Despite all of the hand wringing surrounding Amazon.com’s service outages last week, it is clear to me that cloud computing is dramatically changing the delivery models of computing forever. We simply will not return to a model where organizations assume that they will consume primarily their own data center resources. The traditional data center certainly isn’t going away but its role and its underlying technology will change forever. One of the ramifications of this transition is the role of cloud infrastructure leaders in determining the direction of the partnership models.
Traditionally, System vendors have relied on partners to expand the coverage of their platforms. With the cloud, the requirement to have a strong partner ecosystem will not change. If anything, partners will be even more important in the cloud than they have been in traditional computing delivery models. This is because with cloud computing, the barriers to leveraging different cloud-based software offerings – platform as a service and Software as a Service are very low. Any employee with a credit card can try out just about anything. I think that the Amazon.com issues will be seen in the future as a tipping point for cloud computing. It, in fact, will not be the end to cloud but it will change the way companies view the way they select cloud partners. Service management, scalability, and reliability will become the selection standard – not just for the end customer but for partners as well.
So, I was thinking about the cloud partnership model and how it is evolving. I expect that the major systems vendors will be in a perfect position to begin to reassert their power in the era of the cloud. So, I decided to take a look at how IBM is approaching its partnership model in light of cloud computing. Over the past several months, IBM has been revealing a new partnership model for the cloud computing market. It has been difficult for most platform vendors to get noticed above the noise of cloud pioneers like Amazon and Google. But this is starting to change. It is not hard to figure out why. IBM believes that cloud is a $181 billion business opportunity and it would like to grab a chunk of that opportunity.
Having followed IBM’s partnering initiatives for several decades I was not surprised to see a revamped cloud partnering program emerge this year. The new program is interesting for several different reasons. First, it is focused on bringing together all of IBM’s cloud offerings across software, developer relations, hardware, and services into a single program. This is important because it can be intimidating for an ISV, a Value Added Reseller, or a systems integrator to navigate the complexity of IBM’s offerings without some assistance. In addition, IBM has to contend with a new breed of partners that are focused on public, private, and hybrid cloud offerings.
The new program is called the Cloud Specialty program and targeted to cover the entire cloud ecosystem including cloud builders (hardware and software resellers and systems integrators), Service Solution Providers (software and service resellers), Infrastructure Providers (telecom providers, hosting companies, Managed Service Providers, and distributors), Application Providers (ISVs and systems integrators), and Technology Providers (tools providers, and appliance vendors).
The focus of the cloud specialty program is not different than other partnering programs at IBM. It is focused on issues such as expanding the skills of partners, building revenue for both IBM and partners, and providing go to market programs to support its partners. IBM is the first to admit that the complexity of the company and its offerings can be intimidating for partners. Therefore, one of the objectives of the cloud specialty program is to clarify the requirements and benefits for partners. IBM is creating a tiered program based on the different types of cloud partners. The level of partner investment and benefits differ based on the value of the type of partner and the expectation of those partners. But there are some common offerings for all partners. All get early access to IBM’s cloud roadmap, use of the Partnerworld Cloud Specialty Mark, confidential updates on IBM’s cloud strategy and roadmap, internal use of LotusLive, networking opportunities. In addition, all these partners are entitled to up to $25,000 in business development funds. There are some differences. They include:
- Cloud builders gain access to business leads, and access to IBM’s lab resources. In exchange these partners are expected to have IBM Cloud Reference architecture skills as well as cloud solutions provider and technical certification. They must also demonstrate ability to generate revenue. Revenue amounts vary based on the mix of hardware, software, and services that they resell. They must also have two verified cloud references for the previous calendar year.
- Service Solution Providers are provided with a named relationship manager and access to networking opportunities. In exchange, partners are expected to use IBM cloud products or services, demonstrate knowledge and skills in use of IBM cloud offerings, and the ability to generate $300,000 in revenue from the partnership.
- Infrastructure Providers are given access to named IBM alliance manager, and access to business development workshops. In exchange, these partners are expected to use IBM’s cloud infrastructure products or services, demonstrate skills in IBM technology. Like service solution providers they must use and skills in IBM cloud offerings, have at least $300,000 a year in client references based on two cloud client references
- Application Providers are given access to a named IBM alliance manager, and access to business development workshops. They are expected to use IBM cloud products or services, have skills in these technologies or services, and a minimum of $100,000 a year in revenue plus two cloud client references.
- Technology Providers get access to networking opportunites, and IBM’s cloud and services assessment tools. In exchange, these partners are required to demonstrate knowledge of IBM Cloud Reference architecture, have skills related to IBM’s cloud services. Like application providers, these partners must have at least $100,000 in IBM revenue and two client references.
What does IBM want? IBM’s goals with the cloud specialty program is to make it as attractive as possible for prospective partners to chose its platform. It is hoping that by offering financial and technical incentives that it can make inroads with cloud focused companies. For example, it is openings its labs and providing assistance to help partners define their offerings. IBM is also taking the unusual step of allowing partners to white label its products. On the business development side, IBM is teaming with business partners on calls with prospective customers. IBM anticipates that the impact on these partners could be significant – potentially generating as much as 30% gross margin growth.
Will the effort work? It is indeed an ambitious program. IBM will have to do a good job in explaining its huge portfolio of offerings to the prospective partners. For example, it has a range of services including CastIron for cloud integration, analytics services, collaboration services (based on LotusLive), middleware services, and Tivoli service management offerings. In addition, IBM is encouraging partners to leverage its extensive security services offerings. It is also trying to encourage partners to leverage its hardware systems. One example of how IBM is trying to be more attractive to cloud-based companies like Software as a Service vendors to to price offerings attractively. Therefore, it is offering a subscription-based model for partners so that they can pay based on usage – the common model for most cloud platform vendors.
IBM is on the right track with this cloud focused partner initiative. It is a sweeping program that is focused on provides a broad set of benefits for partners. It is pricing its services so that ISVs can rent a service (including IBM’s test and development cloud) by the month — an important issue in this emerging market. It is also expecting partners to make a major investment in learning IBM’s software, hardware, and services offerings. It is also expecting partners to expand their knowledge of the markets they focus on.
I have been spending quite a bit of time these days at Cloud Computing events. Some of these events, like the Cloud Camps are wonderful opportunities for customers, vendors, consulted, and interested parties to exchange ideas in a very interactive format. If you haven’t been to one I strongly recommend them. Dave Nielsen who is one of the founders of the Cloud Camp concept has done a great job not just jump starting these events but participating in most of them around the world. In addition, Marcia Kaufman and I have been conducting a number of half and full day Introduction to Cloud Computing seminars in different cities. What has been the most interesting observation from my view is that customers are no longer sitting on the side lines with their arms crossed. Customers are ready and eager to jump into to this new computing paradigm. Often they are urged on by business leaders who instinctively see the value in turning computing into a scalable utility. So, for the first time, there is a clear sense that there may well be money to be made.
While a lot of the focus lately has been on software developers, it is interesting to look at the channel as a huge opportunity to bring the cloud into a broader set of business customers. I recently helped to run a couple of workshops with Sandy Carter, vice president of Software Group Channels for IBM. Channel partners and distributors will be an increasingly important part of the cloud ecosystem. These companies typically have the organization and ability to reach into specialized customer markets with solutions. These workshops are very interesting for a couple of reasons. First, many distributors and channel partners are looking for guidance and direction about what the cloud is and what it means for these business. Second, once these partners understand what resources are available to them they are in an excellent position to become a conduit for change. The two workshops that IBM aptly named “Cool Cloud Cash” brought cloud computing into sharp focus for these partners. These are savvy business leaders. Once they understand how they can leverage cloud computing software, hardware, and services they start to see dollar signs. In a sense, the channel is the most important avenue to bring cloud computing to the rest of the market — not just the early adopters. IBM has a renewed focus on channel partners and is focused particularly on expanding its cloud partner ecosystem. One important aspect is new certifications in cloud computing. Given the fact that this is an immature market, it is important that distributors and channel partners are able to demonstrate to their customers that they have deep knowledge. It is especially important that platform vendors like IBM work closely with partners since they are both selling and representing them in the market.