Tcm cloud ezine special preview edition 29 sep 2012

Special

Preview

CLOUD is the channel ready for it?

ERP add-on Anish Kanaran

Regional Director, Epicor Middle East

Cloud Centres of Excellence Ayman Dwidar

enterprise Group Channel Manager HP Middle East

Channel Shakeout Margaret Adam

Principal Analyst - Services MEA Region, IDC Middle East, Africa, Turkey

www.techchannelmea.com

Differentiation In the US, Epicor offers Epicor Manufacturing Extra as a cloud offering based on software as a service model. However for the Middle East region the roll out is still under planning and consideration. Also in the US region, Epicorís cloud offering is sold directly to end users and channel partners are not part of the go to market or distribution strategy. However the strategy for the Middle East region may be different. ìWe are strategising for each region and if we are deciding a cloud strategy we are looking at a complete strategy,î says Anish Kanaran, Regional Director, Epicor Middle East.

In terms of priority, Middle East and the Indian sub continent are likely to follow Europe but the common consideration in any Epicor cloud roll out - there are no half way plans for the roll out. The Epicor Extra Saas offering is meant for small and medium manufacturing and engineering businesses in the US, and the modules are a subset of Epicorís flagship ERP product. Globally, however the roll out of the Saas offering is expected to be customised based on the regional business requirements in Europe, Middle East and India. “We are still studying the roll out to other regions,” explains Kanaran.

Looking at the involvement of channel partners in the Epicor cloud strategy, Kanaran feels partners who are specialised and who can develop their own application layer on top of the core ERP product, will be the ones who can add value in the entire sales and delivery process. “Our approach is partners should verticalise the product and offer it as a cloud solution for end customers.” Hence partners who are specialised, for example in a specific vertical market segment or business process or country legislation and have application development capability should look at adding their own intellectual property to the Epicor ERP platform using the available tool kits. The combination of these two capabilities can help partners differentiate themselves in the ERP market space and drive a sustainable revenue model for themselves. “The key for cloud partners is they need to look at an intellectual property, which can be a differentiating factor or a value addition to our product. They will have a role to play if they have specialised offerings.”

However Kanaran points to slow adoption of public cloud offerings in the region. While hosted CRM applications from Salesforce.com have a few thousand users in the region, ERP on the cloud has only been hosted in a private cloud environment by a handful of end user organisations in the region. “We have not come across many customers asking for a kind of hosted solution. Yes, there are customers who buy the software from us and host it on remote sites.” This option seems to work well for businesses that have smaller in-country operations, but are dispersed  Direct Saas model available in US across multiple countries. For such deployments, end customers buy perpetual licenses and then deploy them  Regional cloud strategy under development in private cloud environments. As Epicor rolls out its regional cloud strategy, end users may also reduce their  Regional roll out next in line after Europe adoption barriers and inhibitors.  Opportunity for specialised partners to build over core product  Differentiation will help build revenue model

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ERP add-on

We have not come across many customers asking for a kind of hosted solution. Yes, there are customers who buy the software from us and host it on remote sites.

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Partner journey

Cloud Centres of Excellence Ayman Dwidar Enterprise Group Channel Manager HP Middle East

Building these Cloud Centres of Excellence is easy.

But maintaining them and making sure you get the most out of them is more difficult 04

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HP is teaming up with select partners who have skills, drive and vision to help master the cloud business model.

As part of HP’s journey to the cloud, it plans to set up Cloud Centres of Excellence in every regional country by end of fiscal 2013. This is a joint initiative between HP’s Enterprise group and select channel partners across the region.

The Cloud Centres of Excellence are meant to help partners showcase their skills in cloud computing. “I think this is the most practical way to get a community understanding of cloud computing for customers as well as partners,” says Ayman Dwidar, Enterprise Group Channel Manager, HP Middle East. Dwidar has selected partners to work on HP’s Centres of Excellence based on their proactiveness in building suitable business models around cloud computing, their technology specialisations, in-house skills and cross portfolio selling capabilities. “Building these Centres of Excellence is easy. But maintaining them and making sure you get the most out of them is more difficult,” says Dwidar.

Even for partners that do not go down the Cloud Centre of Excellence route with HP, there are significant challenges in converting business opportunities in the cloud computing arena. “The first is the partner must speak the services language. This is a paradigm shift.” Considering the partner is able to get over these initial hurdles the next challenge will be the ability to speak both the languages of hardware and services at the same time for potential customers in the cloud computing opportunity. “You need to have the ability to mix and match between the two languages - provide solutions and hardware,” he points out.

Since the IT end user is also being transformed into an IT consumer and will have the choice of selecting IT services delivered from the cloud from multiple partners, the cloud computing partner must be able to understand the customer requirements very clearly. “Dealing with an end user customer who has a choice is completely different from dealing with a customer that has no choice.” Along with high levels of customer orientation and cost competitiveness, aspiring cloud computing partners will also need to be innovative in packaging services for the end user.

The challenge is therefore to create a revenue stream that is profitable, while maintaining a mix of both hardware and services in the cloud computing space. “The partner cannot step away from selling infrastructure because each and every customer is unique.” HP believes traditional  Partner need to learn two languages, hardware and services

IT computing will continue forever and will not diminish

 New skills to be learnt include customer orientation, customer satisfaction and innovative service packaging

be the emergence of new operating models alongside

 Traditional IT will continue forever

towards a hybrid model with variations.

because of cloud computing. What will change will traditional IT models and the defacto standard will shift

 New operating models will emerge alongside traditional IT  End user transformation from IT user to IT consumer

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Uncertain future

Regional channel partners are still sitting on the sidelines debating whether to plunge into the cloud mainstream or not.

The gradual acceptance of cloud computing in the region is expected to put a lot of pressure on channel partners whose entire business may sometimes rest on typical broadline, commodity type transactions. “If you have been in the very traditional model, where you are selling the box or selling the license and you are putting basic integration or implementation services on top of that, it will be quite difficult for you to build a portfolio. You will not see every channel partner playing in that space,” says Margaret Adam, Principal Analyst - Services MEA Region, IDC Middle East, Africa, Turkey However Margaret also feels, in this transformation space, no two channel partners are equal and accordingly each will need to leverage their strengths and orientation in the services space. However those partners who are already operating in the managed services space will be able to adapt more quickly to the cloud driven sales and business model. “Companies that are already providing managed or hosted services will probably find it a lot easier to build a cloud portfolio because they understand the business of remote and annuity driven services business.”

For others the dilemma will remain whether to plunge into cloud computing sales and services and face the challenge of re-skilling their workforce and a vastly different sales and business model - or to sit on the sidelines and wait! “I think the channel is asking itself questions, if we do not get into cloud are we at risk - is the investment required worth it?” Faced with an uncertainty many channel partners may add cloud into their portfolio in order to appear relevant and yet it may not necessarily be their core business. ‘It is not an ideal situation.’

The result of all this will be a shakeout amongst channel partners around cloud driven sales and revenue opportunities as they begin to emerge and scale in the region, leading to a consolidation of competent partners in the region. And therefore not all partners will survive in the ramp up activity curve. “My prediction ñ in the short term, there will be a lot of sub contracting of partnerships between different channel providers. The integration and consulting guys will try to develop a holistic solution. Those who survive are the ones that look to develop capacity and alignment,” says Margaret.

The wait and watch in the sidelines approach by channel partners is also accelerating disconnection with end users.

The end user community has an appetite for moving into  Around 50% of CIOs still believe cloud is just the cloud computing space but the local cloud activity hype has been limited both from vendors and regional service providers. “There is disconnection in terms of how  59% of CIOs have no plans to adopt cloud in any form ready the market is to supply these services versus what  Breach of security in public and private clouds is the customers are saying. There is almost a sense the service biggest concern for close to 50% of CIOs provider community is playing catch up and are a bit late  Less than 30% of CIOs currently have strong to the market,” concludes Margaret. understanding of cloud computing

 Pricing and skills of professional staff are the top most criteria for selection of a cloud services provider

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Source: IDC Cloud Readiness Study 2011-12, N=995

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Channel shakeout Margaret Adam

Principal Analyst - Services MEA Region, IDC Middle East, Africa, Turkey

I think the channel is asking itself questions - if we do not get into cloud are we at risk - is the investment required worth it 07