Cloud Computing: Welcoming rain at harvest time

Tending the cloud seeds and nurturing early signs of growth will require channel partners to adopt new business models and skill sets. But the stage is now set for a considerable channel play in the cloud. TREVOR CLARKE reports.

Late last year, IDC came out with the view that 2009 was the year the cloud was seeded. A big call? Yes, as there were – and are – varying levels of understanding in the market and still significant hurdles to achieving a framework definition of the cloud computing trend. The rates of adoption in Australia, while improving, have also yet to hit top gear with many continuing to baulk at large-scale migration. But on the whole, the analyst firm’s view is one that continues to gain traction. There is little doubt the stage has been set for far greater cloud computing use in the coming months and years.

Ever since the economic downturn hit the headlines, IT departments have been stretched by having to continue to provide increasing functionality for line-of-business requests while also reducing costs.

According to IDC surveys, at the top of the priority list for Australian CIOs is spending less on servers and storage, followed by the postponing plans to build or redesign datacentres. The third top priority is investing in consolidation and virtualisation. These priorities, among others, are driving the growing interest in cloud computing. The top reasons CIOs like cloud computing is it is easy and fast to deploy. You also pay only for what you use while still gaining access to the latest functionality.

Already, there are several big players that have gone direct to market and made considerable ground in securing share of early adopters. Google, Salesforce.com, Amazon, Microsoft, EMC and more have all heavily pushed their respective solutions straight to the user with success. The email battles across Australia’s universities between Microsoft’s live@edu and Google’s gmail offering, where dozens of clients (many famous institutions) have opted for one side or the other in lucrative and very high-profile direct deals, is but one example.

Hey you, get off my cloud

As a result, and with some legitimacy, channel partners are wary of being left out of the blossoming cloud computing market, a point acknowledged by the vendors.

“As cloud is made up of compute resources plus network access, some of the bigger players do have better access to network resources,” Cisco datacentre practice manager, Dylan Morison, said. “However, clouds come in all different shapes and sizes – the key for smaller players will be differentiation and specialisation, to build their cloud to their strengths. For example, a channel partner with expertise in datacentre and applications could be very successful with a single application based cloud, something the larger players will not be as strong in. “

Clearly, most vendors involved in the cloud push have a financially vested interest in keeping the trend front-of-mind with their partners and continuing to promote its benefits. The opportunity to specialise is one angle often touted – and if you are a forward thinking business owner (i.e. your glass is half full), the argument should resonate.

“Rather than being wary, channel partners should look to their own business models and who they are partnering with, for opportunities to become ‘agents for the cloud’,” VMware partner director, Fred King, said. “There will be many opportunities to provide a vast range of cloud services – partners could consider white labelling and customising specific cloud services to address customers and industries that they have inherent strengths in servicing.”

Additionally, it is understandable that competing against major telecoms providers, which are increasingly revealing serious cloud intentions, like Telstra through its partnership with Microsoft, might be a daunting prospect, Novell technical specialist, Paul Kangro, said.

“In this scenario, it’s important to play to your strengths and offer services and processes that very large players will have trouble competing with,” he added. “For example, move quickly to respond to market needs and provide personalised, customised services for major clients.”

Providentially for the channel, there has been a notable shift in recent times in most of the big vendor approaches to accommodate the scale and innovative qualities a vibrant partner community can offer.

Last year, three out of the biggest four cloud computing players – Microsoft, Google and Salesforce.com (with Amazon making rounding out the list) – rolled out far-improved channel cloud programs since they first went to market.

In the US, Microsoft dropped its Windows Azure pricing, Google offered discounts on its Google Apps productivity suite, while Salesforce.com launched a program to attract value-added resellers (VARs). Fortunately, all this means the momentum is in the channel’s favour. The challenge now is to clear the hurdles to developing cloud solutions.

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Hurdle or pole vault?

For David Dixon, the director of Ozefax, which runs a cloud storage offering called OzeMozy on EMC’s Mozy platform, one of the biggest challenges lies in identifying the right cloud.

“We're not directly involved in 'developing' cloud-based solutions, however we do expend a great deal of time selecting a provider who we believe will deliver a high-quality service that our client database will find valuable for their own business operations,” Dixon said.

“One of the hurdles in this selection process is simply the growing number of providers who purport to offer a specific solution. We have the experience to be able to 'weed' out those services that would not 'cut' the bill for our own clients, thereby eliminating their research time and allowing them to continue focusing on their business operations. We inherently take on the support role and convey this information in simple terms.”

As is clear from Dixon’s approach, with relative immaturity in both the user and provider realms comes an opportunity to advise and derive consultative revenue.

Without a doubt, the biggest hurdle channel partners face is market maturity and trust, Microsoft developer and platform strategy director, Gianpaolo Carraro, said.

“However, momentum and time are on their side, as things are improving each day as more and more businesses begin to understand the cloud and gain confidence in working in this environment,” he said. “Early entrants to the cloud computing space are likely to sustain competitive advantage as the market matures.”

Ensuring this advantage is retained should not only be based on the initial advisory role and price. One of the key issues with cloud competition that often raises its head is the battle for customer loyalty through service level agreements (SLAs).

A promise of cloud computing is the ability for customers to easily and quickly change providers when they need or desire to. And while there are some barriers to this goal because of lock in and a lack of standards across cloud providers – for instance it is not that easy to migrate your data from one storage provider to another – there is considerable energy being put in to make it a reality.

As a result, many suggest the battle for cloud customers will not be over the kind of technology platform being used, but rather the service being offered.

“Building the right service involves understanding the needs of the market, while cost depends on the infrastructure deployed to deliver the service. The cheaper the architecture underpinning the service, the cheaper it can be offered,” Novell’s Kangro said.

“SLAs can also be used to compete in the marketplace. Offering better SLAs for the same service may prove more attractive to clients than cheaper prices. Managing your service to allow easy measurement of SLAs, as well as the inclusion of automated actions to ensure SLAs are met, will be a key differentiator for providers.”

An added challenge, however, is the internal changes that must take place and be accepted for those channel players used to getting their revenue from hardware and software licensing sales. These could even those already in a service or consulting operation. In short, the revenue model must change to a subscription based one, often just on a monthly basis.

"Traditionally, companies earn revenue based on a perpetual licence rather than an on-going subscription model,” Google partner and Devnet managing director Craig Deveson, said. “So while the customer acquisitions costs are the same, the reality is you're almost certainly going to make less money in that first year you transition to the subscription-based model."

A new set of skills

Like the changes in business model, cloud computing can demand a new set of skills within the workforce, particularly if the channel player is setting up their own infrastructure to use as a service platform. It’s also disruptive because of the Web-based realities of the cloud landscape.

“When you move to the cloud computing paradigm, you're working with Web-based technologies rather than the traditional desktop or client/server tools,” Devnet’s Deveson said. “The business challenge is to be able to keep training new staff in these ever-changing technologies and languages. Also, because you're revenue-per-customer is generally lower, you need to build a support infrastructure capable of managing more customers without increasing your staff numbers."

Managing the customers also means being able to provide the detailed ins and outs of the new service you are considering providing. For OzeMozy’s Dixon, this means stepping back from any ideas of being an “expert” for a moment.

“I guess this would involve stepping outside the 'developers' role, wearing a 'dummys hat' and start dissecting the application, beginning with 'Installation',” he said. “This is probably best achieved by offering free versions initially of your application to users, encouraging feedback and determining from those suggestions, which offer a nice balance between a wider benefit to the majority of users and commercial appeal.”

Whether you look to offer email, collaboration tools, storage, website hosting, customer relationship management (CRM), human resources solutions or any other kind of cloud offering, getting over the above hurdles should be a factor in any gameplan.

Some may continue to wince at the thought of cloud computing as a serious option in the ICT business landscape, but for those happy to take on the new challenge, now is the time to tender the seeds and nourish the shoots.

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Data security in the cloud?

Perhaps the biggest obstacle to cloud adoption is perceptions of data being insecure. Where is it? Who has access to it? What guarantees do I have it is not being leaked? What compliance obligations am I bound to? Does my provider comply themselves? And a host of other questions continue to stoke CIO and IT department apprehension. ARN asked four vendors and two resellers how to persuade clients that their data will be secure in the cloud. Here are their responses:

“Security of customer data in the cloud is exactly the same as security in the datacentre and for hosting, so the same rules apply, like segregation, encryption and access control.” - Cisco datacentre practice manager, Dylan Morison

“The most important thing a partner can do is speak to their existing customers and ask them exactly what they need and what their security requirements are – otherwise they are just guessing.

“Firstly, partners should ensure they are building and utilising cloud services and architectures from tried and trusted vendors. Secondly, they should consider the specific needs of the customer and industry they are targeting – are there industry standards that can be applied, where is the data residing, what are the capabilities of the firm managing the infrastructure.”

- VMware partner director, Fred King

“Ask customers how they are securing their data now. Often, it is a very rudimentary ‘under the desk’ type of scenario, with little or no disaster recovery plan in place to secure their data. Cloud computing is especially beneficial for small and medium customers, enabling them to much better manage their data in the cloud than they would be able to do themselves. Customers should undertake risk assessments before making a decision on where to put their data. If it’s highly sensitive, then it might make sense to keep it on-premise. If it the information is less sensitive, it could be better managed in the cloud.”

- Microsoft developer and platform strategy director, Gianpaolo Carraro

“Channel partners should persuade clients to start off small and scale up rather than trying to implement the broadest service first. Also, a strong reference program is a big asset. If clients want concessions in the negotiation phase, sign them up as reference customers. It’s much better to have other customers saying how happy they have been if channel partners are trying to persuade potential clients.” - Novell technical specialist, Paul Kangro

“Mozy provides a useful and informative document in this regard. We simply pass this on to potential clients who raise the question. When it comes to issues of security and privacy, it makes absolutely no sense for us to gloss or enhance the 'facts', however we will happily answer any questions [usually related to terminology] should they ask.”

- OzeMozy director, David Dixon

"Convincing clients that there data is safe is largely perception. The key issue is talking about datacentre certification such as SAS70." - Devnet managing director, Craig Deveson