Global research: Channel Partners are midway on their journey to being ‘cloud ready’, while those investing are reaping rewards
Leading technology market intelligence firm reveals cloud is the epicenter of growth in the software market
Channel research conducted by IDC and commissioned by Sage found that:
- Channel partners surveyed consider themselves half way (51%) along the journey to becoming cloud ready
- 66% of channel partners surveyed believe that cloud enables them to have a more predictable recurring revenue stream
- Just over half (58%) believe SaaS opens doors and gets them into new accounts, and improve the rate of new customer acquisition
- Channel partners say top business metrics that have been positively affected by offering cloud services are; growth, gross margin and repeat business from existing clients
Atlanta (May 9, 2017) – Research conducted by IDC and commissioned by Sage, a global market leader in cloud accounting and business management software, reveals that channel partners consider themselves only halfway to having their existing operations to be ‘cloud ready’ despite the recognition of the benefits that the cloud offers them. ‘The Future is the Cloud’ research shows that those that have embraced cloud offerings for over 5 years typically experience higher profitability. The IDC research also shows that channel partners who have invested in cloud sales people, technical people and services achieve the highest profit margins.
Margaret Adam, Program Director at IDC explains: “We see cloud growth accelerating across most markets and customer segments, with cloud software growing at five and a half times more than traditional software. It’s also increasingly the key delivery method for broader digital transformation and so we see cloud at the center of industry growth. We recognize that cloud represents a big opportunity, but it is potentially disruptive and resistance can come from a fear of new technology and the challenge of moving to a recurring revenue model, as many partners still struggle to make the transition from the on-premise to ‘as a service’ model. In saying that, this research highlights that those who have started offering cloud have seen a number of benefits, including new customers and increased revenues.”
Alan Laing, EVP of Partners and Alliances at Sage explains: “It’s predicted that by 2020, 70% of all software will be provided in the cloud. At Sage, we want to bring our partners with us on that journey so they too can reap the rewards that have been clearly highlighted for cloud-ready channel partners. We’re working with our partners and customers to take them to a world where they spend minimal time on business admin, freeing them for the tasks that help them grow and thrive. This research shows how crucial cloud technology will be on that mission.”
Other key findings:
The Cloud Opportunity for the Channel: The channel recognizes that having a SaaS business brings them greater opportunity for growing their business with:
- More than 90% of channel partners anticipate that the revenue they generate by SaaS will grow.
- 63% believe it creates new upsell opportunities.
- Over half (58%) believe SaaS opens doors for them and improves the rate of new customer acquisition.
- 52% say it enables faster business growth.
- 47% believe it offers them higher levels of profitability than their on-premises business.
- The top 3 business metrics the channel believe have positively impacted them by offering cloud services are: growth (49%), gross margin (34%) and repeat business from existing clients (30%).
Cloud-Based Services Provide Additional Revenue Streams: Cloud ready channel partners are seizing the opportunity by offering services to support their SaaS businesses:
- Consulting (80%)
- Integration services (79%)
- Training and education (62%)
- Support services (79%)
Long-Term Profitability for the Channel: The longer channel partners offer cloud solutions, the more profitable they become:
- 20% of channel partners who have had cloud offerings between 2-5 years made over 20% profit.
- For channel partners who have had cloud offerings for over 5 years, the figure rises to 44%, with 20% of these making over 30% profit.
Cloud Investment Reaps Rewards:
- Over half (51%) agree their sales cycles are quicker for SaaS.
- 52% agree that SaaS provides faster business growth.
- Just under half of channel partners (46%) feel they achieve a higher revenue per employee in their SaaS business.
- Over 50% of channel partners are already investing in building a ‘customer for life’ focus for their cloud customer base and a further 31% are in the process of considering it.
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‘The Future is the Cloud’ independent research was conducted by the market intelligence firm IDC, on behalf of Sage. Over 520 channel partners were surveyed across five markets: US, UK, Germany, France and Spain.
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PR Manager, North America