Time to gamble on emerging technology?

According to research firm, Gartner, users’ dissatisfaction with the speed of enterprise IT change will worsen in the next five years. More than 50 percent of users will be dissatisfied with the slow rate of IT change in their enterprises by 2013, up from 30 percent in 2008.

“Users’ willingness to take up web-based alternatives over and above what their IT organisation directly provides (already a significant factor) continues to rise and user skill levels and comfort with using technology rises for employees of all ages,” the researcher said.

“User satisfaction is likely to further deteriorate as the ‘digital generation’ constitutes a larger portion of the workforce and enterprises wait longer to invest in ‘softer’ technologies, such as social software, because results are less tangible than more traditional process- or data-centred tools.”

This exponential phenomenon has vendors scrambling to come up with new technology solutions and as they do so, develop specific programs to bring their resellers up to speed.

Kevin Bloch, Cisco’s Australian and New Zealand director of operations advanced technology and systems engineering, said vendors must not only have specific programs for developing technology, but also programs for mitigating risk on behalf of resellers.

“Cisco’s approach to emerging technology has been refined over the past 10 years to foster and accelerate technology innovation but not compromise our business, our partners or our customers,” Bloch explained.

He said Cisco has implemented a number of measures in order to mitigate risk associated with emerging technologies and markets.

These initiatives include the establishment of a separate business unit to develop emerging technologies (ET) and a process for the sale and support of ETs.

Support for Cisco ETs also comes under the Cisco brand through Cisco Technical Services, where training and equipment is supplied globally to support the technology.

Cisco has also established a separate section within its internal channels organisation to support new and existing partners for these ETs and supplies training and certification for all new and existing partners interested in reselling cutting-edge technologies.

“In Cisco we look at all technology and break it down into three areas,” Bloch said. “These include Foundation Technology, Advanced Technology and Emerging Technology. Foundation is really infrastructure switching and what we have done forever, but is the core of the network and our business.

“Our Advanced Technology program started about six or seven years ago when we realised we could open new market opportunities based on our Foundation Technology.”
Bloch said about four years ago Cisco announced significant milestones and recognised it had to push even further into the emerging technology.

“We recognise the risk associated with emerging technology and Cisco has moved to mitigate the risk through marketing and broadening the market reach of the brand and the distribution channel,” he said.

“For instance we incubate start ups within the group but as soon as the technology reaches a certain point that we can go to market – we have a process within Cisco to breed and cultivate new technologies and likewise a process in market distribution.

“In the Australian and New Zealand channel we have a team subset that takes emerging technologies and mitigates risk as we look to our partners with competence in adjacent markets,” he said.

“But we are always looking for new blood in emerging technology and this might include companies involved in, for instance, security.

“For instance, they might have operations in a physical environment but have no IT or IP expertise. What we would do then is look to get a techie and align them with the security player.

“We also have an Advance Technology Partner Certification Training Course which trains the partners and certifies them before they go and sell the product, thus mitigating risk for us as well as the partner.

“We take an architectural approach,” Bloch said. “And everything we are doing is from a basic idea all the way to partner sales. This is a built-in process rather than sporadic approach.”

Network security vendor Fortinet offers security networking technology and according to regional director Charles Cote the success or otherwise of emerging technology is down to the relationship between vendor and reseller.

He said the risk to resellers of emerging technologies need not be a gamble.

It all comes down to the level of relationship the reseller has with the vendor,” Cote said. “If there is a strong partnership, and the vendor has local on the ground support – both pre and post sales – then you are going to be in a much better situation.

“It also obviously helps when the vendor creates demand with marketing programs to generate end-user demand, and has well-structured training and channel sales programs.”

Cote said Fortinet has a highly structured channel program that has proven very successful around the world.

“Fortinet connects our resellers with the resources needed to develop expertise, grow their business, increase customer satisfaction, while maximising profitability,” he said.

The FortiPartner program offers the opportunity for successful resellers to provide a vendor with emerging technology.

“We can assist our partners in providing strong local pre- and post-sales support, good training programs, and a channel sales model that allows them to make a good margin on both product sales and ongoing services,” Cote added.

“The goal of the FortiPartner Program is to enable our partners to successfully achieve unprecedented growth and profit potential by delivering superior, next generation multi-threat security solutions to your customers.”

“Our program offers the right level of participation, performance and commitment to provide the best opportunity and flexibility for individual needs.”

Fortinet offers three reseller levels, with the silver level partners offering only entry-level product with Fortinet’s low-to-mid range multi-threat security solutions squarely targeting small to medium businesses.

The Gold level program is for resellers who work to deliver the full spectrum of Fortinet’s solution set and they are certified to assist with any variety of implementation needs including a small branch solution or up to a core headquarter deployment.

Platinum partners have full access to Fortinet’s solution set and have certified staff to suit any complex deployment requirements and deliver exceptional levels of support and service.

“Partners have access to a wide range of marketing material and programs, and can carry out jointly funded campaigns tailored to their situation,” he said.
Michael Costigan, marketing director Avnet Technology Solutions, said his company invests in high-growth, high-return markets to enable business partners to accelerate success.

“We have various people driving regional prospects and they look at what are the high growth rates. They then determine the market and feed back to the country management team. In this way we are prepared for some big players and this is how we establish presence in the market,” Costigan explained.

“What we do at Avnet with the changing IT landscape is to help our resellers put the science such as virtualistion, security, storage and software as a service (SaaS).”

Resellers looking to take advantage of Avnet’s solution distribution strategy can rest on the groundwork already done by the company.

Asked what skills resellers need to sell solution, Costigan said first and foremost they need to offer maturity and good commercial acumen to position IT solutions.

“We are then able to go out and offer our value-added services for them and run joint marketing programs as well,” he said.

“Our resellers can take advantage of Avnet’s global reach whereby in Australia they can form a relationship with Avnet and our solutions distributed around the world.

“We are a global distributor and for instance our business in North America allows for local resellers to have a presence and we can marry them up with various systems integrators.”

Costigan explained that business partners can determine the best solution for customers through Avnet’s business innovation office.

“This is our upmarket distribution service where we look at the numbers and what drivers are fuelling growth, for instance is the solution storage or appliance or compliance?”

“The distributor organisation needs to know the customer and what he needs and then to make recommendations on a more collaborative approach.”

Costigan said the main technologies driving the market are in and around security and virtualisation.

“There has been a lot of growth in the marketplace and in end-user organisations, not only about security but also compliance,” he said.

“This is driving IT in Australia and among major banks bringing together disparate systems together and moving towards a greater standards approach.

“Virtualisation is also a big area where from a business perspective they use less hardware and can almost double output, while still being more Green and using less power and disk space.”

Hewlett-Packard said it is continuing to invest in new technologies and making sure that they are incorporated into roadmaps and product line development to keep up with what is a constantly changing marketplace.

Vendors must keep the cutting edge razor sharp and focused on what it means for the customer including how it meets the customer requirements and the significant benefits of providing a better product rather than just technology for technology sake.

Raymond Maisano, marketing manager for Hewlett-Packard’s blade servers division, said a lot of the emerging technology now centres on blades and storage.

“Emerging technology is going down two paths,” he said. “One with a focus on consolidation of servers and the other is for Cloud Computing.”

Maisano explained that HP Virtual Connect is a new approach to connecting and adapting server, local area network (LAN) and storage area network (SAN) domains across the data centre.

“For the first time, server administrators can automatically manage resources independent of server connections to network and storage resources in an HP BladeSystem, saving days or even weeks of administrative ‘wait time,’” he said. “There are also upcoming servers that are built just for virtualisation.

Maisano added that channel partners need to be aware that the market shift to virtualisation means users are demanding more bang for their buck.

“The important thing for us about virtualisation is it is not just about visualising an application on the server,” he said. “Virtualisation is being able to consolidate and virtualise a variety of aspects such as power cables.

“Virtualisation allows for the connection of virtualised servers, operating servers and SANs which until today were connected with fibre channel.

“The move to cable virtualisation allows for a fully virtualised server and IP and integrates communications connections to seamlessly merge.

“Managing that can now be conducted in for instance, peak times with different demands at different times.

“If you virtualise end to end, customers are able to use the system when and where they want it.”

Maisano said the important aspect for channels in the virtualisation space is that they need to recognise that they have to provide solutions across the whole enterprise.

“They need to look at the whole business, because we can now cross the boundary of server and storage,” he said.

“We can pull together a seamless environment and the footprint of servers now have greater density and there is consolidation of cables and power.”

Maisano said the next big thing for HP is Cloud Computing. The company is so convinced of its importance as an emerging technology and benefits that it has created a whole new division in the US to cater for it.

“What occurs to me about Cloud Computing as an emerging technology is that the amounts of storage capacity required to store data online is only going to increase and adjunct to that is the exponential growth in storage needed to support these moves,”
he explained.

Gartner has reported that Cloud Computing is on a par with the development of email as a must-have technology.

Gartner defines Cloud Computing as a style of computing where massively scalable IT-related capabilities are provided “as a service” using Internet technologies to multiple external customers. The types of IT services that can be provided through a cloud are wide reaching.

Computer facilities will provide computational services so that users can use central processing unit (CPU) cycles without buying computers.

Storage services provide a way to store data and documents without having to continually grow farms of storage networks and servers.

Gartner predicts that by 2012, 80 percent of Fortune 1000 enterprises will be paying for some Cloud Computing services, and 30 percent will be paying for Cloud Computing infrastructure services.

Driven by falling prices and new vendors, the percentage of commercial mailboxes using a cloud-provisioned model will grow from one percent of business seats in 2007 to 20 percent in 2012, according to Gartner.

The push into the cloud email market by large suppliers will cause fundamental restructuring of the email market, predicts the analyst.

“Events during the past year have created the conditions for the rapid growth of the cloud delivery model for enterprise email, with companies such as Google, Yahoo, Dell and Microsoft all making major investments in Cloud Computing,” said Matthew Cain, research vice president at Gartner.

New web technologies are expected to yield new services, platforms, utilities, and business models for businesses and service providers.

Bruce McCabe, managing director of Australian research house S2 Intelligence, said Cloud Computing for channels is a challenging technology.

“In terms of what it means for a channel it is a move away from packaging and delivering software and hardware to a model of delivering software storage as a service,” McCabe explained.

McCabe said that over the next five years Cloud Computing will challenge the reseller’s role, which will be more about customisation and business outsourcing and getting into a realm for hosting services themselves.

“Channels need to perform universal services and as with insurance while there is no need for brokers, they can manage risk,” he said. “And so too with resellers they have the opportunity to sell more software while they may lose some sales in devices as we move to services.”

He added that software is particularly challenging in mid-term.

“Cloud Computing is in transition and for business customers and consumers to use it instead of a hard drive looks set to take off,” McCabe explained.

Software such as that offered by Microsoft Office is more than ever being delivered as a service and McCabe said this is worthy of a story in its own right.

“Office productivity is highly representative of what is happening more broadly with the delivery of software such as Microsoft and Zoho.com,” he said.

Until recently, the Cloud Computing market has largely been the domain of small suppliers, but it has been rapidly transformed into a market where the largest IT companies are aggressively competing.

He said that vendors such as Google, Microsoft and Yahoo have consumer mail platforms that serve millions of users and that the opportunity and the challenge is to transfer the economies of consumer mail to enterprises.

Gartner predicts that the impact of Cloud Computing on IT vendors will be huge. Established vendors have a great presence in traditional software markets, and as new Web 2.0 and cloud business models evolve and expand outside of consumer markets, a great deal could change.

Gartner believes the biggest expenses for the providers of cloud-provisioned consumer mail are currently electricity and storage and that the biggest cost for enterprise email operations during the next 10 years will be level-one help desk support as reduced licensing and operational costs improve enterprise cloud-based email economics.

Gartner said the uptake of cloud email will start with small companies (the only area where it is successful now) and move to midsize companies, and by 2012, the cloud model will serve the largest firms, with more than 50,000 seats.

“As large suppliers push into the cloud email market we’ll see a fundamental restructuring of the email market,” said Cain. “Traditional email software-as-a-service (SaaS) vendors will come under tremendous price pressure from mega-scale vendors.

“Established traditional dedicated server model hosting vendors will fare better based on their ability to offer larger scale and more customised email.”

From an end-user point of view, Cain explained that companies with fewer than 1000 seats typically have had the highest costs associated with email and would stand to gain significantly from the cloud approach.

Daryl Plummer, managing vice president and Gartner Fellow, said over the past 15 years, a continuing trend toward IT industrialisation has grown in popularity as IT services delivered via hardware, software and people are becoming repeatable and usable by a wide range of customers and service providers.

“This is due, in part to the commoditisation and standardisation of technologies, in part to virtualisation and the rise of service-oriented software architectures, and most importantly, to the dramatic growth in popularity of the Internet,” he said.

Plummer added that taken together, these three major trends constitute the basis of a discontinuity that will create a new opportunity to shape the relationship between those who use IT services and those who sell them.

Essentially it will mean that users of IT-related services will be able to focus on what the service provides them rather than how the services are implemented or hosted.

Gartner maintains that although names for this type of operation have come into vogue at different times – utility computing, software as a service (SaaS) and application service providers – none has garnered widespread acceptance as the central theme for how IT-related services can be delivered globally.

Gartner reported that while cloud-based services probably don’t meet the needs of enterprise computing today, it predicts over the next five years, they will creep into mainstream use, right at the same time that current enterprise computing models run their course.