Report Finds Where Partners Are Falling Short in Cloud

Most partners are not investing enough resources to take full advantage of the cloud opportunity, despite owing an ever-growing proportion of their revenues to cloud-based sales.

That’s the upshot of a recent study conducted by research and consulting firm 2112 Group, in partnership with Microsoft and Ingram Micro. The company polled nearly 350 U.S.-based solution providers for its July “State of the U.S. Cloud Channel” report, and found indications that “solution providers aren’t ascending into the cloud with strategic direction or forethought.”

Instead, the report contended, “the data points to their cloud development as being opportunistic and more a result of blind luck than strategy.”

The good news is that cloud products and services are steadily growing as a percentage of solution providers’ total income. In 2016, solution providers attributed, on average, between 11 and 15 percent of their gross revenue to cloud sales. That’s up from a scant 5 percent in 2014. This year, cloud sales are on track to make up 16 to 20 percent of partners’ average revenue.

At this rate, according to the researchers, cloud sales will become the biggest source of revenue for solution providers (accounting for 40 percent) by 2022.

On the other end of the scale, a vanishingly small number of partners do not count on the cloud for at least some of their revenue. In 2016, just 6 percent of solution providers reported zero income from cloud sales. That figure is expected to shrink to less than 1 percent by the end of 2017.

The bad news, according to the report, is that solution providers are investing an insufficient amount of their earnings — under 10 percent, on average — into cloud development, limiting their ability to grow their revenues and client bases.

By Gladys Rama

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