10 respondents identified IaaS as the top request from their customers.

Demand did not quite match up to supply, with only 44% of companies providing IaaS directly and 22% providing it via a vendor. It wasn’t that big a shortfall, however, unless you think 11% is a big deal and especially when another 20% said they might consider selling IaaS in 2014.

MTI interpreted the results as resellers “struggling to keep up to pace with the services that their clients want” but that’s probably a tad hyperbolic. MTI also looked at the disparity between the least popular service demanded by customers (security managed services) and the percentage of resellers that provided it. As many as 64% of resellers identified managed security services as the service in least demand from clients even though 75% said they provided it directly or via a vendor. (On a side note, anyone else think it’s a bit Twilight Zoney how the gap between demand and supply is 11% again?)

Anyway, MTI head of channel sales Chris Roberts argues the figures demonstrate “a clear contrast between what clients want and what resellers and service providers are delivering – either directly or through a vendor partner”. According to him, “this highlights the challenge that resellers are faced with where clients’ service demands can shift on a regular basis as technology evolves”.

Roberts argues it is difficult for resellers to be flexible enough to provide “solutions as and when they come into fashion or when demand from clients peaks”. Naturally, given the nature of the company he works for, Roberts believes the best way for resellers to provide a range of solutions is to partner with a solutions expert, such as MTI.

There’s some truth in what he says but you have to wonder whether the gaps between what customers demand and what partners can supply is partly down to a disparity between what vendors think partners should be providing to support their products and what their customers think they want (I write “think they want” because the suspicion remains that customers may well place a higher priority on a fashionable service they don’t really need compared to another less glamorous or wide-ranging one).

Anyway, the suggestion the gap could be caused by a difference between what vendors want to provide and what their customers want to buy appears to be borne out by the findings around managed security services to some extent. Why would three-quarters of resellers end up providing managed security services if they know those services are least in demand from their customers?

Well, if they are the services in the least demand from customers, it might make more sense for most resellers to offer something generic from a vendor rather than put time and effort into developing their own version. Which suggests resellers have found one way to try and address the challenge of meeting customer service demands that shift on a regular basis as technology evolves. And they’re using the path advocated by Roberts of partnering with a solutions expert (or vendor).

Perhaps the most significant figure in the survey is the 62.5% of resellers that make at least 40% of annual revenues from services, especially given that services accounts for between 41% and 60% of revenues for most of them. This suggests quite a few are doing things right, even as it leaves plenty of scope for them to increase service revenues over time. Hopefully, the same is true for Irish resellers (if not better).

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