The cloud is changing the channel, and customers win
The Ingram Micro Cloud Summit called for channel partners to develop intellectual property around cloud offerings and emphasize customer success to boost retention.
A couple of weeks back, I was at the Ingram Micro Cloud Summit in Miami. At this summit, partners and vendors associated with Ingram Micro came together to discuss the state of the channel, how the cloud was changing things still, and where distribution and the channel were investing. What was clear to me was that Ingram Micro has an "all of the above" strategy when it comes to assisting its partners: The value-added resellers turn from the traditional U.S. sense of the word into something more. Here are some key takeaways:
- The channel needs to focus on customer success more than ever.
- Channel partners need to find out what they are good at and focus.
- Intellectual property and services wrapped around the cloud lead to success.
Customer success, focus and intellectual property
The major theme for the Cloud Summit was "everything as a service," which was present in every presentation. What I liked and heard very often was that it's not about being a "body shop" and hiring a whole bunch of smart people to build a bench. It is about what intellectual property you can bring to the hardware, software and services you sell. In fact, given how tight the labor market is in some of the more advanced skill sets, there is no way the body shop model would have worked. Retention of the smart people the partners have has to be a big part of the strategy. This includes investment in training the people you do have.
This matters as infrastructures become more complex, applications become more distributed across clouds and the skills become even more difficult to find. Our Enterprise Strategy Group (ESG) research showed that 67% of organizations are recruiting "IT generalists" to build up their own ranks. This presents an opportunity for the channel to leverage the knowledge and intellectual property they build into the services they offer. But the people factor is only one part of this.
Focus is shifting from customer success being the sole responsibility of the vendors to the one the partners will gladly take on. In a world where Slack messaging your team is the norm, sometimes you need responses from a vendor at odd hours or for a solution to a problem that crosses vendor boundaries. This is where Ingram Micro Cloud is coming in to provide white box customer success teams on top of the many offerings its partners represent out of its product catalog. Having helped run a customer success team for a brief while in a follow-the-sun manner -- and knowing how tough and expensive customer success teams can be -- I can see this being a great advantage to the Ingram Micro Cloud partners.
So, you might ask, why such a focus on customer success? The goal is to help partners drive success with net dollar retention. This is done by focusing on reducing customer churn while finding new customers and selling more to existing customers. In the SaaS world, they call this the net retention rate. Many times, the words "trusted advisor" are thrown around too liberally. Focusing on the metrics tied to customer success will help partners change their culture -- or, in many cases, reinforce the existing culture -- to focus on the outcome and not the product. This is where the cloud has been evolving from providing IaaS to providing PaaS to achieve a goal. Most organizations are buying in this manner. In our ESG research, we saw 75% of organizations will procure solutions in an "as a service" manner from the hyperscalers, traditional OEMs and MSPs.
Intelligence to bring better solutions
Ingram Micro Cloud is all in on helping its partners be better at providing the right solution to their customers at the right time. Another investment the company is making is in the capabilities of understanding its customers' needs. It has started to utilize the four decades of purchase data to build models on how organizations buy and what is bought together. Sanjib Sahoo, Ingram Micro executive vice president and chief digital officer, announced Xvantage, the feature that will effectively be the digital twin of Ingram Micro. There are a whole number of ways organizations can benefit from an Ingram Micro Cloud partner, such as learning what other products should be sold as part of the package to provide a successful outcome. Xvantage is being built on top of the CloudBlue platform. Xvantage is worth watching, as Ingram Micro is not the only one in the space that has the data to do this.
One of the most interesting parts of the keynotes was on the Ingram Micro Cloud subsidiary CloudBlue. What is different about CloudBlue is that it operates separately, even having customers that are competitors to its parent company. For those not familiar with CloudBlue, it provides a platform for creating, building and integrating into cloud marketplaces, as well as easily driving as-a-service revenue for partners, service providers and vendors. An example would be a telecom service provider looking to provide a bundle of some of its services with an independent software vendor's (ISV) software layered on top of it. The CloudBlue platform allows the telecom service provider to have a contract with the ISV that has published into the CloudBlue platform. At the same time, the ISV could also utilize the CloudBlue platform to publish its software into a hyperscaler marketplace, where end customers can buy and use the ISV product. That ISV could also contract with Ingram Micro Cloud, or other distributors, and be published within Ingram Micro's marketplaces. CloudBlue is the underlying technology platform for the Ingram Micro Cloud marketplaces.
What about cloud-native companies? Will they engage with the channel? CloudBlue could be a game changer for Ingram Micro Cloud and how distribution offers a pathway from partners and service providers to startups and ISVs. There is definitely a desire for startups to avoid the channel, as they may see it as giving away margin. CloudBlue could be the key to bringing the cloud-native venture capital-funded vendors to Ingram Micro Cloud.
Final point of view
The as-a-service model is the direction organizations are driving to acquire technology. Vendors, channel partners, distributors and service providers have been adapting how they meet their customers to deliver technology that has traditionally not been bought as a service. In addition, channel partners, distributors and service providers are trying to figure out how to bring multiple vendor products together with their own intellectual property to provide offerings to customers. Customers want their technology to be transparent. Channel partners, distributors and service providers that can provide the products as an integrated solution in a transparent why are going to succeed. Ingram Micro Cloud looks to provide the capabilities to its partners -- and, in some cases, its competitors -- to build a successful business. Customers win when their technology providers focus on outcomes. ISVs will have to decide if they want to play in the broader partner economy, focus on broad awareness and the big hyperscaler marketplaces with freemium models to drive downloads, or have a hybrid model and work to be part of larger platforms with partners wrapping intellectual property. Ultimately, customers will vote with their budget when deciding how they want to consume and where they will get the products.