Change ManagementTrends

What Cloud technology means to Cisco and Microsoft VARS.

Recently, Fivel System’s CEO, John Breakey, took a dive into the world of Cisco and Microsoft VARs to determine if the effects that Cloud has on their business.

Is Cloud Finally Disrupting the Cisco and Microsoft VAR?

Value-added Resellers (VAR) have been a versatile group over the years since the dawn of Microsoft and Cisco. They’ve seen many changes to their business during that time and adjusted accordingly.

Remember when the IP telephone was introduced into the market. Initially companies like Cisco downplayed their Network VARs expecting that Nortel VARs would be the new go-to-market strategy. Network VARs quickly adapted, making investments in new demo gear and retooling of their people. Microsoft implemented a not-to-dissimilar strategy but eventually embraced their existing channel partners too. In both cases, the VARs dodged a bullet.

If you are a VAR or integrator you probably have personal stories about dodging other bullets over the years. But what about the current bullet we call the Cloud?

Ten years ago we were trying to figure out how the Cloud could disrupt the VAR’s core business. Fortunately, the industry and customers were still trying to understand it too. The first iteration, private, on-premise virtualization was within the scope of a VAR’s value-added model. The focus continued to include equipment purchases and services just within a new architecture. However, virtualization is no longer the domain of the Server but is extending into the network too.

Today is very different. It is not the technology that is changing but rather the way customers are buying technology. Collaboration has become more important than infrastructure. Microsoft’s transition to a compensation model for both their internal sales reps and Partners has deemphasized the “purchase and deployment” of software in favour of a user adoption model. Cisco is on a similar path. User consumption is now king.

How does a VAR move from an IT Dept concentric model to an end user one? What are the new value-added services needed to adjust to the new market need?

One model being suggested by both Cisco and Microsoft is the business workflow model. They are encouraging VAR’s to build workflow applications that leverage their platforms and may be specific to a customer or industry. In this model the VARs revenue includes consulting, project management, application development and possibly a monthly user subscription model. If you are not already doing some application development then this model could take 2-3 years and consume a significant amount of cash as you retool your technical and sales groups.

Another model
that may be easier to add is focused on User Adoption. It satisfies the needs of the vendors and solves a common problem that customers deal with every day. Adopting new technology is a challenge for employees and consequently their companies. Removing the delays and frustrations of getting users to actually use new software or technology is now more important then deployment of those systems. VARs that get out front on this opportunity will enjoy the spotlight of vendors like Cisco, Microsoft and others.

The user adoption model has similar characteristics to the remote management model. Without a capital investment or delays you can immediately integrate the tools of an existing adoption focused learning company into a service. It contributes to predictable cash flow and doubles the equity value of your business with its reoccurring revenue model. It increases your brand identity beyond of the computer room or IT closet into the face of your customer’s employees and executives.

Getting out front in a market is always rewarding for companies that lead versus lag!

For 20 years John Breakey led his Cisco / Microsoft VAR business, UNIS LUMIN, through significant, successful changes in the industry. Since 2012, his current initiative Fivel has been solving the customer User Adoption problem. Fivel’s solution injects unique value-add and new revenues for Integrators or VARs.  

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