Cloud Channel Preferences for Small and Medium-Sized Companies

John DeSarbo

John DeSarbo, Principal

New research from ZS reports three things technology vendors should consider when they’re designing cloud service channel strategies for small and medium-sized businesses.

Diamonds in the Rough
Research from ZS reveals three considerations for technology vendors who are defining their cloud service channel strategy for small and medium-sized businesses.

Cloud solutions are becoming increasingly popular for small and medium-sized businesses, also known as SMBs. Companies cite flexibility, scalability and being able to treat IT as an operating expense as a few of the reasons for the cloud’s popularity.

ZS recently surveyed three thousand four hundred and eighty seven US-based SMBs. The research found that forty five percent of SMBs are using software-as-a-service or infrastructure-as-a-service solutions. When it comes to recent purchases or subscriptions to cloud services, fifty three percent of respondents said they bought through an indirect channel.

To learn more about the purchasing behaviors of SMBs and their relationships with channel partners, ZS selected 250 respondents who said they purchased software-as-a-service, infrastructure-as-a-service or both from a reseller within the last twelve months.

SMBs report different priorities when purchasing cloud solutions. For example, pricing is more important to small businesses evaluating software-as-a-service resellers while medium-sized businesses prefer resellers with industry expertise and proof of concept. Meanwhile, small companies placed the greatest value on relationships and prior experience while industry experience was more important to medium-sized companies when evaluating infrastructure-as-a-service. Regardless of company size, SMBs said they look for indirect channels that can help with implementation and offer ongoing support after the initial sale.

The survey shows that most resellers play a small role in SMBs’ purchase decisions and are missing opportunities to gain a bigger share of the market. Less than ten percent of resellers are involved in critical parts of the buying process like requirements definitions, vendor assessments, service provider assessments, or solution design and implementation. SMBs reported similar results for post-sale support, claiming that less than twenty percent of resellers assist with billing and invoicing, customer service, maintenance and other support.

Not surprisingly, customers report lukewarm satisfaction and even lukewarm loyalty when it comes to their cloud service resellers. Twenty four percent of SMBs surveyed said they were willing to refer a reseller they recently worked with to others. But that number jumped to forty four percent when customers saw their channel partners as a consultant instead of just a product reseller.

Despite high levels of cloud adoption among SMBs, there are still opportunities for growth. Technology vendors should look for resellers who customers see as valuable contributors during both pre-sale and post-sale. Steps that tech vendors can take are

Recognize that SMBs have different needs and preferences when choosing cloud service resellers.

Reward channel partners that establish customer relationships and provide more value during the sales process versus resellers who only perform transactional business and don’t work to influence the purchase decisions of SMBs.

Enable channel partners to become advisors. It’s important for vendors to recognize that their partners may need help when it comes to developing consulting and advisory capabilities to meet the needs of their SMB clients. The study is part of ZS’s ongoing voice of the customer research that gathers information and feedback from a wide range of technology vendors, partners and customers in the industry. For more information, please visit