Attendees (left to right): James Leitch (Optus),
Timothy Otton (Telstra); George Kazangi (Blue Central), Michael Diaz (Veeam), Steve Martin (NEXTDC), Jennifer O’Brien (ARN), Craig Somerville (The Somerville Group), Hafizah Osman (ARN), David Hanrahan (Dimension Data), Scott Atkinson (BigAir), Moheb Moses (Channel Dynamics), Philip Meyer (Microsoft), Stephen Parker (Rhipe), Jules Rumsey (Cloud Plus), Yoni Kirsh (Fastrack Technology)

To survive in today’s current economic climate, where short time-to-market and efficiency are paramount for the delivery of innovative products and services, companies need to build the Cloud of the future and enable a next-generation datacentre.

Cloud computing is a disruptive phenomenon with the potential to make IT organisations more responsive than ever. It is changing the way services are built, provided and consumed. It promises economic advantages, speed agility, flexibility, infinite elasticity and innovation – and it is deeply impacting the datacentre.

The datacentre is the engine room and pivotal to how it performs, how it scales and how profitable it is. Next-generation datacentres have a central role in helping customers keep their risks to a minimum, the support network tighter and reduce costs.

And everybody wants to talk about it. As such, a select group of visionary and forward-thinking attendees gathered on a rainy, blustery day in Sydney to discuss the transition to the Cloud, the datacentre of the future, and how the channel is managing customers and solution selling in the age of these disruptive technologies.

Certainly, the thought-leaders had lots to say about the diverse views in the world of Cloud. They were keen to discuss the Cloud evolution, determine the local opportunities and how the channel can better deliver customised, customer-focused, hybrid solutions-based tangible outcomes.

The datacentre itself is transforming and changing, becoming more of a ‘datacentre ecosystem’ that is being procured by organisations that are using a mix of colocation, Cloud services and on-premise. There’s no question that IT services will dominate the way people work and live in the future. JENNIFER O’BRIEN reports.

This roundtable was sponsored by NEXTDC

Evolving Cloud story

Building the Cloud of the future and a next-generation datacentre was a hot topic amongst the industry experts, who all shared insights in the area of value added services and the future of the Australian channel.

NEXTDC general manager, national channel sales and NSW sales, Steve Martin, said he was always keen to hear the diverse views of what is going on in the world of Cloud and its relationship with the datacentre. He said the Cloud story was a broad one. “I believe the reality of multiple Clouds being connected together to deliver customer outcomes, combined with legacy technologies and how we’re looking to manage all of IT for our customers – not just the Cloud One or the Cloud Two or the Cloud Three products – means it’s a broader story.”

And NEXTDC knows a thing or two about leading market trends and keeping on top of customer needs. Martin said the company’s Australia-wide network of Cloud-enabled enterprise class datacentres house a company’s critical IT infrastructure, redefining the datacentre-as-a-service (DCaaS) market. Indeed, the datacentre market has transitioned over the past year, attendees agreed. Partners at the table were eager to discuss the impact of Cloud and how partners need to embrace change in the age of Cloud computing and next-generation datacentres.

Dimension Data general manager, Cloud, David Hanrahan, who is responsible for the Cloud go-to-market and also the datacentre practice, said he’s seen enormous changes over the last 12 months. Organisations need to re-evaluate the amount of datacentre space they need. Many are realising they have over-planned their requirements and that, by taking advantage of the Cloud, can reduce their datacentre footprints by up to 50 per cent.

“We’ve seen the market over the last 12 months start to move to large-scale migration on a small scale, particularly public sector and education. I’m interested to understand how people are coping with that transition and the sorts of services that they’re doing because it’s quite challenging when you start moving out of existing on-premise datacentres to all in the Cloud.”

Channel Dynamics director, Moheb Moses, agreed many companies are going through challenges in the transition to the Cloud. “The big question is, ‘How do we transition to the Cloud and what does that mean for either our own companies or our partners?” Moses asked. He said some top transition considerations include doing a customer analysis and determining what the customers actually want. Then consider the strategic play, do partners resell the Cloud, build or collaborate. Additionally, understand the business model and determine the new revenue streams and what disappears.

Indeed, dealing with the latest disruptive technologies is multi-layered, according to Telstra general manager Cloud strategy and platforms, Timothy Otton, who is responsible for the Cloud strategy as well as the product portfolio management for the company’s platform and SaaS offerings.

“Telstra is moving away a little from building Cloud services to being an enabler. I’m interested to hear how others are adding value around Cloud services as well and really that’s not entirely Cloud but really hybrid IT. Because it’s not all Cloud.”

Optus senior product, business manager for enterprise IT, James Leitch agreed, saying there’s a big demand for hybrid IT. “It solves a lot of problems around legacy and helps customers move to Cloud services,” he said. The company’s Cloud and datacentre solutions are helping companies develop faster, more agile technology services, which is what customers are demanding, he added.

Customers are keen to go on the transitory walk towards the Cloud, according to Yoni Kirsh, managing director of Fastrack Technology, a datacentre network and infrastructure provider.

“With my customers at the moment there is a very strong focus on taking specific parts of their IT infrastructure requirements and moving them to various Cloud providers. We work very closely with Microsoft Office 365 and Azure platform and we’re seeing a lot of uptake there. We’re very interested in enabling our customers to have smooth transitions, which includes connectivity and integration with those different platforms, whether it’s at a network level, a security level or identity level.”

Hybrid Cloud services are picking up with customers, according to Microsoft Australia partner technology strategist, hosting, Philip Meyer, who said other factors come into play. “Security and issues with respect to data sovereignty, compliance issues, covenants, and where companies see themselves in terms of risk of working with overseas partners versus domestic partners are other considerations.”

Time of Transition

Meyer, who assists hosters and service providers build cost effective and efficient Cloud hosted services, said there are some interesting market shifts and trends taking shape as the industry transitions to the Cloud and next-generation datacentres.

“To my mind it is high levels of automation and self-service. Customer self-service which is to me a big factor in defining the word Cloud. So where have we come from? We’ve come from the days of Generation One, engineers standing up racks and stacks and wiring those things and waiting days for delivery of hardware,” Meyer said.

“Now customers, very much young people, want instant gratification. They want to be able to consume services immediately just like they can sign on and get a Facebook post; they want to be able to get a server, they want to get a network connection in that same vein. So that’s jumping a lot in between, but from those raw days of Gen 1 to where we are now with Gen 4, if you will, in datacentre models, it’s about automation and self-service.” Meyer described the Cloud walk as having entered the business phase.

“Cloud One was engineering-led, Cloud Two is business-led. So business is now deciding what, when and how, and it’s not disruptive anymore, it’s much more a part of my world, and this is Cloud.”

Telstra’s Otton agreed, saying customers have matured and are now willing to talk about business outcomes. He said there’s a huge amount of transformation in terms of customer expectations, and a growing realisation that Cloud offers great freedom and enablement.

“A lot of our customers want a consumption model that’s aligned, which is in line with what they’re receiving, both from an availability perspective but also from a cost perspective. A lot of customers are seeking a line to an outcome. Interestingly, people are using it as an underpinning factor for some transformation in their own business. If IT used to hold me back, now that the IT reins have been loosened, the question becomes ‘what can I really do now that I have this at my fingertips, and how do I get the most out of it?’”

New seat of power

And while evolution is taking place at the customer level, it is also happening at the purchasing and decision-making level with buying power and decision-making shifting from the IT department.

Dimension Data’s Hanrahan said the buyer of services has changed and this poses some real challenges.

“When IT was buying these services they knew to ask about the operating model and the interactions and network connectivity at the security. When the business is buying an application they think they’re getting business outcome, but they haven’t thought about the operations model. And the promise of the Cloud broker sounds great – a bit of this and a bit of that and we’ll bring it all altogether – but without a brokerage service and without it changing the operations layer underneath, you often quickly find that things that have been bought by the line of business become IT’s problem 12 months later or as they start to run into issues.”

He said the new power people are often the C-levels, who bypass IT because the provisioning times are too long.

Cloud Plus founder and CEO, Jules Rumsey, said the growing problem with confusion amongst buyers is a challenge across the board, whether dealing with SME or the enterprise.

“The fundamental challenge is the same regardless of whether you’re talking SME or enterprise. You’ve got uneducated buyers basically weighing in on purchasing decisions on things that they are just not qualified to make that decision on.

“They still need to have IT’s involvement, they need to go out and embrace people that can provide advice in terms of the different widgets they’re trying to put together and how that’s going to work and the challenges they’re going to face, things like security, things like back up, who’s going to maintain it? What’s the support model? What sort of SLAs are they going to get?

“When people go out and buy an application or they go and buy a bunch of virtual machines sitting in the Cloud somewhere without understanding how it fits into the rest of the architecture, that is dangerous.”

Fastrack Technology’s Kirsh said with the power moving away from IT, the end result meant it required the partner to be skilled up on achieving business outcomes for customers – and being able to offer customised solutions-based tangible outcomes is essential.

“With the decision points moving further away from the technical people, I’m definitely seeing more requirement to actually be solutioning for our customers as opposed to saying, ‘I can sell you rack space, I can sell you a server, I can sell you a virtual machine, I can sell you a network connection,’ he said. “Now it’s ‘you need to achieve this outcome; here are these six pieces that we need to put together to actually give you a solution’.”

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Deliver an outcome

NEXTDC’s Martin reiterated the importance of delivering an outcome. There’s no question that the business outcomes of a project justify the commitment of resources and provide a key focus for project design and delivery.

IT is under increasing pressure to innovate and deliver better business results, Martin said, adding the partner is in an ideal position to help customers understand how IT solutions can directly support the company’s business initiatives.

“Getting the visibility about what’s happening in IT, what’s happening in sales, what’s happening in marketing, what’s happening in production, and if you can play that role as a service provider, as an integrator to really feed back to the customer what all their needs are across multiple points of their business, then you’re in a very good position to win.

“The downside to that is it costs you a lot of money to engage at that level of detail with the customer to get to a point where you can actually earn some money back from it.”

Indeed, becoming more effective at delivering an outcome is a worthy pursuit for service providers, who need to help customers stay focused on business priorities, according to BigAir Group CTO Cloud and managed services, Scott Atkinson.

“If a customer is a manufacturing business, they don’t want to know that they can go click, click and speed up their virtual machine [VM]. We want them focused on manufacturing their widget, not on how to make their VM run faster. The outcome for them is our business application running and delivering the SLA so that they can focus on their business. With automation and integration, which becomes our issue, is how do we make the business run a lot more effectively so we can deliver a more efficient outcome to our customers.”

Atkinson said the industry needs to think in terms of overall business transformation – and not just focus on Cloud alone.

“We’re seeing a bit of a movement away from Cloud as a raw tool – it is something you can use to form part of an outcome. It’s not just the magic bullet that solves all problems. A lot of customers have had a positive experience and it’s worked out, but it’s not everything to everyone. Looking at the business outcome is a trend where we decide how we’re going to achieve value rather than just presenting a product in a different form.” Determining a business outcome is key at any level, according to Optus’ Leitch, who said customers are keen to get the outcome – even at the application level.

“There’s been this leapfrog from what was infrastructure. We don’t bypass the automation because automation is absolutely crucial, but in some respects we’re finding customers expect that all the automation would have already been put in place, all the integration would have already been put in place. Customers are actually now looking at the business outcome at the application level. There’s just been a massive shift literally in the last six months, which is now our problem.”

Dealing with a customer’s high expectations about the Cloud can also be a challenge, according to rhipe vice-president of market research, Stephen Parker, who is on a mission to help businesses find their Cloud story.

“We’ve not actually caught up under the covers to be able to live with the expectations that we’ve now very cleverly set with our customers. Expectations like ‘you’ll be able to do this instantly, you’ll be able to turn it on, you’ll be able to fire up Cloudburst; instantly servers will appear anywhere in the world, and bill instantly in unique and incredible ways’ and the customer goes, ‘I’ll have that.’ That isn’t necessarily reality.”

Innovation is key

But there is no doubt Cloud computing is helping companies implement business process change and find new ways to engage customers. And while the technology was initially adopted for efficiency and cost savings, it is now emerging as a powerhouse of innovation.

NEXTDC’s Martin said Cloud is levelling the playing field with smaller players, in particular, and helping them to innovate, letting them reinvent how services are delivered to the organisation. But innovation is having a major impact across the board from the large enterprise down to the smaller fish in the sea.

“One of the clearest things that Cloud delivers to businesses today is the ability to innovate at 10 times the speed that they’ve been able to innovate previously,” Martin said, explaining how businesses that have managed to take advantage of Cloud computing’s ability to create innovation have transformed their IT from a cost centre to a strategic department. New business opportunities and new revenue streams are the end result.

“Cloud can give businesses massive scalability and innovation. As you bring it down into the business, it can take away costs, and enables them to do things differently. Thanks to innovation there’s a very strong play for customers to go and do things that they’ve never done before.”

In addition to innovation, Telstra’s Otton said customers are thinking about the disruptive nature of Cloud more in terms of right sourcing, which means getting the right workload where it matters.

“Cloud is not the answer for everything – it’s about right sourcing across a number of options to the customer; make sure you hit the parameters for security, performance, integration or whatever. I don’t think a lot of this is about Cloud, it’s partly about Cloud but it’s partly about the new expectations of customers, who say, ‘I want a consumption model, I don’t want to have to pay upfront with a long lead-time and then the thing might not even work anyway.’ It’s about certainty of delivery, more flexible commercial models. These are the things that customers are actually pushing more broadly for, not just into what we call Cloud,” he said.

Otton said the most exciting aspect of Cloud today is how it fits into other disruptive technologies – or the 3rd platform – that is transforming the datacentre and the very face of business. He said the industry is transitioning to the 3rd platform for innovation and growth, which is built on the technology pillars of mobile computing, Cloud services, Big Data and analytics, and social networking.

“The thing I get excited about is where Cloud fits into what everyone is calling the nexus of forces or the third platform. It’s mobility, it’s Big Data, it’s open systems and API interfaces,” he said. “It’s creating this new platform for innovation that I think is what we should be selling our customers. This is all coming together. It’s not about Cloud, it’s about the way Cloud works with all of these other things. And they’re mutually reinforcing. I think you can safely say that these are the key trends for the next platform. I think it’s indisputable.”

Cloud Plus’ Rumsey said he recognises the journey to the Cloud is a progressive one, and as such the company, which is a provider of private Cloud solutions in A/NZ, maps out a step-wise approach to best meet the needs of the client and make the transition as pain free as possible. He said channel salespeople often don’t know how to qualify opportunities with clients correctly.

“They will have a particular focal area that they wanted to talk to a client about and they’ll just put their blinkers on and that’s what they’re looking at. They don’t see the wood for the trees. If they open the conversation up and start going through some key points with clients, all of a sudden, they uncover an opportunity that might be 10 or 20 times bigger than anything that they were looking at with the client previously.”

Big obstacles

The Somerville Group managing director, Craig Somerville, agreed there are big obstacles to selling these disruptive technologies – even experienced salespeople aren’t 100 per cent skilled up in peddling Cloud services (properly articulating to the customer what’s in the contract) – and/or moving the datacentre to a hybrid model.

“Anyone with real workloads will live in a hybrid space. And as organisations in the channel, we need to be able to identify it, see it, deploy it, deliver it, manage it and then wrap Ts and Cs around it. And that’s going to be the biggest challenge,” Somerville said.

“If you provide a Cloud security platform, what’s in and what’s out? What happens when there’s an infection and it’s all hands on deck. Is that in the contract? Is that not in the contract? These are the realities of deploying these Cloud services and having that clearly articulated to the customer.” The fact that many of the enterprise customers are sourcing services from multiple players is a challenge, added Optus’ Leitch.

“You’ve got multiple department groups in organisations now sourcing services, previously the IT group would attract the spend, but now these organisations effectively have lost control because everybody is buying anything and everything for anybody and there is no aggregation point. So from a sales perspective, as a supplier if you’re selling to a customer, how do you know what they want or how can you target what they want effectively because you don’t have that single aggregation point anymore.” But Microsoft’s Meyer said this is a golden opportunity for partners to make sense of it all.

“What an opportunity though. If you’ve got all of these shadow IT’s occurring and they’re occurring in businesses and you’ve got an entity such as a little partner out there today, you can say, ‘Okay you’ve done that shadow IT Salesforce investment, you’ve done that thing out of there with Office 365 and you’ve got a bit of services from one of you guys in the room, let me bring all that together for you.’”

Certainly, the end pursuit is to offer IT services that are easy to obtain, uniform, plentiful and affordable – much like what consumers get with their electricity and water services.

“IT needs to become a consumable commoditised service just like electricity,” explains NEXTDC’s Martin, who said the vision is to offer IT as a utility. “With IT, we all still care about how the technology gets to my screen. We’re all still stuck in the technology, how to get the CPUs, how to get the network. But the 95 per cent of people in this world that are not in IT don’t care. And Cloud is one of the first key developments in this industry that is getting us to that point where the consumer doesn’t care.

"We, as an industry, have to deliver outcomes and services where it’s purely the IT outcome and all the other stuff that goes in under the covers doesn’t matter.”

Looking to the future, Veeam regional Cloud manager A/NZ, Michael Diaz, said, “More and more businesses are moving to public and adopting a hybrid Cloud strategy as it becomes a more viable alternative, especially with the offerings available from Microsoft Azure and VMware vCloud Air. Through our tight integration with our alliance partners, we are able to deliver solutions that help our partners extend their business models and deliver the promise of hybridCloud – helping customers easily transition to the Cloud.

“The opportunity is there for the resellers to become service providers, and to open up an additional revenue stream. We aim to help enable our channel partners to become trusted advisors to their customers, who are looking at public or hybrid Cloud strategies.”

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Ups and downs

While the hot business trend is to provide a customer with a business outcome – as opposed to simply delivering components – there are some challenges with it.

BlueCentral managing director, George Kazangi, said there are big challenges with playing the outcomes game. Blue Central offers a range of IT and Cloud services and has experience in extending a customer’s datacentre.

“The problem with outcomes-based is it’s no longer the IT buyer. You’ve now got budgets that come out of sales or marketing, and they have got a different driver. They have a different outcome.”

To make matters worse, Kazangi said many of the C-level executives (CMOs and CSOs for example) don’t care about the datacentre considerations and whether they choose a private, public or hybrid Cloud, and also don’t pay attention to the security or licensing aspects, which are crucial elements to consider.

“Most CMOs and CSOs and all those C-level executives don’t care. They don’t ask the question, they just care about the outcome. And that is probably the hardest thing to deal with.”

But Cloud Plus’ Jules Rumsey said this lack of knowledge in certain areas signals an opportunity for the channel.

“This is where the channel is so important because you can have people like us who are largely infrastructure players and then you have a systems integrator who’s been looking holistically at a client’s business and they might have a whole lot of skills in terms of specific applications and how to integrate them and have deep understanding of the clients needs. So working together you can deliver that a lot more effectively than a single company trying to do everything.”

Channel Dynamics’ Moheb Moses said the changing face of the buyer, with power often going to the marketing and HR departments, is an interesting challenge for the channel.

“A lot of the sales people and the partners that I deal with are exceptional at selling to IT, but they actually don’t know what a marketing person wants as an outcome. They don’t understand metrics about sales, lead conversion and so on. You mention that to the average rep and they look at you and blink. You talk to their sales rep about staff retention and all that and they don’t understand those things because they know how to sell to IT. That is a clear challenge for the partners who now we believe are responsible for delivering these outcomes. A lot of these partners actually don’t have the skills or knowledge to deliver on a business outcome.”

Consensus among attendees was that the partner community has no choice: they have to embrace change and learn the necessary skill set to be able to deliver business outcomes for customers.

With Cloud and the datacentre entering the next phase of evolution and embracing the 3rd-platform technologies, partners need to embrace a whole new set of skills. With companies running out of datacentre space and encountering power and cooling issues, it’s extremely important for datacentre leaders to be educated in areas such as facilities.

Indeed, partners are required to be a jack-of-all-trades and have a mix of IT, facilities and security management expertise. In a datacentre, in particular, everything comes together and you have networking, facilities, business units, security and storage.

The big hybrid push

In Australia, the hybrid Cloud model, where an organisation provides and manages some resources in-house and has others provided externally, has proved very popular. Gartner proposes that 50 per cent of enterprises will have hybrid Clouds by 2017.

Dimension Data’s David Hanrahan said enterprise, public sector and finance are the main players moving toward a hybrid Cloud model - whereas the smaller players are holding back and opting for colocation and managed services.

“I think to get to hybrid Cloud right down to the small/medium place, they probably want to put it all somewhere; they don’t want to end up split. Enterprise is happy to deal with the fact that they’ve got complexity. But smaller scale people are looking for some form of, ‘Can I just buy it all from you?’”

Microsoft’s Philip Meyer agreed, saying hybrid makes perfect sense for the top end of town. He said the hybrid Cloud story enables companies to get the best of both worlds. Why choose between your datacentre and the Cloud when a hybrid Cloud solution gives you both, he added.

“The hybrid Cloud definitely is that enterprise model - what’s the most economic place, who’s going to give me the choice about domestic in place,” he said. “Partners need to learn how to articulate the story in an enterprise sale. In the same vein, they’re going to have to support the small business, who is going to move it all to the Cloud.”

Cloud and colocation story

Enterprises don’t have to choose colocation or Cloud. It’s now about colocation and Cloud services coexisting so IT can evolve, according to industry analysts.

NEXTDC’s Martin agreed, saying Cloud and colocation work in partnership with each other.

“NEXTDC is in a very lucky and privileged position in that we get to see a little bit of all of your businesses and we understand or have a very, very high level understanding of what your business is doing, what everyone is doing in the marketplace,” he said.

He explained the breakdown of where compute resides today, how hybrid Cloud is a popular choice, and where co-location fits into the story.

“Approximately 15 per cent of a customer’s compute is going to be in the public Cloud, around 35 per cent of a customer’s compute is going to be in the private Cloud, and the remaining 50 per cent of compute is still going to be proprietary or in-house. And so that is hybrid. That is hybrid through and through. That is the raw core definition.

"Customers want to locate their proprietary in-house stuff as close as they can to their public and their private stuff so that they can deliver all of their IT requirements in as consistent a fashion as possible,” he said.

“So NEXTDC very clearly sees that Cloud plus co-location is the future for at least the next three to five years across the vast majority of customers mid-market and above. And I know there are many small businesses that will go all in on the Cloud and the statistics change on every type of organisation, but at a very high level those numbers align to what other people are seeing in the marketplace. So the organisations and the resellers, the channel that is able to talk the whole story is able to integrate a public Cloud piece with a private Cloud build and continue to manage the proprietary stuff that’s not going through anybody’s Cloud anytime soon. That’s the real strategy for winning.”