Study: The Channel Needs To Improve SMB Cloud Strategy

By Christine Kern, contributing writer

A study by ZS Associates found that 45 percent of small and medium-sized U.S. companies are using Software-as-a-Service (SaaS) or Infrastructure-as-a-Service (IaaS) solutions — and almost half of them purchase or subscribe to those services directly, not through the channel.

According to the study, “Medium-sized companies prioritize channel partner attributes differently than small businesses when purchasing cloud services … Few resellers appear to fit the profile that customers are looking for, and as a result, vendors are having trouble finding them. In short, they are struggling to find the ‘diamond in the rough’ partners that will drive cloud services growth.”

Among the key findings of the research is that different sized businesses have different needs. For example, price is a bigger concern for SMBs when it comes to SaaS solutions than for medium-sized businesses, medium-sized businesses rank expertise as a higher priority than SMBs do, but regarding security, they both rate it as an equally high priority.

The study also found that, despite opportunities to add value both before and after a sale, cloud service resellers are not playing major roles in shaping SMB customers’ purchase decisions. Of those vendors surveyed, less than 10 percent said their resellers are significantly involved in presale requirements definitions, product vendor assessment, service provider assessments, or solution design and implementation. More than 4 in 10 SMBs reported that they do their own product vendor assessments and service provider assessments, and 54 percent develop their own requirements definition.

“The extent to which these customers are not tapping resellers for guidance is alarming, particularly in less mature categories where customers are investing in new technology where they need outside expertise,” John DeSarbo, ZS principal who leads the company’s sales and channel strategy and management practice, says. “In many cases, customers are looking for help, but they’re looking to the tech vendor and not resellers. This will lead to challenges for vendors trying to build scalable channels.”

In addition, the study found that customers report only “lukewarm” satisfaction and loyalty for their cloud service resellers. Just 24 percent of survey respondents said that they were willing to refer their reseller to others. However, the study also revealed that channel partners that offer more advisory services garnered higher levels of customer advocacy, with Net Promoter Scores rising when customers viewed their channel partners in more of a consultancy role rather than as a product reseller.