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Channel Capitalizing on Data Center Outsourcing

By Khali Henderson
September 20, 2012 - Article

Growth in data volumes, consumerization of IT, virtualization and mobility are transforming business IT and putting new demands on the enterprise data center in terms of security and scalability, as two examples. Enterprises are finding that meeting those demands can require more specialized facilities and/or expertise than they have in-house. Research firm Computer Economics Inc. estimates data center outsourcing at 31 percent in 2011. Primarily on the strength of enterprise efforts to move to cloud models, research firm BroadGroup projects data center outsourcing will be 35 percent by 2015.

Third-party data center solutions span a continuum of colocation, hosting, managed services and cloud — each bringing their own value. Fortunately, businesses don't have to choose between them, but need to understand where each best fits. As trusted advisers, channel partners must be able to guide those decisions and make recommendations to meet customer needs today with a clear road map for the future.

To ascertain the indirect sales channel's current and projected sales activity with enterprise-class hosting options, Channel Partners conducted a survey of its readership in May 2012.

The Channel Partners survey sought to determine  partners' present revenue from selling hosting services as well as projected increases or decreases. In 2011, most respondents (45 percent) reported enterprise-class hosting services accounted for 10 percent or less of their annual revenue. Another 15 percent said it accounted for 11-20 percent. One-fourth noted percentages higher than 20 percent, but 15 percent logged none.

In 2012, channel partners predicted that an increasing portion of their revenue would come from enterprise-class hosting services. The percentage expecting more than 20 percent of their revenue from hosting increased from one in four to one in two (47 percent). The percentage of respondents allocating 10 percent or less  was reduced by more than half (21 percent) as was the number that expect no revenue from hosting (6 percent).

Channel partners reported selling the range of enterprise-class hosting services. Data center/colocation space was sold by the largest percentage — about three-fourths of the respondents — with negligible change expected year over year. Cloud hosting, with two-thirds of respondents, and managed hosting with more than half of respondents, were the second and third most-sold hosting services in both years — again with slight variances.

Cloud hosting (also called infrastructure as a service, or IaaS) includes several types private cloud, public cloud and hybrid cloud (combining both public and private). Survey respondents projected gains in all three subsegments, with hybrid clouds — the predominant modality delivered in 2011 — expected to increase 50 percent in 2012.

Interestingly, the basic hosting services — dedicated and virtual private — were not sold as often as managed or cloud. This could be a reflection of the degree of complexity in modern hosting requirements that more midsize business are outsourcing increasing functionality.


Get your copy of the Channel Partners report, "Enterprise Hosting & The Channel: State of the Market," from the Channel Partners Resource Center.

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