Customers across Australia are increasing investment around data centre migration and expansion, as end-user money floods into the infrastructure market.
As hybrid models become the norm, businesses are seeking channel expertise from the edge to core to cloud, driven by a right workload, right environment approach.
Revealed via EDGE Research, data centre investments rank as a leading priority for customers during the next 12 months, creating opportunity for partners to overlay services and solutions on top.
“The Australian data centre market is pretty mature,” observed Mark Iles, executive analyst at Tech Research Asia. “In a world where hybrid cloud is king, partners need to ensure they can capitalise on the need for combined private and public cloud solutions.”
As explained by Iles - during exclusive ARN Exchange events in Sydney and Melbourne - Australia is now considered an industry-leading cloud destination, housing the top three hyper-scale cloud providers in the form of Amazon Web Services, Microsoft Azure and Google Cloud Platform.
Furthermore, the market has also witnessed a “significant build out” of data centre capacity, with high-level demand and supply “pretty well balanced”.
Citing Tech Research Asia findings, Iles said that the dominant theme from customers centres around ongoing consolidation either to colocation or cloud services.
Specifically, 75 per cent of Australian customers are planning to conduct some level of consolidation of their existing data centres within the next 24 months.
Delving deeper, EDGE Research highlighted cloud migration as the leading priority for customers in Australia today, followed by data centre expansion and migration.
“This is echoed by our own experiences chatting to customers and partners,” Iles explained. “As hybrid cloud becomes the de facto operating model for customers there is an increased focus on data centre expansion and consolidation activity.
“Within this, there is a particular focus on the ability to be able to consume private cloud services in the same way as public cloud services. This represents a good opportunity for partners.”
The shift in market dynamics comes as customers realise that despite the advantages of public cloud, the environment isn’t best suited to every workload.
“There is a place for private cloud,” Iles added. “Advances in technology over the last few years, particularly in the management and orchestration of private cloud systems are also helping to drive adoption.
“This represents a great opportunity as the margins for private cloud solutions are significantly higher than for resale of public cloud services, as reported to us by partners.”
In light of changing market conditions, Iles observed that partners are well-positioned to capitalise on increased end-user need for viable IT strategies across Australia.
“Partners are in a great position,” he said. “They can say to a customer, ‘we will look at your current environment and develop a strategy that will use a mixture of cloud platforms and technologies to deliver the outcomes you want’.
“Each case will be different, but the same template approach can be used for each customer making it repeatable and repeatable, which makes it profitable.”
From a components perspective, Iles advised technology providers to invest resources and skills into creating a hybrid cloud strategy capable of aligning to hyper-converged infrastructure (HCI) requirements.
“The key components are the hardware stack,” he added. “Typically a HCI system in today’s environment and then the software stack that sits on top, usually a mix of virtualisation and/or containerisation technologies, software-defined networking and security and a management orchestration layer.
“Developments in recent years mean there is a wide choice for partners to choose from including technologies such as Azure Stack that can provide public cloud style services on a private cloud environment.
“Each partner needs to look at their target markets, their own internal skills and determine the appropriate solution stack to invest in.”
Of note to the channel, Iles said using a common private cloud solution stack allows partners to develop a single set of support and management processes, capable of spanning multiple customers whether the infrastructure is on a client’s premises managed by the partner or in the partner’s data centre environment.
“The common solution allows partners to adapt the solution according to a customer’s needs whilst utilising the same tools and processes for management and reporting,” he said.
Specific to partner skills, Iles cautioned that work is still to be done around cloud migration in the channel, with customer demand still outstripping supply.
Such a market gap was highlighted during EDGE Research, in asking customers what skills were most lacking when looking to engage with external technology providers.
“Cloud migration was a clear second place behind digital transformation,” Iles explained. “On top of this, security is paramount, understanding how to fit a common security policy onto diverse cloud platforms isn’t easy and requires expertise.
“The last component is management and orchestration, how to provide a common management platform across multiple cloud environments using a mixture of vendor tools and potentially a partner’s own IP.”
With increased technology and solutions now available in the market, the channel remains at a crossroads as to the merits of building out a private cloud offering.
“The first decision for partners is whether to build or collaborate with another partner that already has an offering,” Iles observed. “It’s not going to make sense for every partner to build out their own private cloud.”
If the decision is to build, then Iles said the question centres around vendor selection.
“This decision really has two streams,” he said. “First, a technical stream looking at solution stack, HCI infrastructure and management platforms.
“And secondly, a commercial stream looking at financially how the proposition stacks up. Can it be bought as-a-service so you can scale as you bring customers on board? Is there financing available? Will the vendor help you with leads?”
According to Iles, common challenges relate to vendors “not fully aligning” to channel needs, rather continuing the process of simply trying to sell equipment and passing on risk to partners.
“In some cases, this is exacerbated when their sales people won’t help bring customers onto the platform as it doesn’t generate net new hardware sales,” Iles cautioned.
In looking ahead, Iles cited edge technology as a “great opportunity” for partners across Australia, in response to increased investment at a customer level.
“In a world of complex and diverse data repositories you just can’t bring all the data back to the core for analysis,” Iles added. “This is especially true in use cases such as the Internet of Things where a lot of the data isn’t needed, an edge strategy makes a lot of sense.”
Consequently, Iles advised partners to seek out data centre providers with regional plays, plays capable of providing a competitive advantage in a crowded marketplace.
“Customers are increasingly looking to extract better business outcomes from technology, and many are realising that managing infrastructure is not a core competency,” he concluded.
“As a result, we are seeing them turn to partners to deliver their core computing needs so they can focus their resources on more transformational initiatives and this a very positive trend for partners moving forward.”
This exclusive ARN Exchange in Melbourne and Sydney - in association with Dell EMC, Huawei, Juniper Networks, Lenovo and VMware - outlined the state of the data centre market, outlining key customer investment priorities and future opportunities for partners.