Public cloud providers are ramping up in enterprise IT, with flagship clients signing up for infrastructure-as-a-service and software-as-a-service. But despite the fanfare around the deployments, the reality has not always so rosy for these corporate accounts.
Tech giants that cut their teeth in the retail or search space aren't necessarily geared up to provide the level of service and support that (conservative) corporate IT users demand. This night be worrying for the buyer, but it's an opportunity for the channel.
Brett Winterford, my counterpart over at end user enterprise title iTnews, published a blog yesterday that got tongues wagging across the Aussie IT sphere. Aimed at CIOs and IT buyers, the article looks at the reality for enterprises that sign up for public cloud. The headline alone should sell it – 'There's no coke and hookers in the cloud'.
In his blog, Brett makes the point that:
"If as a CIO you’re expecting to get the same after-sales experience from a cloud provider as you have long enjoyed from your traditional supplier base, best reset your expectations. That’s a message I’m hearing on repeat when discussing cloud services with early adopters."
His argument – that public cloud providers aren't geared up to offer the kind of service levels that CIOs have come to expect from traditional IT vendors – might be an issue that keeps CIOs up at night, but it could be a windfall for the channel. In the cloud, integrators and managed services providers can continue to do what the channel has always done: provide front-line deployment and support services so the vendors don't have to.
Brett also makes the point that public cloud players are still finding their feet in enterprise sales. Meanwhile, "vendors like Fujitsu, HP, IBM and Microsoft are sales and service organisations at heart".
"They might hire a few too many lawyers for our liking, but they sure as hell know how to make a buyer feel good about signing on the dotted line. You tend to feel the love most with these guys when contracts are 12 months out from being renegotiated. You tend to feel the love when they need you to advocate for them at an event or in newsprint, or when something goes horribly wrong.
"And you’re certain to get loved up good and proper when all of these coincide, as the oft-quoted story about HP CEO Meg Whitman flying to Australia to appease the Commonwealth Bank over an outage serves illustrates.
"So what happens when something goes wrong at Google or Apple or Amazon, and you’re their largest enterprise client in the region? Does Larry Page or Tim Cook or Jeff Bezos take a long-haul flight and promise to make amends in front of you and your executive peers? They will most likely not even take your call."
Public cloud vendors aren't dumb to these issues. Perhaps they entered the enterprise naively thinking they could court corporate users in the same way they won over the developer community. But they are revising their plans. Look at Amazon Web Services Australia, which is stacked with talent from Microsoft, VMware and Cisco – vendors with thriving partner communities.
Unless they are about to put hundreds of new boots on the ground in Australia, public cloud players need the channel. AWS and Google are both ramping up their channel programs. Between 2013 and 2014, AWS more than doubled the number of channel partners exhibiting at its Sydney summit. It has around 700 partners in ANZ. A heavyhitter from Google's government team was touring Canberra and Wellington only last month to support Brissie-based partner Dialog IT.
There's a but...
It's not all upside though, especially if cheap support from public cloud providers pushes the market price down, as Brett points out.
"First, the style of support offered by cloud providers is having an impact on IT outsourcers, who now find themselves looking very costly. Some have chosen to pair back support resources to lower their cost base and be more competitive on future deals, and are struggling to meet the contractual obligations they have with existing customers. Sounds like a turbulent time to be considering long-term IT outsourcing deals."
If customers are moving to the public cloud for cost reasons – and despite the media hype around price cuts, price is rarely the major driver – then they're sure as hell not going to look fondly on a quote for a premium service package that has as many zeroes as the price tag of their cheap vanilla IaaS.
That's not the only financial risk. Tread with caution the partner who decides to structure its pricing as a percentage of the cloud vendor's IaaS rate card.
Another caveat: not all clouds are created equal. While infrastructure-as-a-service creates a bunch of opportunities around managed services, SaaS could be the opposite, Sure, there are migration opportunities – as can be seen from the Office 365 gold rush – but once the customer is migrated to a cloud application, partners could see themselves ostensibly shut out.
Unless, of course, the vendor decides to meddle with the back-end. Among those clients who have sign up for the public cloud, it is not unknown to come to work in the morning and find everything broken after an overnight software update (with no notification).
But to the point in the original blog's headline:
"There is an entire generation of chief information officers that have been fattened, boozed up and fawned over on the bill of vendor account execs and marketers. I’ve occasionally been there to enjoy some of it for myself. Lunch here, dinner there, business class airfares, whatever it takes for the salesman to get the deal.
"While we’ve (hopefully) moved on from the coke and hookers era that bound executives to one "strategic applications partner" (remember those good times in Vegas, mate?), the love is still there if your spend is big enough."
Maybe, as a reseller your budget is more likely to stretch to a few beers and a branded USB charger than Vegas-style client entertaining. But, metaphorically at least, it's the channel that can bring "the coke and the hookers" – the complex deployments and high-touch managed services.
The question is whether the customers will pay for it.
Agree? Disagree? Leave your comments below or email me at skiernan@techpartner.news
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