Utility Metered Cloud

John Cowan

Subscribe to John Cowan: eMailAlertsEmail Alerts
Get John Cowan: homepageHomepage mobileMobile rssRSS facebookFacebook twitterTwitter linkedinLinkedIn


By John Cowan, CEO

Ten to 15 years ago the Vendor Reseller dynamic began to change thanks to the Internet.  The Internet ushered in an age of electronic commerce that promised to produce an intimate proximity between customer and IT vendor like never before.  Online product demonstrations, simple how-to-videos you can watch in your browser, free open source software, and simple wizard based installation processes occupy the minds of technology producers. A central theme of the Internet era was (and remains) all about customer self service fulfillment.

I call this the era of Channel Disintermediation.  It began with Michael Dell’s revolutionary ‘direct sales’ model in the 1990’s, but Internet oriented companies post bubble, like Yahoo, Google and Amazon set the stage for a very real potential of channel apocalypse.

Disintermediation is the goal of every technology producer.   Period.  

The modern day partner program is not a channel strategy.  It is an “if you can’t beat’em join’em” armistice program designed to soak up the sick and the weak among the channel herd.

One such vendor is among my favorite modern day “partner” programs.  It’s a classic.  Surf on over to the their web page and this is the “pitch” you get:

The ****** Partner Program can provide you with a portfolio of compute platforms, ranging from traditional dedicated hosting and cloud hosting, to email and Microsoft® SharePoint® hosting and online storage, empowering you to capitalize on this significant business opportunity and increase your “trusted advisor” status with your customers.

So let me get this straight.  I’m basically going to port all of my customers over to you, and because you are the ducks nuts in cloud, the customer is going to love me.  The customer, you assure me, will herald me as their “trusted advisor” because I had the fortitude to tell them you are the best?  Is that pretty much how the story is going to go?

Well riddle me this:  What happens when my customer goes to your web page to read about all of the same hosting services you offer direct, with published rates?  

No problem says the cloud vendor, your customer buys from you because they trust you – that’s why we’ll give you a nice “reseller” check.  Huh?  Pardon?   It’s taken me 15 years, three major migrations, several Windows lifecycles and a disaster recovery scenario to build my customer relationship.  And I am going to cash this in for a reseller check?

If I’m any self respecting channel constituent worth my salt, I’m thinking of two words.  The first starts with F.

My point is not to single out this particular (real life) example.  The reality is all of the current modern partner programs look pretty much the same.  And the reality is that these so called partner programs exist as mere lip service.  They are merely a diversionary tactic designed to create some distraction while the technology vendor stealthily tries to slip in through the back door of your customer environment.

How can I be so sure?  It’s simple.   We are all driven by profit margin.  Using Internet technologies and modern IT delivery mechanisms that (on paper) eliminate the need to involve an intermediary is the business strategy du jour.

Think about it in the context of another business model like, say, lawn care.   Lets say your goal is to mow lawns nationwide.   However, getting to every possible homeowner across the country is a nearly impossible task.  You will need to co-opt some help from local partners to make sure every possible customer receives your service.  You go out and recruit local kids in all the neighborhoods that have lawn mowers and you pay them a portion of the money made from each lawn mowed.  You achieve a scale model and the ‘supply’ chain is happy.

Now, what if you possessed a technology that would allow you to remotely deploy and control a lawn mower that could mow the lawns without any assistance from your local partners.   Further still, all of the homeowners could subscribe to your new lawn mowing service by going to a web site and completing a form.  What do you think you would be motivated to do in this case?

I’m not here to say that modern technology companies are the devil because they are motivated to cut out the channel.  I’m here to simply explain the reality of the situation – like it or not.

In Part III of this series, I will explore the how the cloud will become the ultimate wedge between vendor and service provider.

Read the original blog entry...

More Stories By John Cowan

John Cowan is co-founder and CEO of 6fusion. John is credited as 6fusion's business model visionary, bridging concepts and services behind cloud computing to the IT Service channel. In 2008, he along with his 6fusion collaborators successfully launched the industry's first single unit of meausurement for x86 computing, known as the Workload Allocation Cube (WAC). John is a 12 year veteran of business and product development within the IT and Telecommunications sectors and a graduate of Queen's University at Kingston.