IT and Business Insights for SMB Solution Providers

A New Year’s Technology Sneak Peek

We asked 10 IT experts to share their top predictions for the New Year. Here’s what they said 2013 has in store for you, your customers, and your business. By Rich Freeman

Each December, as workers in Times Square prepare the world's most famous crystal ball for its famous New Year's Eve descent, ChannelPro-SMB asks some of SMB technology's most respected prognosticators to gaze into their own crystal balls and tell us what they see. The following includes their expert forecasts, bold conjectures, and wild guesses for 2013 in eight key markets and for the partner community at large - along with some even more daring predictions about the coming year's most overlooked and underappreciated “sleeper” stories.

Will cloud computing continue its steady conquest of the IT world in 2013? Absolutely, says Larry Walsh, president and CEO of Port Washington, N.Y.-based channel advisory firm The 2112 Group. Will it generate increased profits for channel pros as well? Maybe not so much.

“I'm not very bullish on cloud,” Walsh says. “Channel partners in general are going to continue to adapt and evolve cloud offerings, but [they are] still going to make up a minority of their revenue.”

Larry Walsh

“Channel partners in general are going to continue to adapt and evolve cloud offerings, but it's still going to make up a minority of their revenue.” Larry Walsh, President and CEO, The 2112 Group

Indeed, more than half of channel partners currently earn less than 10 percent of their gross revenue from the sale of cloud products and services, according to the latest results of an annual 2112 Group survey. Every year, Walsh adds, participants in that survey see higher cloud earnings just around the corner, and every year their optimism proves misplaced. “There [are] numerous solution providers that are making a very good living out of the delivery of cloud products and services, but they're the outliers at this point,” Walsh says.

That will remain true, he continues, until channel pros start thinking about cloud solutions as an entirely new business model rather than just another service offering. “They have to look at cloud strategically,” Walsh argues. That means assessing their customers' needs, inventorying their own capabilities, building a detailed business plan, and retooling their sales and marketing processes for greater velocity.

All of that is time-consuming but essential work, Walsh says, if you wish to compete with “born in the cloud” channel partners like Cloud Sherpas, a Google Apps and reseller based in Atlanta. Walsh sees such companies as the biggest threat to more established solution providers in 2013 and beyond, thanks to their superior aptitude for using cloud-based solutions to increase productivity and profits. “That's a different value proposition,” Walsh observes. “The average MSP is more focused on keeping the servers running.”

Harry Brelsford, CEO of Bainbridge Island, Wash.-based SMB Nation Inc., has his own concerns about cloud computing. Citing estimates from both Walsh and Gartner analyst Tiffani Bova that the shift to cloud computing could kill off anywhere from 25 to 60 percent of the SMB channel, Brelsford believes the partner community is in for some serious contraction, if not next year then soon thereafter. “There's going to be a shakeout,” he says. “Inefficient channel partners just can't transform to new business models.”

“There's going to be a shakeout. Inefficient channel partners just can't transform to new business models.” Harry Brelsford,
CEO, SMB Nation

Partners who survive that brutal culling, however, will be stronger for having gone through it, Brelsford believes. “There's going to be a flight to quality where partners that are serious are going to sort it out and make more money,” he says.

They'll also reinvent the partner community for a new era, Brelsford predicts. “The nature of community is morphing,” he says, with peer groups like those operated by Harlan, Iowa-based HTG Peer Groups assuming a more central role. Unlike the local user groups that have traditionally defined the partner community, peer groups demand more discipline and effort from their members. “You're going to have to add value to the community gatherings,” Brelsford states, adding that most peer group members feel that the payoff is worth it.

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