White Label, Channel Model, a Better Way to IaaS

We recently chatted with Josh Mariea and Luke Norris, execs at PeakColo about their focus on a white label offering as THE way to incentivize traditional VARs, SIs, and MSPs to push Hosted IaaS.  See our Digital Bridge Partners post below on The Channel for IaaS for context.

White Label solutions help VARs overcome two of their three big barriers in pushing Hosted IaaS:

  1. VARs lose the HW/SW/Services drag if they push hosted cloud over the on-premise data center.

  2. VARs lose control of the customer, since the Service Provider (for IaaS) or SaaS provider (Office365) owns the account, especially if the hoster bills and offers first line support, which is typical.

  3. VARs don’t really have a business model for selling another providers hosted IaaS, they don’t know what professional or managed services they can provide and if they are enough to offset the loss of the HW/SW/Services drag.

This is where white label comes in by providing a good answer to push back points 2 and 3.

A quick digression to describe what a White Label, Hosted IaaS solution is. This is a Service-Provider hosted offering sold by a VAR where the VAR owns the cloud from the point of view of the end customer. The VAR sells, bills, and supports the Private or Public cloud, the Service Provider bills the VAR; the end customer does not ‘see’ the Service Provider.’

So off the top, White Label takes out barrier #2, but more importantly, it incentives the VAR to start to build out a business model of professional and managed services around the public cloud. See my post here to understand the required channel services for IaaS.

The challenge for the channel is to invest in these services NOW with no holes bared because the winners are going to be the partners that have the professional and managed services in support of Hosted Private and Public IaaS down cold so that they can push their sales teams to focus primarily if not exclusively on the move to the hosted cloud.

I still think a key challenge to making these investments will be the partner (VAR’s) preference to focus on on-prem projects vs focusing on transitioning customer data centers from on-prem to the cloud.

Don’t get me wrong, hybrid cloud is key, but as long as a lot of the Private Cloud push is on-premise, we think VARs are going to try to support two different business models and may be incented to push end users to continue to build out their on-prem data centers. See my post here on Why Hosted Private Cloud might be the ticket for truly unlocking the IaaS potential.

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