Despite the hype, the Cloud is only just beginning to build in the channel, according to analysts and industry experts.
In fact, some say it is struggling and needs to be kick-started but all agreed it is here to stay and businesses, as well as the channel, should get their heads into the Cloud. They say it may become the core of business in future and with the rise of other trends such as globalisation and mobility, it will drive commercial outcomes.
They also agreed that the Cloud benefits the channel. Strategies suggested include forging customer relations, building their own Cloud infrastructure or distributing another business’ Cloud offering.
The bigger picture of Cloud adoption can be seen in a recent study by Fujitsu and Microsoft Australia, Cloud in Australia, which polled 179 CIOs across the country. It reinforced the notion that though Cloud computing is still in its infancy, it is the future of ICT.
It showed that the Cloud is increasingly being regarded as ready for core business systems like ERP and Business Intelligence, while migration is well underway for applications such as email and messaging.
However, Microsoft Australia chief technology officer, Greg Stone, said that while Cloud continues to mature, it still lacks a standard definition . “In the eyes of the surveyed CIOs, Cloud is still difficult to define but they know what it means to them. While more than 50 per cent of respondents say Cloud is overhyped, they nearly all agree that it is justified as it offers many advantages for their organisations,” Stone said.
Three key elements
Channel Dynamics director, Moheb Moses, said the Cloud had three key elements that distinguish it from managed services.
“A few things that define Cloud are elastic scalability; pricing, as businesses dealing with the Cloud need not have to pay for it in advance; and the ability for self service without the need for vendors to get involved. If they do not have these, then it is not Cloud,” Moses said.
He claimed within the channel, larger or mid-sized resellers have established some kind of Cloud business but it is less so with smaller-sized resellers.
HubOne managing director, Nick Beaugeard, said Cloud is a long-term strategy for the channel and waiting out years to reap the benefits of it is a challenge.
He said the traditional model where a reseller buys from the distributor is eroding with the growth of the Cloud.
“Cloud brings in money over the long-term when things scale, but in the short-term, when businesses have customers who want to do on-premise and all the normal stuff, that is where the short-term money is. It’s a difficult situation for a reseller to be in,” Beaugeard said.
However, he claimed resellers should jump on the Cloud bandwagon if they have not already. “As more and more customers get their heads around it and adopt it, customer demand is going to push the channel to the Cloud, not necessarily the channel pushing Cloud to the customer.”
EMC A/NZ public Cloud national practice manager, Lincoln Lincoln, agreed with Beaugeard that the channel is increasing its focus into the Cloud as it transitions from being a traditional reseller to a service provider.
“Australia is one of the most virtualised countries and our Cloud readiness, in many regards, is at the forefront. It is one of the countries most ready for it and the channel is adjusting itself in recognition of that market share,” Lincoln said.
Comcity founder and CEO, Jason Reading, said practically every business is moving to the Cloud or at least thinking about it.
“There is no escaping it, Cloud computing is similar to the start of the Internet all over again and the early users of Cloud computing services will reap the rewards,” he said.
Reading mentioned there are numerous advantages for the channel to move to the Cloud. “Not only does Cloud computing reduce your IT cost but companies can gain access to more sophisticated software that would otherwise be out of reach for many small businesses.”
He said Cloud computing allows business owners to remove themselves from the ownership of their IT infrastructure, so that they can focus on their core business.
According to Oracle enterprise architect for Cloud, Rob Reakes, the business context of Cloud is the key element for the channel to promote its adoption.
“My advice to resellers would be promote the technology in a business context – in terms of the Cloud characteristics being pre-packaged automation, elasticity, the pooling of resource, and promoting the appropriate Cloud model,” Reakes said.
ASG Group head of Cloud transformation, Michael Mealey, said the channel needs to move into the Cloud space as it needs to offer clients new applications.
Mealey said Cloud brokerage is a viable space to be in as, from a reseller perspective, businesses are initiating ways that allow resellers to understand their application and via their understanding of the application, best suit the client application to the appropriate Cloud.
“Many vendors put out these Cloud solutions, but their customers are unsure of what it means for them, how they can move their applications there or how the applications are going to behave in that environment,” he said.
Mealey stressed the importance of distributors and resellers in curbing this challenge. Beaugeard built on their importance by recommending that resellers have a strategy around Cloud – firstly, by understanding their customers and their propensity to move to the Cloud, researching the market, and matching the Cloud solutions to the customer’s requirements before pitching to them.
Moses pointed out two options for distributors and resellers to gain opportunities from offering Cloud solutions.
The first is the option of building their own, although it might be a high-risk, cash intensive option. He stressed the importance of having a good cash flow, strong partnerships and a well thought out long-term business model for resellers who embark on this route.
The other is the option of selling another vendor’s Cloud offering. Moses said resellers who pick this avenue should have strong relations with the vendor, as well as offer a service alongside the Cloud offering. However, he said the best opportunity lies in between the both.
“Customers want alternatives and seek different options. Resellers have to think how they can include a Cloud offering in addition to their normal offerings. What Cloud does is that it gives them a second option in terms of how they deliver technology and also gives them a revenue stream from ongoing training,” Moses said.
Lincoln said businesses should look at three dynamics before moving into the Cloud market. He shortlisted economics, functionality and trust in security.
“They need to look if it makes more economical sense to push a workload into the Cloud, if they are going to get a better service level by pushing a workload into the Cloud or if they trust the security of the Cloud to put their data on it,” he said.
Resellers should be prepared to offer add on incentives such as Cloud assessment services, which helps organisations evaluiate workloads independently, Lincoln said.
What strategy is it
According to WhiteGold Solutions strategic advisor, Leigh Howard, the Cloud is not a replacement strategy, but rather a complementary and additive strategy to what the channel does.
Howard said businesses moving to the Cloud are predominantly picking up commodotised applications and resellers should be tapping into this space and traditional resellers should evolve their business model to embrace the technology.
“But the role of the distributor and reseller doesn’t change much. They are still a trusted advisor to the end customer, they still have to go through a professional services play and design infrastructure to meet Cloud services for end users. There will always be a place for the IT channel,” he said.