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How The Cloud Impacts Systems Integration Firms

It's a path to the recurring revenue game. Are you playing?

By Daniel L. Newman October 14, 2013

This article is provided by Commercial Integrator

 
It’s official: Cloud fever has struck Integratorville.

With widespread use of commercial cloud applications like iCloud, Dropbox and Google Apps, it was only a matter of time before the “marketing cool” that is cloud became relevant to the integrator channel.

This has left CIs everywhere asking themselves, how do we capitalize on the popularity of cloud?

In the commercial integration market, cloud is still primarily just a “marketecture” used by manufacturers, VARs and distributors all offering cloud-based solutions for collaboration, conferencing, signage and support.

With what appears to be an abundance of cloud solutions reaching the channel, the good news is cloud may finally be providing a platform by which a CI can get into the recurring revenue game. The bad news is, we are seemingly talking a lot more than we are doing.

Talking Cloud Is One Thing

If there is one thing the integration channel has done a lot of, it is talk about change – changing technologies, changing market forces, changing profitability and so on.

Perhaps more discussed than any of those things is the integrators need for a change in their business model, specifically a move from project (capex) revenue to a more sexy recurring revenue (opex) model based on services. Of course this topic immediately leads to further conversation about how CIs can leverage cloud.

While all of this talk is great, what has been the effect? How much cloud is the integration channel selling? Is it relevant? Can it be measured?

Flirting, Dating, Marrying Cloud?

Like all major shifts in business, the movement to cloud is more than just a shift in ideology. 

In reality, it reflects a full change in how integrators go to market. It impacts project size, scope, cash flow and compensation amongst other things. 

This leaves many CI business leaders to find themselves on the outside looking in as the change seems like too much to take on at one time. Those that are getting into the cloud business seem to be more likely to flirt with cloud services than to truly jump into the dark yet perhaps perfect waters that represent “cloud services.”

Business Impact Of Cloud?

The business impact of cloud is still primarily locked in potential.

The speculation is that with the growth of a cloud practice, CIs can finally unlock the potential recurring revenue stream that has been so elusive for the CI. What challenges the integrators is figuring out how to start.

It is more than just talking, and even more than just flirting, that is going to be required for a VAR to succeed in cloud. It will require a commitment to a changing business model, smaller but more consistent cash flows that build in time, and a vast improvement in service delivery, most poignantly the way support issues are responded to. 

But just because the change is hard doesn’t mean it should be ignored. Cloud is without a doubt a popular way to market and solve business problems, and in the end as CIs that is what we are using technology to do.

The popularity of cloud based applications is here to stay, which means it is something CIs need to learn to embrace. With an abundance of options spilling into the channel that integrators can now package and sell, those that take the opportunity and run may be the ones to pull away in the race to sustainable profits.

However, those that catch the fever and don’t cure it with a meaningful shift in their business model may be left out in the cold.

Daniel L. Newman currently serves as CEO of EOS, a new company focused on offering cloud-based management solutions for IT and A/V integrators. He has spent his entire career in various integration industry roles. Most recently, Newman was CEO of United Visual where he led all day to day operations for the 60-plus-year-old integrator.

Go to Commercial Integrator for more content on A/V, installed and commercial systems.


About Daniel

Daniel L. Newman
Daniel L. Newman

CEO, EOS
Daniel currently serves as CEO of EOS, a new company focused on offering cloud-based management solutions for IT and A/V integrators. He has spent his entire career in various integration industry roles. Most recently, Newman was CEO of United Visual where he led all day to day operations for the 60-plus-year-old integrator.

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