And not just from the partner community, but from a lot of vendors as well. This is it guys. It’s going to change whether we like it or not. It’s going to change the rate of change to something we can’t manage. You’ve just got to get on board, and we’ve got to reinvent what we do and how we do it, faster than we’re probably prepared to do at the moment.
Toby Regardless of the BYOD factor and users demanding what they want to use at work, the relationship the partner and the vendor has with a customer does change, and I think it changes forever. I don’t think we ever go back. We talk about the opportunity we discuss with our partners, the margins, and the partner record fees are at the bottom of the list.
It’s that ongoing consultative engagement that you have with your customer, both from a vendor, and the increased expectations there – but also from a partner, not necessarily going in every two or three years, and doing a bigger deal, but that consistent engagement, taking advantage of opportunities that cloud technologies bring to solve different business problems. It’s a very different dynamic, and that’s where we’ve seen some partners embrace that and be very successful with that strategy.
Brendan The early phases of cloud has been very much ‘how do I do something differently than I’m already doing?’ The massive opportunity now, and we’re seeing it in the SMB market for example, is ‘how can I do things that I don’t even currently consider that I can do?’
Look at someone like Dominos based in Queensland. They went through the floods etc, seen the risk in their business and now redundancies, and they’ve made the initial decision based on how they fix immediate problems. The doors opened. Now their app you can get for ordering your pizza let’s you see where your pizza is up to any time.
You can monitor it, and see exactly when it’s going to arrive at your door. So there’s a whole new market that they’ve opened. They can now per minute take three times as many pizza orders than they used to. So this has opened new doors and new markets for them.
The other one is Greyhound buses. They’re now using it and linking it back onto the bus and looking to bring out fleets of business class services. Passengers can now get access to wi-fi while they’re on the bus and a whole lot of new services. They’re monitoring driver behaviour, revs per minute, speed, everything, through all of their drivers, and storing all that information centrally.
Managers and the admin people within Greyhound can access that anywhere any time, and they see their market in the next two years going from 1½ million passengers a year, to 5 million. The reason is, they’re really heavily going into the mining areas, and of course safety is a massive concern. So they know where every bus is, at any time, what it’s doing, how it’s performing, and this has opened up brand new markets they weren’t considering previously.
CRN What about the threat of public cloud services in general? Presumably this is a big issue for resellers, because customers are now able to go with a credit card and establish themselves by provisioning virtually anything in the cloud now. And there’s no ongoing support revenue, there’s no break fix revenue, there’s none of that going on.
We were talking about the fact that this change is inexorable, it’s inevitable, everybody will get on board, and as you were saying Brendan there’s obviously a lot of opportunities, but particularly for smaller resellers, aren’t there real challenges they need to address, and how do they go about doing it?
Brendan I think it’s the new markets that are the opportunity. We spent half a day with Apple recently and I think they’re up to 700,000 applications now that you can download through iTunes. So there’s applications that weren’t there previously and customers are coming up with new ways of doing business. I think some customers will be able to do it themselves. They’ve still got to have the skills. They’ve still got to run the admin, but I think it’s the new markets that provide the opportunities for all of you.
For us, from a partner perspective, we won’t take this journey unless we have the right partners on board, because we know that we’re never going to offer every service and do all the end-to-end to all of our customers. So the partner community to us is absolutely critical. We do see a number of small customers buying things like some software-as-a-service without assistance, but it would be about 30 percent if not less of our base that is unassisted.
So there is definitely a market there for it, but they’re the customers who are managing things themselves, but who aren’t yet thinking about some of the things they do.
John Don’t forget that around the world hundreds of billions of dollars’ worth of infrastructure exists in private enterprise and in small- to medium-sized businesses. In Australia I forecast say there will be a significant amount of acquisition of existing technology hardware, perpetual licence going into private enterprises, in small businesses for the foreseeable future.
This shift to public cloud is not going to happen overnight. It’s going to accelerate, but there’s a huge amount of existing infrastructure. The most desirable model is this hybrid cloud which David spoke of before, where you’re able to take your existing private infrastructure and create a much more virtual relationship with that and a much more agile relationship and create cloud-like services through there and then burst into a public cloud whenever you need the additional processing or capacity, and that’s a really desirable sort of infrastructure state for many organisations to work with.
That still requires huge innovation management and expertise from the partner community, so there’s still a huge tail of opportunity in existing infrastructure. We shouldn’t just think this is going to go away overnight and everyone’s going to shift to a public cloud. So there’s the hybrid cloud that’s a very important part of our future still.
David I was intrigued about it. I think the industry reflects inwardly too often and the demise of the channel has been forecast since 1980. The simple fact is most people are technophobic. Most customers out there would rather be hairdressers, accountants, butchers or bakers and they’re very good at that, but when it comes to IT they turn to experts for expertise. As we glibly talk about the cloud, how easy it is to become enabled, these are confronting environments for many people.
If you look at the NBN rollout, there would be 30 to 35 percent of Australian businesses which are not even connected to the internet, and do you know why? Because they don’t know how to and they don’t want to. The role of the reseller is absolutely enhanced for at least the next decade to be the facilitator and the enabler of allowing businesses to go into the marketplace and exploit this investment rightly or wrongly – there’s 30 odd billion bucks on the ground – and really create some differentiation.
So I really see the opportunity for resellers and partners and systems integrators as pure ‘blue sky’ and it isn’t the demise of the channel. If anything, you can see a lot of logic as to why more channel partners will be embraced into the marketplace, because most people are confused by our technologies and they’re frightened by them.
Charles Those kinds of public cloud services wouldn’t be for everyone and I think from what we’ve seen over the life of technology basically is that cloud services provide an idea and a framework, but many customers will need something that isn’t quite that, or isn’t quite linked with dotcom or isn’t quite as-a-service and will need something that is slightly bespoke or more closely caters to their requirements.
So what we’re seeing at Veeam is a lot of our partners taking that opportunity to provide something that from a marketing standpoint looks like a generic public cloud service, but is actually something that provides a very unique and specific service for their customers, and I think we’re going to see more of that, and this idea of the cloud becoming a diaspora of partners, rather than ‘the cloud’ at the back somewhere in the dark.
CRN A year or two ago, Gartner and IDC were excitedly reporting Australia and New Zealand were among the biggest adopters of the cloud and virtual technologies in the world. Is that still the case? Are we still leaders in the adoption of cloud and virtualisation?
John Yes we are. We’re miles in front. The whole of government’s shifted towards cloud services and is ground-breaking in terms of a philosophical approach towards having a much more agile infrastructure. And that’s what’s driving a lot of the really interesting stuff that VMware and a bunch of other companies are doing as well.
We’ve seen this high level of virtualisation and the question is well, what next? We knew that was step one on the journey to the cloud, but now we’ve got to come up with step two and step three a little bit faster. That’s what’s driving a lot of the new technology and new solutions out there. There’s still a bit to go.
Critical applications, production applications, tier one apps and modernisation of some of those older apps, we can certainly help with that. But yes, we’re actually doing pretty well out there.
Brendan Yes, I think cloud goes hand-in-hand with tablets and smartphones too. We are now number two in the world with penetration of smartphones to dumbphone sales. So the only country beating us is Singapore. But comparing the two companies is chalk and cheese, so we are punching well above our weight.
Rob New Zealand’s been punching well above its weight in terms of its propensity to do strategic outsourcing for probably over a decade now and I think all the hype about cloud is nothing more and what it’s done has exacerbated, particularly among small- to medium-sized business, this need to want to move stuff off-premise to another service provider.
So I think what we’re going to see is a continued trend which can only represent huge opportunities for everybody in the room here, for all the reasons described before.
Darren I wanted to add we’ve seen a significant number of businesses moving to co-los in the last two years, moving to this cloud environment and right now I can say that nationally there are a large number of projects under way where we’re going to see a lot more co-lo type data centres rolling out. The latest was the NextDC launch of a couple of large data centres, but there’s quite a large number already in the pipeline that we’re aware of, so there’s been a phenomenal shift to the cloud and we’ll continue to see that over the next two to three years.
CRN Is there a danger of the trend getting a little out of hand from the point of view of businesses, as you were saying Rob, moving everything to the cloud. Is there a risk of companies going too far? How can they develop a more considered approach?
Rob I don’t think we’ll ever see everything move to the cloud. I think there’ll always be this hybrid environment, there’s always going to be, when you’re looking at the cloud, there’s always a function of what is the sensitivity of your data and what’s the workload, and there’s always going to be workloads that need to reside on-premise and in a private cloud environment perhaps, but we’re not going to see the small business moving all their stuff to everyone else’s data centre.
Charles I think smart IT managers use all the tools available to them and I think what the cloud represents is one of those tools and is broad potentially and certainly powerful and flexible, but it isn’t necessarily the be-all end-all. As I said earlier, one of the key opportunities for channel partners is to help IT managers help CIOs make those decisions about whether or not, which parts of their business are most appropriate for the cloud, and you know Rob’s right, it’s not going to be everything.
Toby I couldn’t agree more actually. It’s the point I made earlier about it being a matter of time, and I do think it is a matter of time for customers to realise what parts of their business we want to move to the cloud and we’ve seen that happening, but again from a Microsoft perspective, and the position we have with both our server infrastructure and public cloud platforms, we’ve seen a lot of these examples come to life.
So back to the scale and performance of Australia and New Zealand specifically, we’ve had 1700 partners enrol in our cloud programs, and over 500 selling. That is very high around the world. As a result, that opportunity that we see specifically, and when we talk about new markets that are in the small to medium business space which we talked about before, customers not necessarily knowing how to move into the cloud, I disagree that they don’t want to.
I think if they actually understood the benefits they would want to move to the cloud, but that doesn’t mean they know how to, and that’s again where the reseller really comes in. It’s that seed and feed mentality that there’s a huge untapped opportunity out there with 1.2 million small businesses in Australia to take advantage of a public cloud offering, while from an enterprise perspective, we can still have a hybrid approach.
Charles Expanding on Toby’s point there I think that as David was saying, it doesn’t become about moving to the cloud, it comes about as really what’s best for your business.
It’s an interesting statistic because our specialities are around disaster recovery or business continuity, and so only about 35 percent of small to medium businesses have a comprehensive disaster recovery plan last year, according to Gartner.
And for organisations that suffer a media outage, or suffer a disaster like the flood in Queensland, like earthquake in Christchurch, only about 6 percent would survive without a major impact to their business, either shutting up shop, or suffering a significant loss of revenue.
So presenting it as a journey to the cloud I think is perhaps the wrong way to present it to those sorts of customers. I think it’s about how do we find ways to make your business more available, how do we find ways to keep you afloat and face the challenges you face as an organisation.
Darren The other thing I wanted to touch on is what we’ve seen in the last couple of years because these organisations are now available and space is readily available that IT managers are now starting to employ disaster recovery solutions whereas previously they may not have been doing that because it’s become affordable and plus we are becoming more and more reliant on technology.
We’re seeing quite a mix, where some businesses are looking towards the cloud environment for their DR or vice versa. We’re seeing quite a lot of that happening in the market.[We need to take this to the audience to see if anyone has questions.
David I was at a conference in Singapore recently, and there were some interesting stats thrown out around cloud from a partner perspective. This perspective was ‘plan to have at least half of your sales organisation leave the organisation and leave the industry, because they won’t adapt to the new selling environment’. That’s half.
Now that’s a major issue when we sit here and you look at the talent resource we have in the industry today. And the other one is the financial model and migration of the financial model from transactions to annuity. How is the industry working together to ensure the partners can actually make this migration? So what’s the industry doing to train soft skills, not hard skills? We’re all very good at that; ‘here’s the new X Y Z’.
But the soft skills that allows our sales organisations in the community to change the selling process from an IT manager to a boardroom or a CFO; and what about the financial model? It’s all very good encouraging these people, but every one of us sitting here with businesses promising a revenue stream and balance sheet – and we’re asking for massive changes – what is the industry doing with that?
Toby We’ve had some experience in the last 12 months with a particular activity which we call business model transformation workshops. There’s a whole component of that focused on the operational aspect of annuity-based revenue streams and how to think about your business differently, right down to how you compensate your sellers and really across the business.
The content has been very well received, and what I would say is that regardless of the solution, it could be applied across any cloud solution, so it’s something for us that was a fairly significant investment. We’re not able to scale broadly, but we got some great feedback from the partners themselves, and we also see a return of three to four times on their cloud business, so it’s something we’re absolutely going to continue to do at least from the Microsoft perspective.
Audience question - Damien Rossiter: I represent an organisation on the Gold Coast, ONCG Systems (CRN Fast50 20012 No.18) which is traditionally an SME provider. My question goes to the whole panel, Toby probably in particular. We live in the SBS (small business server) world, we don’t need to get into the arguments about what’s going to happen with the death of SBS, and yes, we are moving our market or our business towards cloud.
And we believe it’s inevitable and everything but I’m still waiting for a logical argument, especially from the ‘tin pushers’ to say where’s the better value in what you were just discussing, from transaction to annuity business.
When you lose that hypothetical three-year transaction, the value that’s placed at the moment in that SME, the returns that we get for a 365 project with Telstra for 10 to 15 users, we still do those services when we had the server in place, the SBS server, where every service is there. We’re a relationship business, and obviously everyone in this room is a trusted adviser; all those types of things, otherwise the business wouldn’t grow.
So all the services that everyone’s spruiking as being value adds, I would guess most of the people in this room have captured, not saying we’re the best at it, can do all of it, and that there’s not much more to be learnt.
But there’s a massive value chunk that’s just been taken away from the integrator that goes through, and I’m yet to find someone who can tell me where that’s gone. Everyone talks about the hype, particularly Telstra with their bundle, and Microsoft going through, and I can understand the business model about why they go that way at that big end of the town. At the small end of the town I’d like some answers.
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