Partners Best Bets for Cloud Services

By Charlene O’Hanlon

The cloud space is rife with opportunity for channel partners looking to extend their services quickly and with little overhead cost. But cloud services comprise many technologies and many services, and for some solution providers, finding those opportunities can be akin to finding a needle in a haystack.

When deciding which cloud services to offer, it helps to put the technology into perspective, said Amy Larsen DeCarlo, principal analyst at Current Analysis. We view the cloud as an evolution of things that have been happening for a long time,” she said. SaaS elements have been around for a number of years, and the same with hosted exchange model. Now the cloud is simply combining things that were not readily available in the past.”

What has changed, she said, is the way the resources are being utilized. Some of the underlying technology may not have changed at all, but the control users have through the portal is whats changing,” DeCarlo said. There have also been advances in utilization and bandwidth. That was one of the things that happened with the ASP model (a precursor to cloud services) it was a good idea but the underlying technology couldnt keep up.”

Now that the technology has matured to the point where cloud computing is a viable business model, channel partners have more opportunity than ever to expand their offerings. And the number of hosting providers offering services in the cloud, which require no back-end infrastructure and therefore speed the time to market dramatically, is growing exponentially.

However, when deciding what services to offer through the cloud, DeCarlo said solution providers need to stick with choices in areas where they feel comfortable. A solution provider that is already established should stay within some degree of their comfort zone. If theyre not in storage, they shouldnt look at it.” Instead, she said, choose complementary services to create a robust and synergistic product offering.

For many data-focused channel partners, that can mean adding communications in the cloud to position themselves well in the burgeoning convergence space. For telecom-focused channel partners, that can mean dipping their toes into IT by adding disaster recovery/business continuity a service that aligns well with many companies communications needs.

Indeed, the cloud lends itself well to a number of services, all of which can make a channel partner money if the service is positioned well and handled correctly. Software as a service, storage, security and telecommunications, in particular, all have reached the point of maturity where a savvy and diligent channel partner can add one or more of these offerings without fear of utter failure, if the offerings are in harmony with the rest of its core business.

Software as a Service. Perhaps the first offering in the cloud, SaaS first gained a foothold when companies including and NetSuite Inc. recognized that potential customers would be more amenable to renting” their services on a subscription basis rather than paying for the hardware and the accompanying enterprise licenses. Google Inc. quickly jumped into the space, followed by Microsoft Corp. and a whole host of other vendors eager to move to a subscription model.

Because of the success of the SaaS model, channel partners have an almost unlimited choice of offerings for their customers, from workforce management and productivity applications to human resource management, customer relationship management, analytics and more.

And that market is growing. According to research firm IDC, the SaaS market reaped worldwide revenues of $13.1 billion in 2009 and is expected to reach $40.5 billion by 2014. The firm also forecasted that by 2012, nearly 85 percent of software firms coming to market will be built around SaaS service composition and delivery, and by 2014, about 65 percent of new products from established ISVs will be delivered as SaaS services.

Storage. While not considered one of the easier technologies to manage, even as a hardware-based solution, storage can be a lucrative option for solution providers willing to take on the challenge. In particular, subsets of storage such as disaster recovery/business continuity can almost sell themselves.

There are a lot of things a solution provider could look at in terms of disaster recovery,” DeCarlo said. That is something every company should have, and its a customer-facing service where solution providers would just be looking at the delivery of the service.” In other words, solution providers could simply resell a cloud service providers BC/DR service, eliminating the need for hardware and the deep technical expertise that an on-premises solution would require.

A number of vendors have flooded the BC/DR space with cloud offerings for those channel partners that do decide to build out an infrastructure, including Lawson Software, IBM Corp. and i365, to name a few. Some are software-based solutions that load onto existing servers, while others require dedicated hardware. Either way, offering cloud-based disaster recovery without going through a hosting provider is a complex undertaking and takes a certain level of technical expertise.

Still, storage in the cloud is a growing market and one worth considering, especially for vertical markets that utilize large amounts of storage. Health care, financial and legal vertical clients in particular have a need for large amounts of storage, due to regulatory compliance requirements.

Security. As cloud services become more pervasive, security issues will continue to loom large. A recent survey by security vendor Fortify Software Inc. revealed that enterprises see a significant security risk in the cloud. In fact, 96 percent of the 100 respondents said they believe the cloud opens up more hacking opportunities, while 89 percent said cloud vendors arent doing enough to address cybersecurity issues. That translates to a major opportunity for channel partners as they look to cloud services.

Rather than looking at security as a separate cloud service although there are plenty of offerings available from a plethora of security vendors channel partners should focus on ensuring the cloud services they offer are locked down tight. To ensure they dont introduce security issues with their cloud offerings, channel partners should make sure their cloud service provider or vendor has certain provisions in place, including periodic risk assessments and up-to-date service level agreements.

Sean Bruton, director of security at hosting provider NeoSpire Inc., said security should be a top priority when looking at cloud-based offerings, and channel partners should do all they can to ensure security is top-notch. The old school stuff works well,” Bruton said. Audits are the way to go, and if you cant have your or your customers auditors in the data center all the time, make sure you go through a trusted assessment.”

For those interested in selling security in the cloud, most security vendors have built offerings for the cloud space, including Trend Micro, Symantec Corp. and McAfee Inc. Channel partners now have the choice of selling premises-based security or layering a cloud-based offering on top of their customers existing network.

Telecommunications. IT-focused channel partners looking to complement their existing service offerings often look to add cloud-based telecommunications services as an easy entry into the convergence space. But telecom agents, too, can look to cloud services to bolster their product portfolio and expand their customer base, including unified communications or IP PBX in the cloud.

Indeed, IDC estimates that worldwide telecom cloud billing investments will grow from $15 million in 2008 to $350 million in 2013, which means more companies are adopting cloud-based telecom services as a complement to their existing services or to replace old or outdated systems. Vendors, meanwhile, are making it easy with a slew of offerings designed for the SMB up through the large enterprise, taking advantage of IP infrastructures and open standards to create full-scale telecom and unified communications solutions delivered through the cloud. Even Google is making its move into cloud-based UC, after a series of strategic acquisitions designed to place it front and center in the space.

Its no secret that cloud computing is being hailed as the next generation of technology delivery. Analyst DeCarlo noted that for many channel partners, the question isnt whether to get into cloud services, but rather how soon. We see a lot of growth happening in next three to five years, so technically cloud computing is still in its early days,” DeCarlo said. We are in a transition period. There is opportunity but it is just the beginning.”

Customers, she said, are driving the change. Customers dont want to purchase so much hardware and they question even how their licensing is configured. I think solution providers are going to have to get into this space because thats how customers are going to want to consume the technology.”

Charlene OHanlon is a freelance writer specializing in the technology channel.

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