Channel Cloud Development, Maturation Lagging

March 14, 2012 Off By David
Object Storage
Grazed from Channel Nomics.  Author: Larry Walsh.

Cloud computing is a rapidly growing opportunity as more businesses look to augment or replace their legacy systems with virtualized private clouds or third-party delivered application and infrastructure services. By some estimates, cloud computing sales will range between $150 billion and $200 billion by 2020.

Despite the rapidly gathering cloud computing opportunities, the channel remains relatively disengaged from the cloud. A new report by the Cloud & Technology Transformation Alliance (CTTA) finds most solution provider cloud practices are immature and underperforming from a revenue perspective…

The State of the Cloud Channel report, scheduled for release at the CTTA Spring Summit and Channel Partners Conference in Las Vegas March 28, finds the majority (48 percent) of solution providers earning less than 10 percent of their gross revenue from cloud computing. Only one in five solution providers are earning between 11 and 25 percent of their revenue from cloud products and services.

Cloud computing, as a percentage of revenue, is a good barometer of the importance of a product or service to a solution provider’s business. More significant is the year-over-year revenue growth measure. While the market is seeing substantial growth rates in cloud adoption, the channel lags behind. Channel cloud revenues remain relatively stagnant in 2011 compared to 2010, with most revenue bands shifting up or down by between 1 and 2 percent.

Surprisingly, 12 percent of solution providers report earning no revenue in 2011 from cloud products and services, up 1 percent over 2010.

The cloud computing picture gets a little better when the channel is bifurcated between IT solution providers and telephony agents. Based on revenue numbers, more telephony agents entered cloud computing sales in 2011, as the percentage of revenue in the less-than-10-percent band jumped 10.5 points year over year.

The IT channel is also better in cloud computing, as the number of solution providers earning less than 10 percent of their gross revenue from the cloud fell a dramatic 17 percent in 2011. Most of the change is a shift to the higher revenue bands. However, the IT channel saw an equally dramatic shift – a 5 percent increase – in the number earning no revenue from cloud computing.

Solution providers’ lackluster cloud performance could be blamed on a maturation issue. Four out of 10 say their cloud initiatives are “developing,” while another 28 percent characterize their cloud programs as “implemented and evolving.” Thirteen percent say their cloud initiatives are “nascent and need work.”

Surprisingly, one out of 10 solution providers say they have no cloud products or services in their portfolio, but they’re studying how to develop cloud solutions. Another 3 percent say they have no cloud strategy and no plans for developing one.

This is the second year CTTA, a joint venture of The 2112 Group and Virgo Publishing, has conducted the State of the Cloud Channel report. The survey had more than 400 solution providers, telephony agents and channel companies participating. The full report will be released March 28 at the CTTA Summit in Las Vegas. For more information about CTTA or the State of the Cloud Channel report, please contact info@the2112group.com.

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