Cloud computing tipped to take off in 2010

Head in the clouds: VARs that embrace cloud services could win big

Cloud computing has dominated channel watchers’ predictions of what trends will take the IT industry by storm this year.

Market-watcher Gartner put the technology top of its 2010 list of IT offerings that have the “potential for significant impact on the enterprise in the next three years”.
Figures released by ISP Easynet Connect earlier this month show the number of SMEs using or planning to adopt cloud services has risen by 28 per cent over the past 12 months. Conversely, the number of businesses that claim they will never use cloud-based solutions has halved – from 53 per cent in
2008 to 27 per cent at the close of 2009.

The year of the cloud

Vincent Franceshini, chairman of the Storage Networking Industry Association’s (SNIA) Cloud Storage Initiative, said there are already signs that 2010 could be a watershed year.

“The impressive number of cloud-based startups financed by venture capitalists that are emerging and the money the big vendors are investing are all signs that something big is on the horizon,” explained Franceshini.

He also cited the increasing numbers of SMEs and enterprise-size customers adopting the technology as “encouraging”, but said VARs should be reinforcing the financial benefits of the solution to ensure uptake continues to climb.

This is a view shared by Andy Burton, chairman of the newly formed Cloud Industry Forum (CIF), an organisation concerned with the promotion of trust within the cloud sector.

Burton said: “Access to cash is a challenge for many businesses at the moment, so people are looking for solutions that do not require a big investment up front – one of the main selling points of the solution.”

The money-saving argument, added Burton, is a compelling one, but end-user concerns surrounding the security of cloud-stored data is a major barrier to widescale business uptake.

“The technology driving it has matured, but overall adoption is reliant on trust in the security of the cloud-based model and the ability of end users to determine whether a service provider can be relied on to look after their data,” explained Burton.

As IT decision-makers become more accustomed to the cloud proposition over time, security will become less of a concern for end users, believes Jeremy Wallis, UK systems engineering director at storage vendor NetApp.

He added: “People moving into positions of authority in the future will be members of the ‘Facebook generation’ that have grown up using the internet and will be more open to looking at ways of utilising its capabilities for their businesses.”

Business model
A bigger concern for service providers and their partners is establishing a business model and deciding what services they want to offer in the cloud, explained Wallis. “Service providers who figure out the answer early on are the ones who in five years or so will be very profitable,” he said.

John Malabon, marketing director at storage reseller Alpha, added that there are other technical difficulties service providers must address to convince end users of the validity of cloud-based solutions.

“Service providers will want a ‘one to many’ agreement, whereas customers may well require something more bespoke,” he said.

Subscribers will also want cloud to provide capacity on demand, said Malabon, so service providers will have to ensure the infrastructures they deploy can be scaled up to meet changes in storage demands.

Businesses may also have concerns over the ability of service providers to look after the infrastructure of the solution, said Paul Hickingbotham, solutions manager at storage distributor Hammer.

“Companies must consider if the UK in particular has sufficient infrastructure to support it, and also the future cost implications of being locked into a service,” he said.

Craig Nunes, vice president of marketing at storage vendor 3PAR, said VARs and service providers that manage to negotiate these challenges successfully will be best positioned to take advantage of the new channel “profit pools” that cloud will open up.

“2010 will be a defining year for cloud computing, making it an exciting time for the channel because it is creating a whole new industry that will create some very interesting opportunities for VARs who work out a good go-to-market strategy,” he said.