Cloud Business Models that Work

You know you need to get a handle on the cloud, but how to begin? Learn where some early adopters are gaining traction in the channel.

By

Lauren Gibbons Paul

High-Volume SaaS/Office 365 Reseller

Carl Mazzanti’s company, eMazzanti Technologies, began offering email filtering for its SMB customers in 2003, adding hosted proxy soon after. “We needed to find an inexpensive way to protect our small retail customers,” says Mazzanti, based in Hoboken, N.J. “They would have two computers in their store. They could not afford an expensive firewall.”

After gaining momentum with those services, he started offering hosted Microsoft Exchange in 2004. “Nine years ago we had to convince people of the idea of letting us host their email,” he says. Now, his company has about 114 customers that do hosted Exchange. “We have a couple thousand mailboxes on our private-label hosted Exchange,” he says. “We filter one million messages each day on our email filtering platform.”

Mazzanti admits to some anxieties about the large OEMs potentially changing the game for the worse with little to no notice. When it comes to cloud, “they want to grab as much land as they can,” he says.

Still, for Mazzanti, the bottom line is maintaining a steadfast focus on solving customer problems, cloud or no cloud. “When we do that, our customers reward us handsomely,” he says. As far as gaining traction with cloud, Mazzanti is bullish. “Every dollar they spend with us is a vote of confidence that we are doing a good job.”

It is clear Mazzanti is doing something right. His 20-person firm has grown at greater than 20 percent every year for the last 12 years, racking up an incredible 240 percent growth in the last three years. eMazzanti has been on the Inc. 500 for the last three years and has been a Microsoft Partner of the Year, as well HP Partner of the Year. “As long as you are improving the way [clients] do business, they will come back to you to do more,” he says.

Cloud Services Broker

According to Gartner Inc., “cloud services broker,” a term the analyst firm coined a few years ago, is a major new role for channel partners in the cloud. “We see this role emerging in the market,” says Gartner’s Tiffani Bova, vice president and distinguished analyst, sales strategies and channel innovation. According to Bova, there are three primary models for cloud services brokers:

Aggregator: This type of broker brings together multiple cloud services in some unified way, such as by business process, industry, or region. The aggregation may be for billing purposes, single sign-on, SLA management, or others. Integrator: This role gathers and makes multiple cloud services work in a more cohesive way to deliver an integrated result. Customizer: This type of company alters or adds to a service’s capabilities, such as developing a new look and feel for the service or layering on new data and process functions.

Bova points to “born in the cloud” companies when asked which IT providers are succeeding with cloud. These organizations have offerings that involve professional services, software, and application development. Often founded by a person who worked at an OEM or in a traditional channel business, this new type of cloud-only company has less baggage and therefore an easier time than competitors trying to straddle both the cloud and on-premises worlds.

“They have no historical business to protect and they’re not worried about their medallion status with their partners,” says Bova. Born-in-the-cloud companies such as GreenPages Technology Solutions, in Kittery, Maine, and Atlanta-based Cloud Sherpas are doing well, she notes.

Independence IT is another example. Its first cloud workstation came out in the 1990s. By the early 2000s it had developed its own software to manage virtual software environments. The company sold its cloud workstation solution directly to SMBs until a few years ago, when it elected to sell exclusively through channel partners, according to Seth Bostock, executive vice president of corporate development for Independence IT, in Allentown, Pa.

According to Jim Lippie, executive vice president of business development, Independence IT now has 176 partners, and that number is growing. Lippie’s sales pitch: Partnering with Independence IT is a more attractive option than partnering with traditional technology OEMs. In his view, these OEMs are now trying to go around the channel and sell directly to SMBs.

“It’s the ‘channel eclipse’ concept,” says Lippie. “Companies like Microsoft and Google want to take their small business relationships direct. They are trying to take market share away from the partners.” Independence IT won’t step on the relationships partners have with their customers, which provides some peace of mind, he says.

Although his is not a cloud-born company, Nelson is totally dedicated to cloud. “We believe this is the best-case scenario for our clients and our business.” Slightly more than a year after offering cloud services, he believes his business will be 25 to 30 percent cloud by the end of the year and will reach 100 percent within four or five years. “We will promote cloud and actively work with as many clients as we can to get them on that model,” he says.

To arrive there, Nelson views his most important internal role as number-one cloud evangelist. “Every single chance I get, every conversation, I talk about how this is the best way to do things,” he says. “You have to constantly hammer away at the education.”