Solution providers say they are losing fewer sales opportunities as they increase their cloud computing capabilities to meet the expectations of a services-hungry IT marketplace. However, when they lose a sale, more times than not it’s to a peer.
According to the “CTTA State of the Cloud Channel 2013″ report, solution providers have noted a substantial decrease in the number of sales lost because they couldn’t fulfill a client or prospect’s cloud requirements. While the number of solution providers unable to fulfill cloud requests remains above 50 percent, the volume of channel companies losing cloud business fell 10 percent year over year.
The cloud study, conducted by The 2112 Group and Channel Partners magazine, has found a jump in intra-channel competition for cloud computing business (see chart below). In 2011, 29 percent of solution providers said their lost sales opportunities went to a vendor selling cloud services direct; in 2012, sales losses to vendors fell to 27 percent. However, sales losses to peer solution providers skyrocketed from 10 percent to 33 percent.
The jump in peer competition for cloud business makes sense as cloud computing in the channel continues to mature. Solution providers say it’s becoming easier and more affordable to develop cloud capabilities. Most solution providers are skipping the development of hosted resources in favor of reselling vendors’ cloud services, such as Microsoft Office 365 or Google Apps.
As cloud computing becomes more accessible, so too is revenue and profits derived from cloud services. Solution providers report a jump in cloud computing earnings: Cloud revenues and profits inched up in 2012, with the average solution provider earning 15.5 percent of revenue and 12.5 percent of profit from the sales and support of cloud services, the CTTA report shows.
With regards to tracking cloud competition, solution providers still struggle with blind spots. Nearly one in four solution providers have no idea what happens to a cloud sale if they don’t get the business. This number is down from nearly one-third in 201, but it does reflect solution providers not following up with customers to discover why they weren’t chosen for cloud opportunities.
CTTA, founded in 2011 by The 2112 Group and Channel Partners magazine, produces the annual “State of the Cloud Channel” report with the support of sponsors, including AT&T, Juniper Networks, Sungard Availability Services, CBeyond, Ingram Micro Services and RapidScale. For more information about CTTA research, visit cloud.channelpartnersonline.com or Channelnomics.com/tag/CTTA.
2 Responses to “Competition Rising in Channel for Cloud Sales”
Leave a Reply