White-label booms despite concerns

While the channel sees white-labelling as crucial for selling cloud services to end customers, the Cloud Industry Forum (CIF) is calling for more “transparency” over where those services are coming from in the supply chain.

According to CIF research, the ability to white-label cloud services is increasingly important for the IT channel when determining which vendors to work with. But CIF has warned that while white-labelling enables resellers to protect their brands and maintain control of the customer relationship, resale arrangements “must remain transparent” to “ensure customers are fully aware of what they are buying”.

The research, conducted by Vanson Bourne on behalf of CIF and cloud applications player Intermedia, polled 150 senior decision-makers from IT channel organisations, including MSPs, VARs and systems integrators, regarding their attitudes and confidence in reselling cloud services. It found that 86% of channel firms saw white-labelling as either “important”, “very important” or “critical”. But according to CIF, it is “critical” that white-labelling arrangements are matched by a commitment to transparency, as it is “clear from the research” that that transparency is “lacking in many cases”.

The research found that just a third (31%) of organisations proactively inform their customers about the third parties involved in the delivery of all of their services, with the remainder offering “only a partial view” or, in 3 percent of cases, “no view at all”.

CIF maintains that “complexity” in the cloud supply chain must also be “managed transparently” via back-to-back agreements, so that there is “no disconnect between the parties as to what is contracted, who is liable for elements of service delivery, and who is accountable in the event of a service interruption”. While the majority of players are said to have these contractual agreements in place, they are “conspicuously absent” in over one in five cases (22 percent), according to the research.

Alex Hilton, CEO of the Cloud Industry Forum, said: “Many resellers have spent years building their brand and controlling the service that their customers receive, it is understandable that they will want to remain in control of that relationship.

“Therefore, the growing importance of white-labelled services should come as little surprise, and vendors that don’t offer the ability to white-label their services are going to struggle to make much headway with their partner programmes.”

But, he added: “When white-labelled services are offered it is important that the arrangements are completely transparent, so that customers know precisely what they are buying and which parties are responsible for the delivery of their services.

“Unfortunately, the data suggests that there’s much room for improvement in that regard. Providers need to be fully transparent about the services they are offering. This is a core tenet of our Code of Practice for CSPs (cloud service providers), which exists as an independent benchmark that credible CSPs should be able to measure up to to provide more assurance to the market.”