Role of Channel Partners in Cloud Services is Growing in Importance

The role of channel partners in cloud services is growing in importance. A new research from Canalys reveals shows that the market dynamics have changed over the last 12 months. With more businesses opting for multi-cloud and hybrid IT environments, they are leveraging the strengths of different cloud service providers and deployment models, prompting the latter to alliance with cloud partners who are experts in this domain. Several traditional channel partners are also joining the cloud bandwagon, which in turn is giving them more revenue and profit.

According to the research firm, cloud service providers are “reaching a critical point” in their growth strategies amid the popularity of multi-cloud and hybrid IT models. They are placing greater emphasis on building channel programs to support the growing network of partners beyond the largest systems integrators, especially as they extend to mid-market and SMB customers.

“This creates a huge demand for channel partners to provide consulting, migration, integration and management services across multiple platforms. The channel is becoming a new catalyst for continued growth for hyperscale cloud service providers, particularly as competition intensifies,” Canalys research analyst Daniel Liu said.

Canalys chief analyst Alastair Edwards added that the success rate will “increasingly be defined” by technology alliances, as well as developing relationships with key channel categories. According to him, “Microsoft has built new partnerships with Oracle, VMware and most recently SAP, which gives it greater credibility with enterprises as core applications are migrated to the cloud.”

Canalys showed that in Q3, AWS remains the dominant cloud infrastructure provider globally, but competitors Microsoft Azure and Google Cloud are growing faster and taking away more market share. AWS’s growth rate for the period slowed to 35%, while Azure and Google Cloud grew 59% and 69% respectively. The overall cloud infrastructure services market for the period also grew 37%.

Canalys expects a greater focus on rewarding partners with specialist expertise around specific cloud deployments, such as SAP HANA, analytics or security; on partners developing unique services on top of cloud; and also on those partners driving customer adoption of cloud services.

Cloud service providers should build trust with their channel partners and not implement initiatives or change terms and conditions that drive more direct sales, according to Canalys. Instead, they must offer superior marketing resources that enable channel partners to differentiate hybrid multi-cloud service capabilities in this very competitive marketplace.

Canalys expects the share of cloud business supported by or with channel partners to increase in 2020. Cloud service providers must therefore find new ways to improve their own differentiation to partners and raise the maturity of their channel models, it said.

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