To say that these partners were paranoid that the large vendors would turn on them and eat their lunch is a little unfair. But they were wary (often for good reason) of vendors seeking to go direct or to restructure their channel focus and incentives on a regular basis.
After I left IBM I worked as an analyst/journalist for a couple of years. I was not only a pundit myself focusing on cloud and the channel ecosystem, but also sat alongside other such pundits at many a press conference or industry event. One interesting perspective that I learned was that of a group of venture capitalists (VCs). They also attended such events, not only to spot the next potential unicorn, but also to see what vendors were up to.
Russian roulette at re:Invent
The most scary event of the year for these VCs was AWS re:Invent. They watched with a mixture or interest and horror as Amazon Web Services (AWS) announced a long list of service enhancements, as it does at each such event. The announcements would create a host of new peripheral opportunities for small start-ups seeking to innovate on the fringes. But they would also kill a number outright that had been operating in just such a fringe operation that had suddenly become part of AWS’s own area of operation. The VCs described it as Russian roulette. If they’d invested in a business that had just been crushed by the new services enhancements that AWS had announced, that was it – BANG.
There are many Managed Service Providers (MSPs) that will now know how the VCs feel. AWS has just announced it's getting in to the managed services business. It may have operated a consulting practice for some time, largely focused on helping clients migrate onto its cloud. But until now it had kept out of many areas of cloud management – patch management, backup, monitoring, security, etc – leaving such responsibilities to clients and partners.
Many providers, unable to compete on price with the global giant, had chosen instead to partner with it, focusing on peripheral services such as operational processes for incident, change, and problem management. While AWS may not have killed them all instantly with its latest announcement, their business models based on partnering with AWS have been served a potentially mortal blow.
Life in the channel is far from easy and partners know that working with the big vendors has advantages – largely access to platforms and technologies that they can add value to and then repackage as a service of their own. But it also has associated risks – the main one being that the vendor could turn on them at any time. It is often described as being akin to lion taming. It’s all fine until it goes wrong, and it can go very badly wrong.
Planning a route away from AWS
So what are the options for these partners? Realistically many of them need to be planning a route away from AWS. The lion appears to be untameable and it would be simply too risky to re-enter the ring.
They could turn to the other global public cloud players, but they risk entering the ring with equally large and potentially fierce beasts. Or they can look towards Managed Private Cloud, but recent research has shown that this is only economically viable at scale.
For partners serving the UK public sector, there’s a less threatening option available. The government created G-Cloud as a framework to enable all participants in the value chain (from large SIs to small businesses) to compete for tranches of government business on equal terms. Here at UKCloud we have seen how well this has worked and we provide a public cloud for the UK public sector working alongside an array of partners who also serve this market. The G-Cloud framework means that we can all collaborate without the need for lion-taming skills.
What we need is vision from the UK government. It needs not only to continue to lead by example, as it has with G-Cloud and other initiatives that enable SME’s to compete on equal terms in the public sector, but also to use its influence. By helping to extend this type of model well beyond the public sector to the private sector as well, it could enable SMEs (many of them the partners that AWS has just turned on) to compete to serve all markets!