sean ferrel xchange speaker managed solutionSean Ferrel, presenting on the evolution of managed service providers to managed cloud brokers at XChange Solution Provider 2016 in Los Angeles.

Service Provider CEO: VARs Will Become Tech ‘Brokers’

By Joseph Tsidulko as written on
VARs are becoming cloud brokers, pushing resources and services to their customers like Wall Street traders do with stocks, Sean Ferrel, CEO of San Diego-based Managed Solution, told attendees of XChange Solution Provider 2016 last week in Los Angeles.
As the public cloud becomes more commoditized, and the process of provisioning servers more automated, frequent workload migrations to optimize cost and performance will become the norm, Ferrrel said. He believes the channel should seize the opportunity to act as an intermediary between customers and the multi-cloud environments they provision.
"I think we're all going to be stockbrokers in the future, brokering software and hardware," Ferrel told XChange attendees at a breakout session of the conference, hosted by CRN parent The Channel Company.
"But it's really just another form of the same thing," he said.
Instead of selling a box, the channel will increasingly sell services through marketplaces, Ferrel said. And as managed cloud brokers, partners will remain essential to the distribution of technologies—by no stretch getting pushed out of the market, like some feared with the advent of cloud.
"The VAR channel (is) actually just being reinvented with cloud," Ferrel said.
He identified three components of a cloud brokerage model: intermediation, aggregation and arbitrage.
The channel can execute those three functions by facilitating deals between their enterprise customers and the cloud providers that offer the most suitable environments for specific workloads.
Many solution providers are already acting as intermediaries, aggregating clouds from multiple vendors, and calculating costs to direct customers to operators that will deliver savings.
When it comes to the performance of virtual machines, there's a good deal of parity among providers, Ferrel said. That's why "people were really most interested in best cost overall for the product."
And while much is made about vendor lock-in, that concern is lessening.
"Funny thing about vendor lock-in," Ferrel told attendees. There are "so many automated tools that can take an application in the cloud and push a button and move it to another one. Eventually it's going to be so easy to move between clouds."
And there will be plenty of profit to be made doing that, he said.
The evolving role of the channel comes as the consumption gap widens — with product feature and complexity going up faster than the customer's ability to consume those features, Ferrel said.
To close that gap, companies want to get software fast, migrate between environments fast, and constantly optimize their costs, he said.
"In clouds, they want cheaper, better, faster," Ferrel told attendees.
That's the market demand pushing the channel to a "more centralized resale model," with users being empowered with platforms they can use to initiate buys, under rules of corporate governance.
"You've always been a broker as a VAR," Ferrel told his peers. "Now you're just doing it in a little different way with some automation tools."


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