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Mon 20 Jul 2009 12:50 PM

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Channel must think carefully about sticking its head in the clouds

The role of the Middle East channel in generating sustainable revenues from cloud computing is beginning to emerge although it is still a long way from being totally clear.

The role of the Middle East channel in generating sustainable revenues from cloud computing is beginning to emerge although it is still a long way from being totally clear.

Shrewd IT providers have been using the choppy market conditions to convince end-users that certain areas warrant a greater investment than others at the moment, none more so than those peddling the hosted software message.

The IT industry ranks top of the league when it comes to creating buzzwords out of almost nothing, and cloud computing providers have certainly done a remarkable job of essentially reinventing a concept that, in its purest form, has existed for years.

There is now mounting evidence that efforts to drum up interest in cloud computing among enterprises in the Middle East are happening with increasing regularity.

Last week, salesforce.com — a pioneer of the hosted model — completed a series of road shows with local IT provider eSolutions to outline the advantages of cloud computing to end-users in the region. It is not alone.

Everybody from Cisco through to IBM has been fine-tuning their cloud strategies, while Sun Microsystems recently revealed that one of new regional boss Marc Heger’s initial priorities is to promote awareness of its cloud computing portfolio in the Middle East.

Clearly it is a subject that the enterprise channel can ill afford to ignore, although talk of cloud computing usually leaves VARs feeling a little uneasy to say the least. Most remain unsure of where they fit into a model that is inherently based on the vendor delivering the commodity directly, thereby eliminating the need for a middleman.

This apparently gloomy scenario may not be as inevitable as it sounds though, especially in the Middle East where a longer-term opportunity for integrators and service providers to carve out substantial consulting margins appears to exist.

Think of it like this. Enterprise organisations raised on a staple diet of on-premise software will undoubtedly require a considerable degree of handholding if they decide that transitioning to hosted subscriptions is the way for them to go.

The channel in the Middle East holds the trump card in that it remains the major link to the end-user, which means cloud computing providers will have to find ways of accommodating partners if they want customers shifted to this new method of purchasing.

It will be equally important for channel players to examine how they can gain from so-called ‘agent-based’ partner programmes that some vendors seem to be developing by way of compromise. Although the subject of customer ownership is a potentially sticky area, such initiatives at least offer a platform for VARs to make some revenue from traditional value-added sales and support services.

In the US, there have also been discussions about the feasibility of enterprise-focused resellers developing advisory practices around cloud computing, essentially allowing them to charge a fee for overseeing the complete management of the multiple hosted services that large end-users subscribe to.

Furthermore, there is a compelling opportunity for the channel to position itself as the single point of contact for all of an organisation’s hosted services agreements, thereby eradicating the need for that customer to engage in time-consuming dialogue with numerous application vendors.

The one sticking point in this region is that the market remains dominated by small and medium businesses that, in all reality, are unlikely to have any inclination to adopt off-site software models.

It is more probable that larger organisations will provide the customer base for such value added services, but they naturally comprise a much smaller portion of the market.

However it turns out, integrators and IT services providers in the region will need to take into account a plethora of external factors if they harbour serious intentions of gaining an early lead in a cloud computing race that has only just started.

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