Many service providers have yet to tap into the full business potential of IT-as-a-service. If they’re willing to invest the time developing the relationship with their channel partners, the returns could be considerable.

The dramatic growth of cloud services isn’t a new concept to service providers (SP). Recent research from AMI-Partners[1] forecasts global revenues of $351 billion for cloud products and services by 2019. That is more than double the 2013 figure of $140 billion!

What is not as widely known, however, is the opportunity this presents for SPs to generate new revenue by offering IT-as-a-service (ITaaS) to businesses of all sizes. This is now simple and affordable for SPs to offer customers, thanks to its cloud architecture based on:

  • software-defined networking (SDN)
  • network functions virtualization (NFV)
  • open application program interfaces (API)
  • zero-touch provisioning

The trick is to tap into the broad market of customers through channel partners.

The ITaaS demand

Plug in a phone or router. Go to a cloud portal. Order everything your business needs – apps, virtual private network or communications – from the cloud, on demand. It is this simplicity that customers love. So rather than handling IT themselves, more and more businesses are opting for the service-based alternative. It is highly efficient and cost-effective. What is more, there is an ever greater acceptance that the model can apply equally well to both single-office and multi-branch businesses.

AMI-Partners’ research, which took in 350 enterprises across 11 countries, shows that businesses are picky about the vendors they turn to for cloud services. Most don’t have relationships with SPs. Instead, they look to trusted advisors like value-added resellers (VAR), system integrators, managed services providers, and data center hosting companies.

A broad channel presence is a must

So what is the takeaway from all of this? SPs that want to be successful selling ITaaS to a broad business market must develop strong channel partnerships. Before the cloud, you would have had to integrate your network service into those of your channel partners. But now, a software-defined infrastructure and open APIs make it much easier for you to deliver these services to end customers through the channel.

With the newest cloud solutions, you can focus on building your own brand by directing your sales and marketing efforts to channel partners. You can promote the superior quality of service and user experience you provide versus the best effort service of over-the-top providers.

The channel opportunity in numbers

The AMI-Partners study also included data from interviews with 25 SPs. Some 84 per cent said they are ready to share their APIs with third party channel vendors to collaborate on offering cloud service bundles.

The research pulled data going back to 2014 and found that SPs were only capturing 17 per cent of the ICT cloud services market that year. The majority of revenue was going to other vendors, from companies like Amazon Web Services to resellers, hosters, and system integrators. For SPs that don’t pursue channel partnerships, market share is forecast to decline to 15 percent by 2019.


Source: AMI-Partners study, March 2015.

Now for the good news. The research also forecasts that SPs can increase their percentage of overall cloud revenues to 46 per cent by 2019. They can do this by partnering with different channel vendors. The study predicts this partnering formula will result in a 15 per cent uplift to the global cloud services market, increasing overall revenues to $351 billion.

Find out more

The ITaaS for business opportunity is huge. For more information on how Cisco can help you capture your share of this market, visit MOI Forecast or ITaaS global summary.

[1] Cloud VPN & The Role of the Service Provider in Disrupting the VPN Market, 2015


Ben Bekele

Director Prouduct Management