NEXTDC Strategy Guide Opportunities for MSPs capable of delivering cloud value

Perception vs. Reality

With the SMB cloud market moving to maturity, the cloud conversation has evolved beyond hype as SMBs strategically assess cloud migration options. Based around lowered costs and increased flexibility, investments in cloud-based services are expected to grow considerably by 2018, according to a survey conducted by Gartner, highlighting the increasing significance of cloud to SMBs.

Within the coming months, SMBs plan to allocate more of their budgets to cloud as they become more open than their enterprise counterparts to purchasing public cloud offerings, even in business-critical areas such as business intelligence, customer relationship management (CRM) and enterprise resource planning (ERP).

As Gartner explains, the main driver is “a hurry to accelerate their business growth with the support of more advanced IT solutions” with cloud now acknowledged as a business accelerator and a cost-containment enabler.

When assessing perception vs. reality within an Australian cloud context, analysts are also united in the belief that for businesses below the enterprise threshold, cloud adoption barriers are eroding.

Such changing mindsets, coupled with technological advancements and the maturity of offerings now available, has widened the market for managed service providers (MSPs) in Australia, as cloud becomes an assessable and viable channel play.

“A year ago, Amazon Web Services, Microsoft Azure and IBM SoftLayer were viewed as unreliable and the enemy, now they are part of the offering,” says Cam Wayland, Co-founder and Director, Channel Dynamics.

“Part of that has been through investing in a local data centre infrastructure.”

In sharing many cloud adoption characteristics with large enterprises, Wayland believes SMBs are responding to vendor demonstrations of cloud maturity through improved performance reliability and sovereignty credentials.

“Public Cloud is very much part of the offering of most MSPs,” Wayland adds. “Resellers are a reflection of what the client wants and these are the things they are asking for.

“The real money is in the institutional intelligence and how you bring all these things together and make it work for the client within your infrastructure.

“The tools that are available and the automation that is now needed to make it work is the real value add.”

Adding weight to Wayland’s theory, fellow analyst firm Telsyte forecasts the total market value for Public Cloud infrastructure services in Australia to reach $775 million by 2019, up from $366 million in 2015.

Consequently, market opportunities are opening for partners capable of delivering cloud value to SMBs, chiefly through cloud, mobility and security services.

Infrastructure as a Service provider Cloud Plus continues to excel, building on the company’s 147 percent revenue increase during FY15. CEO Jules Rumsey describes how trust is a central factor in the move to hybrid cloud: many SMEs, corporations and government agencies making the transition from on-premise hosting within their own facilities to hosted cloud computing have major concerns about performance, availability, security and data loss.

“We believe the market will see significant growth in the managed services space over the next couple of years,”

Hugh Ujhazy, Vice President of Australia Research, IDC.

As awareness of cloud services grows among SMBs, IDC Vice President of Australia Research, Hugh Ujhazy believes market value can be derived from Australian MSPs building a strategic cloud business.

“But it will be tempered by depreciation cycles,” he advises, “and the need to find a seasoned partner that can actually do these things and has the experience to bring value.”

Why are SMBs moving to the cloud?

Cost reduction

Billed as the key advantage across the industry, the pricing flexibility and ‘pay as you go’ approach to cloud consumption - based on demand - is proving a strong drawcard for SMBs.

In addition, cloud eliminates the need for SMBs to replace capital expenditures on a regular basis, avoiding spend on associated hardware, software or licensing fees.

Increased flexibility

Cloud computing allows SMB employees to be more flexible - both in and out of the workplace.

The rising tide of collaboration tools available in the cloud - such as Office 365 and Google for Work - allow SMBs access information from anywhere, creating equality between smaller companies and larger enterprise firms in terms of how they access company data and files.

Growth, agility and speed

By removing the need to focus on constant server updates, hardware replacement, software updates, and other computing issues, SMBs can now focus on the broader company goals.

In providing greater speed, agility and scale, cloud computing is proving a viable alternative for SMBs striving to adapt to the changing business demands.