Room for channel in the cloud?

Cloud battleground: Increasing numbers of offerings from virtualisation vendors have seen competition heat up in the cloud hosting market

Cloud computing has been around for a while, but as more virtualisation vendors launch cloud service offerings, the cloud hosting and managed service provider market has become a battlefield for channel players.

Businesses are catching on fast to the benefits of cloud hosting as the downturn bites. Worldwide IT spending on cloud services will grow almost threefold, reaching $42bn (£25.6bn) by 2012, according to market watcher IDC.

But with the likes of Microsoft, Google Apps and Salesforce.com bursting onto the scene, competition is rife and the middleman can find himself being pushed out as more vendors take business direct.

The hosted cloud

Cloud computing is where scalable IT-enabled capabilities are provided as a service to customers using internet technologies. Hosted clouds are dedicated pools of resources managed by a service provider.

A number of resellers and managed service providers are carving out a selling point to differentiate themselves from big vendors that offer cloud services. They are focusing on eliminating the need to maintain an IT infrastructure, freeing up more time for IT managers to manage applications.

John Woolley, sales director at managed service provider Atlanta Technology, said customers want to make their own decisions about what applications to run and where to run them.

“We provide and maintain the infrastructure so the customer does not have to worry,” he said.

“Why would a company want to pay for infrastructure when it is the applications that are the value to their business? We act as a back-office network and can offer better technologies, which customers may not have had the budget to purchase themselves. Businesses are keen to hang on to any cash they have.”

Woolley said IT managers often feel threatened by the fact that a third party is eliminating the need for an on-premise IT infrastructure, so it is important to stress how they will have more time to realign themselves with the company’s applications.

Resellers can choose to work with Atlanta via a wholesale, referral, or resale partnership. Recently launching a formalised partner programme, Atlanta has already signed up VARs Fabric Technologies and Exponential-E.

Gary Collins, chief information officer at virtualisation reseller Intercept IT, agrees that cloud hosting allows firms to do what they do best by focusing on business workflow ­ a great selling point for the channel.

“We are not looking to make IT managers redundant but to free up their time for other duties,” he said. “At Intercept, we can run the server lines and the applications ­ we are a utility service.”

Technology gathering clouds

Collins said that when Intercept opened its two data centres in 2002 ­ in London and Milton Keynes ­ the market was still in its infancy. “The channel and customers were not ready for cloud services back then,” he said, “but over the past 18 months we have revamped our architecture in datacentres due to increasing interest. More customers with on-premise IT are looking towards the cloud.

“We are launching a new service called Online Desktop Standard in a few weeks and our current Online Desktop Service will be rebranded to Online Enterprise ­ resellers are already signing up for this service.”

Simon Kelson, managing director of Atlanta Technology, said the reseller has two datacentres in case of a failure.

“Atlanta hosts in the first datacentre and replicates the data in the second for disaster recovery,” he said. “Our three-year agreements make contracts stickier for us, so we have to keep our technology up-to-date to differentiate ourselves from the competition. We have just added a technology from Compellent to our data centre and aim to migrate servers and storage over 10kms ­ this technology is on Compellent’s roadmap.”

John Rollason, product marketing manager of EMEA at storage vendor NetApp, said there are two key factors behind increased uptake in cloud computing.

“First, in the current market, firms have limited funds to invest in IT. There is an increasing pressure to ‘do more with less’, he said.

“Second, virtualisation has become a mature and trusted way of delivering IT. The need to reduce expenditure, combined with the ability to build virtualised infrastructures, makes cloud the perfect option.”

Dominic Monkhouse, UK managing director of online IT hosting provider PEER 1, said that despite cloud computing being hailed as the future of IT, it has its downfalls, so it is important for the reseller to make things clear for the customer.

“A big problem is that there is no accepted definition of ‘the cloud’. Is it a technology or a business model? Is the internet the cloud? Is the cloud a content delivery network, or is it a virtual storage and server park? There is no definitive answer to these questions, which makes it difficult for businesses to decide whether the cloud is right for them,” he said.

“The thing to remember about cloud is that, like any IT advancement, it is still in its infancy. Despite benefits such as reduced costs and increased mobility, cloud is not the panacea it is being hyped as.”