Fatter margins, simpler servers

Remora is in the sweet spot for resellers set to capitalise on the trend towards simpler server architectures to deliver fatter margins.

Business customers keen to simplify their IT operations are tilting at systems that integrate storage with networking and processing. It saves labour and risk to design, build and test a solution from components and lets resellers sell higher-value services such as management and analysis tools.

The Melbourne integrator is training its 12 staff in readiness for the shift that threatens to unseat traditional server resellers. “We are focusing on getting our guys skilled across the portfolio of products so they can deliver them all,” says Remora chief executive officer Robert Silver. “That’s where we’re heading right now – application to disk where it’s a complete, end-to-end solution.”

The inherent optimisation that is in such systems eliminates a “fairly substantial cost from the systems integrator perspective”.

It is more expensive for customers up front but they will get their investment back on savings for professional services.

Silver smoothes this apparent contradiction: “You’re making money out of the infrastructure that you’re selling but also professional services in deployment, implementation and customisation. But time to deployment has been reduced significantly.”

And customers are so happy with faster project delivery that it engenders strong loyalties.

“It’s more about retention. On the other side of it your reputation as a systems-integrator partner will help you secure new customers because the speed to deployment is quicker and it will save the customer more money.”

Gartner data centre analyst Phil Sargeant says the payoff for the reseller is a “lot more margin than just hardware”. “An X86 (server) could cost $10,000 and one of these boxes could cost hundreds of thousands,” Sargeant says.

Sales projections are small and Sargeant estimates that of the millions of servers sold a year, integrated servers will count for only several thousand worldwide and just several hundred in Australia.

But the only companies with expertise and virtualisation skills to implement such systems will be big resellers – and vendors’ direct teams, Sargeant says.