The NBN uncovered

The NBN's killer app

No, it's not as sexy as telepresence. In fact it's more mundane than email. Many industry watchers believe one of the most popular applications will be: backup.

A high-speed connection to a data centre will give companies and individuals the ultimate in backup - a single-button service that copies all the data on your computer to an offsite location.

"You basically have to run your own data centre in this country if you want to do backup. And the price is so expensive that you can only do backups once a week or you have to do them locally and then replicate to a data centre on an infrequent basis," says Kaseya's Dickinson. "It's not an ideal solution.

"But if you have 100Mbit to the home and to the business you'd be able to have that instant point and click backup which is something we are all looking forward to, because security of our personal and business data is essential to our ongoing well-being."

Dickinson says few resellers have the skills to set up proper offsite backup and disaster recovery. The current, bandwidth-limited process of backup is overly complex because it forces companies to choose which data to back up, and within an affordable schedule.

It also encourages onsite backup products such as tape which is an expensive technology to automate.

Kaseya is working to automate the backup and disaster recovery process with its Acronis module which encrypts data between office and data centre.

"One of the best things you can do is get rid of tape because it is one of the most manual parts of IT," says Dickinson.

"We are trying to simplify that to a drag and drop manner and provide a high degree of disaster recovery and backup for resellers that don't have that sophistication, and that's a huge market."

Kaseya's hosted backup service is three to six months away and will probably be run on the Amazon S3 platform. Why Amazon?

"The number of services that are being rolled out across that platform, it's a pretty amazing story. Simplicity - that's why you want to be part of it."

The cloud is here

Any conversation about a high-speed network always ends up in the same place: cloud computing. Cheap and plentiful bandwidth lets companies store their data - and the headaches of looking after it - elsewhere.

Cloud computing models reduce the amount of on-premises equipment needed to run a business. The impact of cloud computing on the reseller business model is obvious - less installation, integration and hardware sales.

The upshot for customers is cheaper access to ICT services, which is a good thing. Resellers need to make sure they stay relevant and in tune with best practice.

"You don't need a data centre. Maybe you don't need Microsoft licences any more. As long as you have failover to 3G to keep it all going, you don't have to have all these fixed costs," says Bill Lang of Bill Lang International, a channel consultancy.

Providing cloud services favours larger players who can scale up to increase profitability. But businesses will need resellers to talk them through the process, show them how to connect and provide the interfaces and tools to work with cloud services.

"Someone has to sit down with government departments, schools and CIOs and explain it to them," says Lang. "Those that get on top of this stuff earlier are going to have a great opportunity to cherry pick a few new clients from those resellers who are adopting a wait and see attitude."

Resellers need to start with a broad needs analysis of a customer's ICT requirements, says Lang. Then they need to present options from server- software-integration to a cloud solution, with a comparison of benefits and ROI calculations for each approach.

The good news is you don't need a fat pipe to take advantage of cloud computing.

Lang knows this from personal experience at a startup in the US which was one of the first customers of salesforce.com. The company had basic CRM functionality in a faster time to market than setting up a server onsite. "We only had to pay on a monthly basis and if it didn't work out we would shoot it."

Recently Lang went through the CRM pitch again for Bill Lang International in Australia. His reseller immediately wanted to go down the path of new server, software licence, systems integration.

"We had to raise if they had a cloud version of it that we could rent. They led with what they know how to sell, which all sales people do, and what they get rewarded for."

Selling clouds

There is less work to do in selling a cloud service because generally the cloud provider worries about backup, integration, patch management, security and access.

But that also means fewer opportunities for resellers to make their margins. Cloud computing will force resellers to change their business models to guarantee profitability, says Lang.

Resellers need to assess commissions for cloud-based services and work with cloud providers to ensure there is a compensation model that makes sense to the reseller.

The shift to hosted applications will force resellers to become brokers for cloud services, earning recurring revenue from the commission trail.

The popular metaphor for selling cloud computingis selling financial services. "The IT reseller model is probably going through what the financial services industry was going through 10 years ago, and still is," says Voges.

Lang prefers an insurance broker analogy - resellers need to represent multiple insurance agencies rather than being a tied agent to a single bank, for example. He points out that, until the financial crisis, the overwhelming share of mortgages went to brokers who could present several brands to customers.

Moving from an upfront payment on dropping a box and selling software, to an ongoing commission annuity, will have a big impact on cash flow. Resellers who are well capitalised are in the best position to withstand the change in revenues, says Lang.

He advises resellers to talk to their financiers and prepare for the financial strain of moving to a three-to five-year revenue stream.

Choosing the right cloud provider is very important. Lang, who is training resellers for NEC's Apps Net platform, says NEC's approach matches his top criteria to look for in a cloud provider.

The provider must be willing to train resellers in using and selling cloud services. Ideally the provider has partnered with several brands. NEC offers two types of CRM and plans to add another three, whereas Telstra's T-Suite is one fixed suite of applications, says Lang.

Ideally the cloud provider would only sell through the channel. Telcos are retaining their direct sales forces, who will inevitably compete with resellers. However, the telcos don't have the relationships with customers, and the transition to cloud is going to depend on large amounts of trust, says Lang.

If the goal is to win 100 percent of money spent on ICT services, resellers are in a good position. "Whoever's got the best relationship with those customers and the right skills, they're going to be best positioned to win that game," says Lang.

Lang's advice is to start developing skills now by selling cloud services that are currently available and figure out what other services they would want. "Ask what your customers in schools are going to need in the long term, and make sure that is on the platform. Don't wait for the NBN to happen and then start thinking about this stuff," says Lang.