CRN roundtable discussion: SMBs in the cloud

If there’s one thing that attendees at CRN’s recent industry roundtable agree on it’s that the cloud is no mere passing fad. Rather it’s a technology trend presenting myriad new and exciting opportunities for the channel.

Nick Verykios, managing director – Distribution Central

Tony Ignatavicius, head of commercial sales –  Synnex

John Donovan, director of channels – VMware

Simeon Joyce, GM business and marketing – Telstra

Jason Ashton, managing director – BigAir

Tony Heywood, vendor alliances director – Westcon

Roy Pater, sales director – Infraserve

Robert Sherry, cloud channel development executive – IBM

Geoff Olds, managing director – TechFlare

Stephanie Browne, cloud services manager –Express Data

It’s a stunning understatement to say that cloud computing has generated a great deal of hype over the past few years.

CRN sat down recently with some of Australia’s smartest and most experienced technology experts to deliver something of a sanity check on this runaway trend in computing.

What emerged was a fascinating discussion about the opportunities, challenges and even dangers facing small businesses as they join the mass exodus to the big new world of shared IT. And the key takeaway message was the cloud has drifted beyond the “hype” phase into being a technology trend which companies – vendors, partners end users alike – ignore at their peril.

CRN: Express Data recently conducted a national roadshow with the aim of helping your SMB partners get a better handle on cloud technologies and how to go about selling them. Perhaps we could begin with you sharing with us the content of some of those conversations.

Stephanie: Sure – we are in the process of delivering a national workshop series to our SMB partners, and it’s really focused on talking to them and their systems integrators about how they can transition their business to the cloud. There are a lot of challenges they face with this transition and two of the key topics that keep coming up for our partners are what is the opportunity and what is the best path for them to go down? Should they invest in their own data centres and infrastructure or should they partner with someone, or just resell a service to do that?

Another key challenge is transitioning your business and how you manage that cashflow. You’ve gone from selling these large on-premise upfront deals, to selling smaller monthly subscription based deals – so there’s a real cashflow challenge there and also a real challenge with renumerating their sales team as well, so how do you incent them to look at transacting that business quite differently?

CRN: One of the key things as well is helping a business understand what its needs are and where it’s going to be in three to five years’ time. I imagine the sorts of companies that are more suited to a cloud model are high growth companies. Is that what you have found?

All: No.

John: In the introduction you talked of cloud hype. I think we’re beyond that to be honest. I think all of us at the table have had significant experience in this space. We’ve got a very healthy service provider community that is billing on a regular basis. People are used to billing on a monthly basis. We’ve had that model in the consumer space for many years now with organisations like the antivirus companies that introduced monthly subscription billing a long time ago.

So I think small, medium and large enterprises are quite used to that operational expense model rather than capital expense model. In terms of who’s actually adopting it, the fastest in the market that we’ve seen has been SMB to be honest, where they don’t have IT infrastructure management as a key proficiency, nor do they want to develop the proficiency in that space. 

In terms of trust of cloud I think there’s probably two markets we need to consider: one is the private cloud and the other is the public cloud and then the hybrid model in between the two. I think we are now almost beyond the confusion between the two. 

Companies see a lot of the benefits they originally saw from public cloud computing, resource pooling, CPU pooling, network resources, storage, all that sort of stuff. When they then need to burst into a model with more capacity, so traditionally the cloud environment, they can now do that in a more confident and secure managed environment, through hybrid cloud models.  So I think probably over the last 12 to 18 months there’s been a significant amount of gain made in this market and I think there’s significantly more confidence in this market as well.

Geoff: As a reseller I still think there’s a lot of business owners, directors and CEOs who are in a holding pattern. They are not sure. And there’s some IT resellers who are very pro-cloud and there’s those who are still in the traditional model. What you were saying before Stephanie, about the cashflow side, it’s a massive challenge. That’s what we’re going through right now. From the feast and famine of projects to the ongoing monthly fees for our managed services and cloud. I think yes, at the top end of town it’s very clear, but filtering right down to some of the CEOs who’ve probably been in business for 10 to 15 years, there’s still a lot of grey areas there that we have to untangle for them.

CRN: Jason, what’s your view on the role of network speeds in the uptake of cloud services in Australia?

Jason: The speeds that I’m typically seeing in the market that people are requesting are still quite small – one meg, two meg services – so it’s not like people are saying ‘I need 100 meg to access cloud-based applications’. I think the key is that it’s reliable and it’s consistent performance. A lot of our partners are actually using us in combination with a fixed network – so where they’re deploying a cloud-based application for an end user, they’ll actually insist on there being diverse connections to the office – so there’ll basically be a red cable and a blue cable. That will ensure there’s always a way for the end users to access their applications.

CRN: How confident are you that many of these companies really understand their needs and the role that cloud is supposedly playing in satisfying them?

John: That’s the interesting thing from a reseller perspective. It was originally applications as a service or something, 10 years ago, and it’s evolved into this cloud-based model. We’ve had opex billing for quite a while but this is a role for the development of the reseller community, and originally when we looked at cloud people were saying ‘that just gets rid of the channel doesn’t it?’ And the answer is ‘no, it forcesthe transformation of the channel’ – a really interesting one – this is where we are spending alot of time and resources, enabling and educating and training the partner community so that they can maintain that traditional relationship they have with their customers, being thought leaders and the trusted adviser.

CRN: What are you doing to help them become forward leaders though, it’s not something that can happen overnight is it?

John: From VMware’s perspective it was the work that we did starting 10 years ago around infrastructure and server virtualisation, giving resellers the confidence that they can create a much more agile approach to IT management through cost effective control of server resources and how you manage that, so being able to lower operating costs, utilisation of energy costs, administrative costs, and IT acquisition costs, that puts us in a really good position to be able then to take them on the next step of the journey, which is helping educate the partner community around how they can control and manage this transformation from a customer’s perspective.