SIs must act fast to weather storm

Storm clouds: Ovum claims many firms fear cloud computing will "irrevocably alter the SI business as we know it"

Systems integrators (SIs) need to move fast to adapt their businesses as the rise of cloud computing threatens their traditional models, analyst Ovum has claimed.

Ovum claims widespread adoption of cloud services could negate the need for firms to turn to SIs for complex integration projects for internal IT infrastructures. The analyst noted that the market for cloud services is still fairly immature, but warns that SIs should be exploring cloud-centric revenue streams.

Ovum research director John Madden claimed many firms feared cloud computing would “irrevocably alter the SI business as we know it”.

“They have one eye on potential growth and one on the potential impact on their bottom line,” he said. “It might present an upswing for other business around services delivery. It is about playing a little bit of offence and a little bit of defence.”

Madden advised SIs to embrace a variety of vendors’ cloud ecosystems and to forge new revenue streams around outsourcing or consulting.

“It is still a relatively new market,” he said. “Customers are still getting a handle
on what it means. End users still have a pretty high level of confusion.”

Factors pushing channel firms towards cloud services include market demand and vendor strategies, claimed Ovum. But Madden added that uptake of cloud services had been slightly hampered by other factors, including excessive hype and budgetary restrictions.

“It is also a cultural shift,” he said. “There are compliance issues to consider and questions about what data you can put on the cloud. There is a certain level of control you may not be willing to give up.”

Madden picked out IBM as one of the most active vendors on the cloud front. Michael McCarthy, the vendor’s vice president of cloud computing, spoke earlier this month at the IP Expo event.

“The number one concern for customers considering cloud computing is security and, if you talk to a vendor about their cloud services, you should be asking them about security,” he said. “Most companies are more interested in a private cloud model than a public one.”

Speaking at the CRN Channel Conference earlier this month, SCH Group chief executive Sir Peter Rigby earmarked cloud services as a growth area and advised the channel to be prepared for change.

“I think SaaS is a good thing -­ it is radical. But, if the big boys will let the
technology trend unfold without playing King Canute, the notion of paying for what you use will take off,” he said.
cloud
“However, the opportunity it delivers will also force changes in the channel because the licensed software player will disappear. You have to have a solution spin on any business.”