The transformation of the technology channel continues to accelerate with the shift to cloud services, according to a Canalys survey of channel partners worldwide.

A huge majority (96%) of the 352 respondents say they already deliver some of form of “IT-as-a-service”, including managing customer assets on-premises, off-premises hosting or public cloud services.

For most, this still accounts for less than a quarter of revenue. But by 2017, the research firm says, almost two-thirds expect IT-as-a-service to account for more than 25% of revenue. “Product resell is still the most important business model for over 60% of channel partners,” Rachel Brindley, research director, Channels, at Canalys said in a statement. “But they rate the importance of their managed services to their businesses very highly, just behind reselling products.”

By contrast, the survey shows that the public cloud is less important to channel business models. “The perception of most partners is that reselling third-party cloud services is less profitable than reselling hardware and software,” Brindley said. “This also reflects the fact that most channel partners see the top two cloud opportunities as productivity applications such as email, and infrastructure-as-a-service (IaaS), both of which are under growing margin pressure. Higher value applications are not yet seen as the primary opportunities.”

Channel partners also fear the threat of cloud providers bypassing them, with 62% identifying this as the biggest challenge they face when selling IT-as-a-service. “We are clearly moving to a world where channel partners will have a varied portfolio including hardware, software, public cloud services and their own managed service offerings,” Alex Smith, senior analyst at the firm, said in a statement. “Vendors developing go-to-market strategies for cloud must ensure they are not increasing competition with their established partners, but recognize that this is typically delivered as part of a hybrid IT offering.”

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