The rise of cloud computing has largely been a boon for providers of managed hosting services. While cloud service providers such as Amazon Web Services (AWS) represent an existential threat to the existence of hosting service providers, demand for access to external IT infrastructure has never been higher. The reason for this is that when IT organizations begin to investigate cloud computing many of them quickly conclude they would prefer, for a variety of reasons, private clouds over environments where they would otherwise need to share IT infrastructure with others.
Recognizing the pivotal role channel partners play in guiding IT organizations to that conclusion, vXchnge, a provider of hosting services, today launched its first formal channel program. That program is designed around a two-tier model that rewards partners up front for driving the initial sale in addition to generating recurring revenue based on the lifetime of the contract.
It’s critical that channel partners be rewarded up front for cloud services because not every sales opportunity gets converted, says Joseph Mileo, vice president of global channel development at vXchnge. If a channel partner closes three out of every ten potential deals, they still incurred the same cost of sales for all ten deals. The VxChnge program recognizes those efforts by paying partners upfront for closing deals in a way that makes it worth the overall sales and marketing effort, says Mileo.
“We’re in this together with the partner,” says Mileo.
vXchnge differentiates itself from other hosting providers by focusing on the demand for co-location and interconnections in markets that are not oversaturated. For example, vXchnge provides access to hosting facilities located in Austin rather than Dallas, which is where most of the rival hosting facilities serving Texas are located. Mileo says that’s a significant issue because many of the IT organizations in Austin, for example, prefer their IT equipment reside locally near them. In total, vXchnge is serving 14 markets, including St. Paul, Nashville, Cleveland, Philadelphia, Raleigh, St. Louis and New York/New Jersey. Among the first channel partners participating in the VxChnge program are Unitas Global, Bridgepointe Technologies, Avant, and MicroCorp.
While there are lots of workloads moving into the public cloud, the overall size of the co-location market is still several orders of magnitude greater. As demand for co-location continues to grow in the age of the hybrid cloud, Mileo notes, hosting services enable solution providers to retain greater control over how applications are consumed in a way that tends to be much more profitable. The challenge and opportunity facing solution providers now is to make sure they are inserting themselves into the IT decision process before a customer decides to employ a public cloud simply because that seems to be what everyone else is doing.
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