Vox pop: Should Aussie MSPs build their own clouds?

Moheb Moses, co-founder and director, Channel Dynamics

Building your own private cloud will cost more up front, but should yield a better ongoing margin.

The problem is scale. If you build for future growth, it’s not profitable now, and if you build for current usage, you run out of capacity. And unless you differentiate your solution (with a specific application, for example) the big guys have the scale to bring costs down further.

The other issue is Moore’s Law (technology halves in price and doubles in performance every two years).

It was great when resellers used to sell technology to customers, because it meant they could upgrade them every few years. But when an MSP builds their own private cloud, the onus to upgrade shifts from the customer to the MSP. And if the MSP hasn’t factored that cost in, customers will switch to another MSP who can provide better performance, a lower price, or both.

Jules Rumsey, chief executive, Cloud Plus

It really depends on the reason.
If it’s for a specialised application that an IT firm is better able to support on their own infrastructure, and they have the prerequisite skills and experience to build and operate a private cloud platform effectively, then this may make sense.

But if they plan to offer a general-purpose IaaS platform to their clients, then they’ve probably missed the boat. You need scale to sustain healthy margins in what is already a very competitive market. Plus, it is capital intensive, in both an upfront and ongoing sense, and to do it properly you need to invest a significant amount of engineering time that will likely take a long time to recoup.

This is foreign to most IT businesses and may put them under a lot of stress. So, it is arguably better to partner for such services.

Paul Mangano, managing director, Mangano IT

I believe the answer to this question needs to align with the strategic direction of each MSP. Building out a private cloud that offers performance, reliability and security is quite an investment. In my opinion, that is best left to the bigger players.

At Mangano IT, we have chosen to partner strategically with Microsoft and Telstra. This gives us the ability to deliver scalable public cloud solutions that meet the needs of most clients. Of course, public cloud isn’t for everyone.

In those circumstances, we deploy traditional infrastructure on-premise or in a data centre for our clients. We prefer to manage this infrastructure for our clients, as opposed to building out a large, multi-tenanted environment that needs regular refreshing and constant maintenance.

As the cost of public cloud reduces over time, I believe it will become more difficult to make the numbers stack up for MSPs to build their own private clouds.