Partner Content: Exclusive CRN Research Reveals How Partnering With Open Source Can Boost Partner Profit Margins

Red Hat partnered with CRN to identify key cloud opportunities for channel players.

The pressing need to transform businesses into ones fit for the digital marketplace means that many businesses have moved on from early, cautious cloud exploration of SaaS for non-core business applications into far more enthusiastic adoption. Many have at least begun modernising their core business applications with large scale hybrid and/or multi-cloud deployments.

Plenty of obstacles to the greater agility the cloud should engender have had to be overcome and, in many cases, these continue to hinder digital initiatives. The technical difficulty and potential risks of migrating and integrating legacy applications, the acute shortage of cloud engineering skills and the omnipresent fear of breaching cyber security and compliance mandates loom large.

Businesses have traditionally overcome these barriers to change by consulting with cloud and managed service providers who can support the process of transition and help their customers overcome issues arising from the lack of standardisation and visibility across different cloud environments. But whilst the expansion of cloud markets still offers great commercial opportunity for cloud and managed service providers, margins have been squeezed by the twin infrastructure juggernauts of AWS and Azure. IaaS pricing is on a race to the bottom - and it's one that most cloud and managed service providers know very well that they won't win. How do they retain and grow their share of the cloud services market and protect their margins?

Red Hat have partnered with CRN to provide some answers to this question and explore the ways in which service partners can win and retain their customers in the hyperscale world.

The findings highlight substantial opportunities for service partners in several areas.

The first of these is hybrid and multicloud. This research shows that hybrid public/private cloud/on premise computing remains the most common approach, with complex, bespoke core applications still the most likely to remain in customer owned datacentres. However, more than two thirds of contributors told us that their use of multicloud computing was likely to increase in the next three years. Hybrid may remain the dominant model for some time - but multicloud instances will constitute a sharply increasing proportion of the mix. There are opportunities for cloud and managed service providers partnering with vendors offering platforms to manage and orchestrate this hybrid/multi cloud layer, and specialism and skills in multicloud.

A rich seam of opportunity can also be mined from PaaS. A clear majority of contributors had scaled up their use of PaaS in the last three years but were being held back by concerns about cost and perceived risk - as well as a more tangible shortage of expertise in microservices, containerisation and Kubernetes. What businesses want are partners to build and run platforms to enable them to get on with the development so they can bring applications to market sooner.

Hyperscalers are only too happy to engage directly with their customers, but many contributors to this research are engaging with hyperscalers via partners. Reasons given for doing so included a better understanding of their businesses, the ability to supplement technical and consultative skills, specialisation and personalisation of services. Businesses have concerns around hyperscale IaaS - and many remain reluctant to place all of their proverbial eggs in the one basket.

This report sets out how cloud and managed service providers can adapt their service propositions into ones fit for the future by combining these approaches to add value to their customers through every stage of their cloud transitions. Colin Fisher, Director, Cloud Service Providers, Red Hat EMEA explains. "By choosing vendors partners carefully, cloud and managed service providers can avoid competing directly in the race to the bottom for margins. They can add value to their customers by building open source platforms for the management of complex hybrid and multicloud infrastructure. By enabling their customers to modernise and manage their applications, they're building the foundations on which both they and their customers can compete."

Click here for the full report