Channel Faces Up To The Challenge Of Moving To ITaaS, Canalys Finds

At the annual Canalys Channels Forum the analyst firm said that the transformation of the technology channel has continued to accelerate. According to research revealed by Canalys, 96 percent of resellers now offer some form of online services to their customers.

This figure shows that IT-as-a-Service (ITaaS) is catching on, but 60 percent of the channel players questioned said their primary business still comes from reselling hardware and software rather than managed services.

Slowly growing

With almost all of the respondents saying that they are already delivering some form of ITaaS, including managed customer assets on-premises, off-premises hosting or public cloud services, it still accounts for less than a quarter of revenue for them. In the future growth does not look as though it will be meteoric and by 2017, two thirds of those asked expect ITaaS to account for more than 25 percent of revenue.

“Product resell is still the most important business model for over 60 percent of channel partners. But they rate the importance of their managed services to their businesses very highly, just behind reselling products,” said Rachel Brindley, research director for channels. “58 percent of partners also believe that their managed services business is more profitable than reselling hardware and software.”

The hardware and services worlds intertwine. For example, printing is now heavily driven by managed services contracts, she said.

The survey was conducted among 352 channel partners from around the world as part of Canalys’ ongoing channels research and another interesting discovery was that public cloud is seen as being less important to channel business models.

“The perception of most partners is that reselling third-party cloud services is less profitable than reselling hardware and software. This also reflects the fact that most channel partners see the top two cloud opportunities as productivity applications, such as e-mail, and infrastructure-as-a-service (IaaS), both of which are under growing margin pressure. Higher-value applications are not yet seen as the primary opportunities,” Brindley said.

A large concern for resellers is the threat that cloud providers will bypass the channel. 62 percent identified this as possibly the biggest challenge they face when selling ITaaS.

Alex Smith, senior analyst at Canalys, said, “We are clearly moving to a world where channel partners will have varied portfolios, including hardware, software, public cloud services and their own managed service offerings. Vendors developing go-to-market strategies for cloud must ensure they are not increasing competition with their established partners, but recognise that this is typically delivered as part of a hybrid IT offering.”

Customer concerns about cloud security and difficulties in finding skilled consulting staff are also major concerns for around 40 percent of partners when it comes to selling cloud services.

The Canalys Channels Forum Emea is currently being held in Cannes, France, were the challenges of ITaaS will be discussed through a series of partner round tables.