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Cloud calls for Changes in Business Models, New Skill Sets and Strategic Investments in the Asia/Pacific Channel Ecosystem, Says IDC

May 20, 2010 - IDC sees three key, immediate impacts on the channel partner business model as a result of the game changing nature of the cloud:

1. There will be opportunities in the resale of public cloud services but, it will require a fundamental transformation in the business model for channel partners. This is because one of the key attributes of public cloud services is subscription-based pricing model (normally on a per-user, per-month basis). According to a recent IDC Partner Connect* study conducted in April this year involving channel partners across the region, close to 77% of the respondents interviewed indicated that they would like to receive a proportion of this monthly subscription fee. However, this requires an ongoing relationship with the customer in order to drive the renewal, which is a drastic change from the transactional approach that most value-added resellers (VARs) currently receive.

2. Local partners will have to build out new sets of skills around strategy consulting, application architectures, migration tools and services in order to cater for clients implementing cloud technologies and services. All of these will require development of a larger services delivery capability by channel partners as opposed to the simple resale model.

3. The annuity-based revenue stream will also mean that the return on investments for partners will be seen in approximately two to three years time (as opposed to six to 12 months for traditional ICT products). This will require channel partners to take a strategic view on how they invest in this space.

According to Sureshpal Singh,IDC “It is becoming clear that different cloud deployment models will emerge. In the short term, IDC expects that some attributes of the public cloud (e.g. pooling of resources via virtualization, elastic scaling, and real-time provisioning) will be leveraged within the enterprise network perimeter in the context of an internal, private cloud. This is essentially the next phase of the dynamic IT journey. Certain services will also be sourced through the public cloud in the form of Software, Platform or Infrastructure-as-a-service, and a hybrid, blended service model will emerge which will differ by industry and market segment in the region.”

The cloud delivery model has been proven to be more than just hype. According to Chris Morris, IDC Asia/Pacific, “By 2013, IDC expects spending on public cloud services to make up 10% of total Asia/Pacific (excluding Japan) or APEJ ICT spend. During this period, the compound annual growth rate (CAGR) for public cloud spending is predicted to be four times greater than on-premise/traditional IT in the region.” He adds, “The financial benefits inherent to the ‘everything-as-a-service’ model is driving a shift in buying behavior as capital constrained CIOs look at different options in terms of getting access to ICT resources without having to pay for them upfront.”

Across both vendor and channel ecosystems, key aspects of existing commercial agreements will change as the market develops. Whatever holds true for this year will more than likely change in twelve months. This needs to be understood and accepted. Those that are able to adapt quickly and work out a flexible working arrangement based on mutual trust will most likely exploit the emerging opportunities from this market transition.

(Extracted from IDC Release)

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