Reseller's edge: cloud is key to SA's growth
The cloud offers an incredible opportunity for resellers, but without the right partner they can get lost in the transformation.
The world is consuming cloud. South Africa and its fellow African giants are no different: 83% of South African companies were increasing their cloud budgets in 2018, according to World Wide Worx's Cloud Africa 2018 report. Ninety-four percent of Nigerian businesses planned to do the same and a staggering 98% of Kenyan organisations were also increasing cloud spend. This was before Microsoft launched its local Azure data centres into a market that also accommodates Amazon and Google.
Cloud is growing on the continent and growing fast. A combination of appetite for new technologies, belt-tightening among tight economies, opportunities to leapfrog business development and a fast-growing broadband landscape is making Africa the place to be for technology resellers.
"There isn't a part of the market not being touched by cloud," says Saartjie Wait, Marketing and Digital Experience Director at Westcon-Comstor Sub-Saharan Africa. "Enterprises get much more power and flexibility. SMEs gain access to tier one and tier two applications and many other business services, but at very low subscription rates. The quiet boom of IOT solutions out there has the cloud behind it. Cloud is growth – that is obvious."
Resellers leading the change
Cloud might be growth, but that isn't the perspective of some resellers. If you compare cloud to the more traditional resale models – where hardware, software and licences are very lucrative revenue streams – it doesn't paint such a rosy picture. But this doesn't take into account why cloud is popular.
Wait explains: "Why does the market like cloud? It's mostly driven by the value they feel they are getting. It's not always about saving money, but making money go further. These services are so popular because you can consume them at low cost and scale as you need more –which you will if you grow. That's the new IT customer: they will spend if they see value."
Services is the key word: services take up no space and, as long as a reseller can scale them, it can sell as many subscriptions as it wants. Consumption-based revenue streams are steadier than big deals and can also support a larger customer base. Since cloud-based services are digital, practically ethereal, they can be provisioned across geographies. Returning to the opening statement of Africa's cloud appetite, this should raise reseller eyebrows.
But cloud has many challenges. Foremost, it is instilling the market with much higher expectations. Provisioning must be reliable. Billing must be accurate. Responses must be fast. This is both in terms of the services as well as helping customers with their cloud strategy. Migrations, proofs of concept, change management – these and many more barriers sit between companies and their cloud futures.
"Customers have grown attuned to services, agility, speed of delivery and scalability. Resellers who can't deliver on those will have a hard time growing their customer base."
Success requires the best support
Some resellers are uncomfortable with the cloud because they are not immune to the change affecting their customers. The demands and risks of adopting new business models and strategies, forced by the very need to survive as a viable and growing business, are the same. This means resellers have the same problem: how can they focus on their core competencies in a world where technology is so demanding?
"We've had to take a long and hard look at how we approached the market," Wait says. "We had to revisit our strategy and then looked at how that refocused the business. Cloud represents many different layers, each which needs support of some kind. This is where resellers that want to change often struggle. They want to create services and expand their markets, but the digital reality behind all that is complicated."
If resellers expect to succeed in the cloud world, they can start by recognising they also benefit as customers of cloud. Not every orchestration layer behind their services and technologies need to come from inside their house. Quite the opposite: if a reseller wants to harness powerful environments such as hyper-scale public cloud providers, allocating resources wrapped in their own services for their customers, why reinvent the wheel?
The right reseller partners have these capabilities, from management to allocation to billing to compliance. You can call it the cloud value chain. Instead of being spooked by their disappearing licence and box revenue streams, resellers can give their customers what they want: the power and opportunity of the cloud.
"The cloud world is modular. It's not about controlling the whole vertical. Resellers don't want to control the whole vertical. They want to deliver value to their customers. They can offer much more than before, such as analysing and scoping their customers' cloud needs. But that requires visibility and scale. So they must do their partner homework. Can the partner offer the platforms and support that give them all of that?"