Thursday, 5 July 2012
Stop being a cloud lemming... let’s claim the IT industry back!
Firstly I take my hat off to Amazon and what it has achieved with AWS. Amazon has taken its experience in retail and applied it to create a supermarket style, volume driven business. The genius is in the way it has achieved this and in doing so, has created a new annuity model for selling IT infrastructure.
Its development of the platform has been phenomenal and it has now taken this to a level where the software layer is so complex that competitors such as Rackspace are using this as a stick to beat them with. The rise in the number of AWS independent consultants and cloud service brokers underlines this. When Amazon had an outage last month the world’s fastest growing website, Pinterest, and sites like Heroku, went down for several hours so you have to ask why they didn’t configure multiple availability zones.... is it just that it’s too complex, or is there a deeper issue?
The knock on effect of Amazon’s success is a stampede from the IT industry trying to ape this success and in many cases throwing away its own experience from the last three decades around best practice IT. IT companies, desperate to put the word ‘cloud’ on their websites, are just buying the ready meal equivalent of the cloud industry – effectively a piece of self service software which sits on a hypervisor, some of which have very questionable security.
The main reason I am writing this article is to try and put perspective on what is happening in the cloud and I realise that with a job title of ‘Director of Cloud Services’ I am the world’s biggest hypocrite. Amazon has created an amazing IT delivery model based on the efficiencies of virtualisation and I absolutely love it. I also love the term ‘cloud’ even if it’s a bit of a metaphor - both of these are here to stay. But Amazon is a retailer whose model is built on volume and it is very reluctant to take responsibility for delivering the full IT stack so the onus (and risk) of course goes back on the customer. This may be fine for test and dev purposes, but how resilient is a CIO going to be shouldering the risk for production, business critical apps?
Managed IT Services are the cornerstone of the IT industry, my industry, the ability to tell a customer that backups, DR, database management, patching, and security are our responsibility and we won’t just stop at the point that allows us to scale with the most efficient head count. It’s an industry that’s built on best practice and customer relationships where we care about the mutual partnership to deliver a solution.
My rallying call is that although the retail sector has taught IT companies a lesson in innovation, now is the time for us to take our industry back. We need to use the cloud operational model to provide agility, but let’s reclaim responsibility and make ‘as a service’ really mean ‘best practice IT managed service’ without compromising our principles – rather than trying to pick up crumbs that fall from a retailers table.
Friday, 6 May 2011
Amazon EC2 Issues: Observations and Cloud Disaster Recovery
Being a daily user of Hootsuite I was first alerted to the Amazon EC2 outage through a “Service Down” message strangely in Japanese on the Hootsuite website at 8am on Thursday 24/4. A quick Google later and the size of the outage became apparent. The impact and the sheer number of companies affected was a very prominent illustration on how popular cloud application hosting has become.
At the time of writing the root cause of the of issue hasn’t been posted, however it appears that there was a major network failure. The main problems to customers seemed to arise when the EBS (Elastic Block Storage) volume replication was disrupted and speculation is that a significant re-mirroring process potentially overloaded the EBS plane.
I am certainly not going to blog about the misfortune of Amazon and its customers, however I would be naive not the think that what has been termed a “plane crash” in cloud computing terms wouldn’t be playing heavily on the minds of our customers. Looking at the constructive comments to come out of the issue (in light of no root cause analysis), there are 2 main threads:
1) A need for improved communication.
A big part of the frustration against Amazon was the lack of information and poor communication flow following the outage. Although Quantix are a smaller company and during any issues lines of communication are through the account management team, I believe all service providers should be looking for improvements. I for one will be sitting down with my team and making suggestions for additional channels.
2) A need for customers to build their own resilience across multiple Amazon availability zones.
Amazon’s high levels of availability to date may have caused complacency in its customers leaving them unprepared our being caught out by an unforeseen failure scenario. I’m sure these latest issues will make a lot of Amazon customers bulk up their resilience across multiple availability zones.
Offering Managed Cloud Services, at Quantix we mitigate the risk to customers by taking on this responsibility for them. This means that every server running on the Quantix cloud has full failover capability from our primary to secondary DC, without any intervention from the customer. Please see this link for more information on our cloud topology http://www.quantix-uk.com/about-quantix/quantix-cloud-platform/cloud-technology-topology
The metaphor of the term cloud has been very useful to describe a way of consuming IT, however it lacks any clarity in terms of what goes on “under the bonnet”. Therefore, if your need any clarification on the way Quantix operate our managed cloud, please feel free to contact me directly and I’d be more than happy talk it through at length.
At the time of writing the root cause of the of issue hasn’t been posted, however it appears that there was a major network failure. The main problems to customers seemed to arise when the EBS (Elastic Block Storage) volume replication was disrupted and speculation is that a significant re-mirroring process potentially overloaded the EBS plane.
I am certainly not going to blog about the misfortune of Amazon and its customers, however I would be naive not the think that what has been termed a “plane crash” in cloud computing terms wouldn’t be playing heavily on the minds of our customers. Looking at the constructive comments to come out of the issue (in light of no root cause analysis), there are 2 main threads:
1) A need for improved communication.
A big part of the frustration against Amazon was the lack of information and poor communication flow following the outage. Although Quantix are a smaller company and during any issues lines of communication are through the account management team, I believe all service providers should be looking for improvements. I for one will be sitting down with my team and making suggestions for additional channels.
2) A need for customers to build their own resilience across multiple Amazon availability zones.
Amazon’s high levels of availability to date may have caused complacency in its customers leaving them unprepared our being caught out by an unforeseen failure scenario. I’m sure these latest issues will make a lot of Amazon customers bulk up their resilience across multiple availability zones.
Offering Managed Cloud Services, at Quantix we mitigate the risk to customers by taking on this responsibility for them. This means that every server running on the Quantix cloud has full failover capability from our primary to secondary DC, without any intervention from the customer. Please see this link for more information on our cloud topology http://www.quantix-uk.com/about-quantix/quantix-cloud-platform/cloud-technology-topology
The metaphor of the term cloud has been very useful to describe a way of consuming IT, however it lacks any clarity in terms of what goes on “under the bonnet”. Therefore, if your need any clarification on the way Quantix operate our managed cloud, please feel free to contact me directly and I’d be more than happy talk it through at length.
Monday, 21 March 2011
Information for RSA & Signify Customers
As a customer of Quantix, some of your users may be using SecurID keyfob tokens supplied by Quantix as part of your cloud service from us. These tokens are designed and manufactured by a company called RSA, the Security Division of EMC. RSA have been the market leader in two-factor authentication products for over 20 years with over 40 million tokens shipped worldwide.
We have been and are currently in regular contact with RSA as we are aware that some of RSA's systems have been subject to a sophisticated cyber attack, and that has resulted in certain information being extracted from RSA’s systems that relates to RSA’s SecurID two-factor authentication products. At this point RSA have not confirmed what this information is, but they are confident that the information extracted does not enable a successful direct attack on any of their RSA SecurID customers, including Signify and our customers.
Currently Quantix are not aware of any compromise to the security of the RSA tokens as a result of this activity, and you can be assured that we are increasing our vigilance and will be working closely with RSA to ensure we take any appropriate steps to minimise any potential impact.
RSA have released an open letter to customers relating to this incident here http://www.rsa.com/node.aspx?id=3872
We will be keeping you informed as and when more information becomes available.
Friday, 11 March 2011
The UK impact of Cloud by 2020
I have just received seen a headline from TechMarketView announcing:
"By the end of the decade, we expect that cloud-based packaged software will represent nearly 30% of all UK software spend, leaving the market for legacy ‘on-premise’ products in irreversible decline."
I have always followed and respected the analysts at TechMarketView and working at the coal face I would even go as far to say that this estimate is on the conservative side. If (or looking more like when) this shift happens the UK "channel" landscape will look very different.
Hardware Sales
If 30% of software is on cloud then at least a similar % of hardware will be powering the cloud. Although as a large percentage of the remaining 70% could be legacy software sales with revenue driven by term licences and subscriptions, new application deployments (which typically drives hardware sales) will be greater than 30%. This therefore means that the hardware channel will be condensed to a fewer number of customers, with the major cloud service providers being the biggest buyers. The economies for service providers will focus on enterprise end kit, greater discounts and a demand high levels of virtualisation. This will apply not only to server & storage, but also security appliances, switches, routers etc..
As a service provider we are already seeing hardware vendors recognise this and they actually help to market our services (rather than their product) because the knock on effect of us taking on more customers means we need more of their kit.
The dominance of the service provider
The demand for SaaS from users is forcing ISVs to do or die and I truly haven't spoken to a software vendor who doesn't have a plan to adopt an element of cloud in the last 6 months. The main problem is that ISVs typically don't have the skills to build and maintain the infrastructure and frankly still just want to concentrate on their application. Therefore the majority of SaaS deployments are based on an established cloud providers infrastructure. Which sets the scene for cloud service providers to become a dominant force as Cloud eats into the UK software market. This is a real worry for the smaller traditional IT resellers, whose revenues rely on product sales, consultancy and post sales support because the market they are addressing is a diminishing one, the full effects of which is a ticking bomb.
Environmental benefits
One natural benefit of software moving to a cloud model is that cloud service providers, driven by virtualisation are going to be very efficient against a large number of independent end user deployments. The cost of power and space will have a big role to play and the service provider will be driven to find efficiencies in this area.If you look at the benefits of virtualisation for just 50 servers, the efficiencies just get better as the magnitude increases.
The above are a few initial thoughts but the effects of a simple headline announcing "a market change" will be profound and will touch the way we use applications, accountancy processes and the IT channel as we know it today. One major hardware vendor said to me recently (in all seriousness) that they can see a place in the future where 90% of their business is condensed to a handfull of major cloud service providers...food for thought.
"By the end of the decade, we expect that cloud-based packaged software will represent nearly 30% of all UK software spend, leaving the market for legacy ‘on-premise’ products in irreversible decline."
I have always followed and respected the analysts at TechMarketView and working at the coal face I would even go as far to say that this estimate is on the conservative side. If (or looking more like when) this shift happens the UK "channel" landscape will look very different.
Hardware Sales
If 30% of software is on cloud then at least a similar % of hardware will be powering the cloud. Although as a large percentage of the remaining 70% could be legacy software sales with revenue driven by term licences and subscriptions, new application deployments (which typically drives hardware sales) will be greater than 30%. This therefore means that the hardware channel will be condensed to a fewer number of customers, with the major cloud service providers being the biggest buyers. The economies for service providers will focus on enterprise end kit, greater discounts and a demand high levels of virtualisation. This will apply not only to server & storage, but also security appliances, switches, routers etc..
As a service provider we are already seeing hardware vendors recognise this and they actually help to market our services (rather than their product) because the knock on effect of us taking on more customers means we need more of their kit.
The dominance of the service provider
The demand for SaaS from users is forcing ISVs to do or die and I truly haven't spoken to a software vendor who doesn't have a plan to adopt an element of cloud in the last 6 months. The main problem is that ISVs typically don't have the skills to build and maintain the infrastructure and frankly still just want to concentrate on their application. Therefore the majority of SaaS deployments are based on an established cloud providers infrastructure. Which sets the scene for cloud service providers to become a dominant force as Cloud eats into the UK software market. This is a real worry for the smaller traditional IT resellers, whose revenues rely on product sales, consultancy and post sales support because the market they are addressing is a diminishing one, the full effects of which is a ticking bomb.
Environmental benefits
One natural benefit of software moving to a cloud model is that cloud service providers, driven by virtualisation are going to be very efficient against a large number of independent end user deployments. The cost of power and space will have a big role to play and the service provider will be driven to find efficiencies in this area.If you look at the benefits of virtualisation for just 50 servers, the efficiencies just get better as the magnitude increases.
The above are a few initial thoughts but the effects of a simple headline announcing "a market change" will be profound and will touch the way we use applications, accountancy processes and the IT channel as we know it today. One major hardware vendor said to me recently (in all seriousness) that they can see a place in the future where 90% of their business is condensed to a handfull of major cloud service providers...food for thought.
Thursday, 24 February 2011
The future of VMware public clouds
For those of you who run cloud infrastructures or operate hosted virtual servers there's a good chance you are using VMware. In fact if you read the latest "Cloud Infrastructure as a Service and Web Hosting" Gartner Magic Quadrant, there is criticism for providers who aren't using VMware.
When it comes down to licencing, because VMWare end user licencing agreements do not allow for products to be used in hosting environments, service providers have to enter into a VMware Service Provider Program (VSPP).
The reason for me asking about the future of VMWare public clouds is that the current VSPP which is based on charging per active virtual machine will be defunct by March 2012. The replacement VSPP agreement will be charged on the amount of virtual memory allocated to each virtual machine. This isn't a major issue until you start creating VMs that are allocated over 3GB RAM, for example the cost for a 32GB VM will work out over 13 times more expensive than under the previous scheme (to the provider).
My question though is how this will impact the big public cloud providers such as Navisite, Rackspace & Opsource who run on VMware and charge by actual RAM usage. Surely this will be impossible to maintain as if a user creates a 32GB RAM VM but only draws 2GB RAM, then the provider will be in a position of having to pay VMware for a 32GB VM licence and only receiving customer revenues for 2GB of actual usage.
I'm sure it will come out in the wash, but I wouldn't be surprised to see some major pricing structure changes from the big providers over the next 12 months.
When it comes down to licencing, because VMWare end user licencing agreements do not allow for products to be used in hosting environments, service providers have to enter into a VMware Service Provider Program (VSPP).
The reason for me asking about the future of VMWare public clouds is that the current VSPP which is based on charging per active virtual machine will be defunct by March 2012. The replacement VSPP agreement will be charged on the amount of virtual memory allocated to each virtual machine. This isn't a major issue until you start creating VMs that are allocated over 3GB RAM, for example the cost for a 32GB VM will work out over 13 times more expensive than under the previous scheme (to the provider).
My question though is how this will impact the big public cloud providers such as Navisite, Rackspace & Opsource who run on VMware and charge by actual RAM usage. Surely this will be impossible to maintain as if a user creates a 32GB RAM VM but only draws 2GB RAM, then the provider will be in a position of having to pay VMware for a 32GB VM licence and only receiving customer revenues for 2GB of actual usage.
I'm sure it will come out in the wash, but I wouldn't be surprised to see some major pricing structure changes from the big providers over the next 12 months.
Wednesday, 23 February 2011
Back in the saddle
Firstly apologies for not updating this blog. The fact that I haven't had the time to update it is that our Cloud business has been going bananas and it's ironic that I should be blogging about the "future" of Cloud yet it is so busy at the moment. A very good sign I hope..
For those of you who follow Quantix, you will know that circa 3 years ago we started to build an cloud infrastructure across 2 DCs in the UK. We are getting a lot of pressure to expand into the US, however, I have been pleasantly surprised how important a UK presence has been to customers. As many companies need data to reside in the UK, 2 local DCs are a must for disaster recovery.
We now have 50 plus customers running on the infrastructure and on the whole, most of these clients have moved major applications onto the platform. The main usage being database heavy e-commerce apps, Hosted Exchange 2010 & Business Continuity.
The combination of a scalable cost effective platform, with our managed service team overlay has found us in a great spot whereby customers want Quantix to take full responsibility for management up to a DB or App level.
I still think public clouds like Amazon are a great fit for companies wanting a DIY approach however, when you are trusting a business critical app to the cloud, you need the provider to take responsibility.
For those of you who follow Quantix, you will know that circa 3 years ago we started to build an cloud infrastructure across 2 DCs in the UK. We are getting a lot of pressure to expand into the US, however, I have been pleasantly surprised how important a UK presence has been to customers. As many companies need data to reside in the UK, 2 local DCs are a must for disaster recovery.
We now have 50 plus customers running on the infrastructure and on the whole, most of these clients have moved major applications onto the platform. The main usage being database heavy e-commerce apps, Hosted Exchange 2010 & Business Continuity.
The combination of a scalable cost effective platform, with our managed service team overlay has found us in a great spot whereby customers want Quantix to take full responsibility for management up to a DB or App level.
I still think public clouds like Amazon are a great fit for companies wanting a DIY approach however, when you are trusting a business critical app to the cloud, you need the provider to take responsibility.
Friday, 14 May 2010
The emergence of the Cloud Managed Service Provider (MSP)
The cloud is a melting pot of service providers, all striving to advance technology, service models and it has to be said “hype” marketing techniques. As the dust is settling there is a small percentage of these companies that have invested in the right areas and are creating the wake for others to follow. Over the past two years there has also been a huge surge in “me too” companies, propelled by marketing departments scurrying to rebrand their existing offerings and the rise of the term “private cloud” which I struggle to accept as a concept!
The big success has been in 2 key areas which are represented by the 2 poster children of Cloud computing; Salesforce and Amazon. These 2 companies have a very different proposition which broadly falls into: SaaS (Salesforce) & PaaS/Iaas (Amazon).
What is a Cloud MSP?
The “Cloud MSP” is a relatively new genre which fits squarely in between SaaS and PaaS providers, That being said, I strongly believe this will be one of the most lucrative areas and ultimately one which will represent the greatest potential growth.
Cloud MSP vs PaaS : A Cloud MSP offers the financial flexibility and the agile infrastructure of a company such as Amazon, but provides a managed service overlay to take away the management headache.
Cloud MSP vs SaaS: A Cloud MSP offers all the user and commercial benefits of SaaS via publishing mainstream applications, but will offer multiple business solutions and a tailored environment to provide a better corporate fit and integration, with greater visibility and control.
A Cloud MSP has the following characteristics:
• They have built their own multi-tenant cloud infrastructure and own the assets of the component parts across multiple datacentres (rather than piggybacking on EC2, Opsource etc).
• They offer a typical “elastic” pay as you go charging model, which allows customers to expand and contract their resources, only paying for what they use.
• They have a very strong managed service proposition allowing them to offer a SaaS experience to users for mainstream software vendors.(Oracle, Microsoft etc..)
• Self service functionality is designed to be user facing allowing service and change request automation.
• Security is paramount with customers being segregated into Virtual Private Clouds and the adoption of a more closed cloud architecture.
• The Cloud MSP has full visibility over all the servers running in the infrastructure and delegates privileges to customers.
• They have a broad, high level technical skills set from the network to application layer allowing them to own and manage the full stack.
• They have strong integration skills to offer a clear one stop application delivery model.
• Dashboard and Service information provides customers with clear SLA and technical information to retain control.
Issues for SaaS providers:
“Gartner defines SaaS as software that is owned, delivered and managed remotely by one or more providers. The provider delivers an application based on a single set of common code and data definitions, which are consumed in a one-to-many model by all contracted customers anytime on a pay-for-use basis, or as a subscription based on use metrics.”
The reason that salesforce.com has been so successful is that the CRM functionality goes toe to toe with mainstream CRM providers, making it an easier decision for companies to sell the application back into their organisation. Problem number 1 is that not all SaaS providers are equal and I see numerous complaints and definite inequality in the market. So if the application isn’t superior to what a company already has, then there has to be a compromise and/or financial saving to make it appealing. Until the mainstream software players get their software into architecture that is truly SaaS, then companies won’t have to compromise on the quality of their application.
The greatest problem for an IT department is when they want to outsource multiple applications to the cloud, as they have to deal with multiple SaaS providers, all of which have differing platforms, databases, interfaces, connectivity methods etc... This poses a big problem to widescale adoption as companies have little consistency across applications, equally, there is little or no interoperability between SaaS apps, there are multiple authentication issues, increasing loss over control/visibility. Furthermore, a key issue is that you continually have several “asses” to kick... That’s if you can find the right ass!.
Issues for PaaS/IaaS providers:
Companies such as Amazon and Opsource have a different set of issues and have been very attractive to a set of early adopters, who are keen to explore the benefits of the cloud. Typically, customers are technically “savvy” and have been using the platforms to undertake tactical projects. Mainstream adoption of cloud technology may mean that growth of this more disposable “hands off” approach struggles to live up to expectations. Customers are and inevitably will continue to demand greater services, and if an organization has made the decision to outsource elements of their infrastructure to the cloud, surely there are greater financial benefits to outsourcing the whole stack and management?
This has been recognized and providers are courting MSP’s and ISV’s to build out on their infrastructure to complete the full picture. There is a great article here http://chaotic-flow.com/saas-channels-cloud-channels-will-follow-the-moneythe-emerging-paas-channel-opportunity/ by Joel York, which highlights the fact that most PaaS providers need this missing service link, hence it being the biggest opportunity for the “channel”. The problem with this model is that the company providing the wrap around service has minimal control over the underlying network and infrastructure, being at the whim of the PaaS provider.
Another problem for PaaS providers is that their business model is based on volume and needs to attract a high frequency of customers, many of whom will consume resource on a disposable model. The result of this usage has a knock on to the architecture requirement and PaaS providers by their nature need to adopt a more open architecture. They have limited visibility as to what purpose the customer is renting the infrastructure for, leaving it more open to compromise. This disposable/utility view of IT is a big jump for mainstream companies to make. This in mind, there is a direct need for a more personal and refined approach to this, which builds trust if critical applications/data are to move into the cloud.
Why is the Cloud MSP growing so rapidly?
Cloud MSPs typically already have a mature and large customer base of clients for whom they remotely manage or host corporate systems. They are in a trusted position and it’s this position that allows them to leverage the benefits of a cloud delivery model more effectively and lucratively. The Cloud MSP has a very attractive formula which offers customers all the commercial benefits of the Cloud, but minimises risk by providing the wrap around management and SLA’s. The customer gets “The Cloud” in a controlled, well managed and secure fashion which requires a zero leap of faith. The added integration and personalized delivery makes it a very attractive proposition.
It has to be said; part of the “push” from MSP’s is also defensive. MSP’s are seeing hosting companies now coming down into their space. I have met with many mainstream hosting companies recently and they are all saying that the margin from hosting and comms has been eroded, so they now need to diversify into managed service. This represents a major threat because if hosting organisations “skill up” with large teams of application and database expertise and can match MSPs in service delivery, then naturally, customers are more likely to consider the hosting companies where their kit is located. MSPs are fighting back by building new green field infrastructures built on more inventive and agile cloud technology, in a bid to offer a more flexible environment. It is a great deal easier to build an infrastructure, than it is for a hosting company to build a comprehensive portfolio of Managed Services with the skills, processes and accreditations which under pin this, (and make it a success) which is a big barrier to hosting companies. However, in the short term, I’m sure the gap will start to close as hosting companies enter into strategic partnerships to bridge this void.
The main barrier to entry for MSP’s trying to diversify to become a Cloud MSP is the huge set up costs of the Cloud environment, plus the diverse skills needed to manage the resultant infrastructure. I know from experience when we built our environment at my company “Quantix” www.quantix-uk.com , the set up costs were close to £700k ($1.1m) and it took a significant amount of lobbying and convincing of the board to make the step to diversification. All being said, it has paid off, and we now are in a position whereby our contracts, more than cover our initial outlay and the future looks rosy. This high cost to entry though will mean that few MSPs will be able to make the jump and only the most committed will be able to enter the market!
Cheers,
Andy
The big success has been in 2 key areas which are represented by the 2 poster children of Cloud computing; Salesforce and Amazon. These 2 companies have a very different proposition which broadly falls into: SaaS (Salesforce) & PaaS/Iaas (Amazon).
What is a Cloud MSP?
The “Cloud MSP” is a relatively new genre which fits squarely in between SaaS and PaaS providers, That being said, I strongly believe this will be one of the most lucrative areas and ultimately one which will represent the greatest potential growth.
Cloud MSP vs PaaS : A Cloud MSP offers the financial flexibility and the agile infrastructure of a company such as Amazon, but provides a managed service overlay to take away the management headache.
Cloud MSP vs SaaS: A Cloud MSP offers all the user and commercial benefits of SaaS via publishing mainstream applications, but will offer multiple business solutions and a tailored environment to provide a better corporate fit and integration, with greater visibility and control.
A Cloud MSP has the following characteristics:
• They have built their own multi-tenant cloud infrastructure and own the assets of the component parts across multiple datacentres (rather than piggybacking on EC2, Opsource etc).
• They offer a typical “elastic” pay as you go charging model, which allows customers to expand and contract their resources, only paying for what they use.
• They have a very strong managed service proposition allowing them to offer a SaaS experience to users for mainstream software vendors.(Oracle, Microsoft etc..)
• Self service functionality is designed to be user facing allowing service and change request automation.
• Security is paramount with customers being segregated into Virtual Private Clouds and the adoption of a more closed cloud architecture.
• The Cloud MSP has full visibility over all the servers running in the infrastructure and delegates privileges to customers.
• They have a broad, high level technical skills set from the network to application layer allowing them to own and manage the full stack.
• They have strong integration skills to offer a clear one stop application delivery model.
• Dashboard and Service information provides customers with clear SLA and technical information to retain control.
Issues for SaaS providers:
“Gartner defines SaaS as software that is owned, delivered and managed remotely by one or more providers. The provider delivers an application based on a single set of common code and data definitions, which are consumed in a one-to-many model by all contracted customers anytime on a pay-for-use basis, or as a subscription based on use metrics.”
The reason that salesforce.com has been so successful is that the CRM functionality goes toe to toe with mainstream CRM providers, making it an easier decision for companies to sell the application back into their organisation. Problem number 1 is that not all SaaS providers are equal and I see numerous complaints and definite inequality in the market. So if the application isn’t superior to what a company already has, then there has to be a compromise and/or financial saving to make it appealing. Until the mainstream software players get their software into architecture that is truly SaaS, then companies won’t have to compromise on the quality of their application.
The greatest problem for an IT department is when they want to outsource multiple applications to the cloud, as they have to deal with multiple SaaS providers, all of which have differing platforms, databases, interfaces, connectivity methods etc... This poses a big problem to widescale adoption as companies have little consistency across applications, equally, there is little or no interoperability between SaaS apps, there are multiple authentication issues, increasing loss over control/visibility. Furthermore, a key issue is that you continually have several “asses” to kick... That’s if you can find the right ass!.
Issues for PaaS/IaaS providers:
Companies such as Amazon and Opsource have a different set of issues and have been very attractive to a set of early adopters, who are keen to explore the benefits of the cloud. Typically, customers are technically “savvy” and have been using the platforms to undertake tactical projects. Mainstream adoption of cloud technology may mean that growth of this more disposable “hands off” approach struggles to live up to expectations. Customers are and inevitably will continue to demand greater services, and if an organization has made the decision to outsource elements of their infrastructure to the cloud, surely there are greater financial benefits to outsourcing the whole stack and management?
This has been recognized and providers are courting MSP’s and ISV’s to build out on their infrastructure to complete the full picture. There is a great article here http://chaotic-flow.com/saas-channels-cloud-channels-will-follow-the-moneythe-emerging-paas-channel-opportunity/ by Joel York, which highlights the fact that most PaaS providers need this missing service link, hence it being the biggest opportunity for the “channel”. The problem with this model is that the company providing the wrap around service has minimal control over the underlying network and infrastructure, being at the whim of the PaaS provider.
Another problem for PaaS providers is that their business model is based on volume and needs to attract a high frequency of customers, many of whom will consume resource on a disposable model. The result of this usage has a knock on to the architecture requirement and PaaS providers by their nature need to adopt a more open architecture. They have limited visibility as to what purpose the customer is renting the infrastructure for, leaving it more open to compromise. This disposable/utility view of IT is a big jump for mainstream companies to make. This in mind, there is a direct need for a more personal and refined approach to this, which builds trust if critical applications/data are to move into the cloud.
Why is the Cloud MSP growing so rapidly?
Cloud MSPs typically already have a mature and large customer base of clients for whom they remotely manage or host corporate systems. They are in a trusted position and it’s this position that allows them to leverage the benefits of a cloud delivery model more effectively and lucratively. The Cloud MSP has a very attractive formula which offers customers all the commercial benefits of the Cloud, but minimises risk by providing the wrap around management and SLA’s. The customer gets “The Cloud” in a controlled, well managed and secure fashion which requires a zero leap of faith. The added integration and personalized delivery makes it a very attractive proposition.
It has to be said; part of the “push” from MSP’s is also defensive. MSP’s are seeing hosting companies now coming down into their space. I have met with many mainstream hosting companies recently and they are all saying that the margin from hosting and comms has been eroded, so they now need to diversify into managed service. This represents a major threat because if hosting organisations “skill up” with large teams of application and database expertise and can match MSPs in service delivery, then naturally, customers are more likely to consider the hosting companies where their kit is located. MSPs are fighting back by building new green field infrastructures built on more inventive and agile cloud technology, in a bid to offer a more flexible environment. It is a great deal easier to build an infrastructure, than it is for a hosting company to build a comprehensive portfolio of Managed Services with the skills, processes and accreditations which under pin this, (and make it a success) which is a big barrier to hosting companies. However, in the short term, I’m sure the gap will start to close as hosting companies enter into strategic partnerships to bridge this void.
The main barrier to entry for MSP’s trying to diversify to become a Cloud MSP is the huge set up costs of the Cloud environment, plus the diverse skills needed to manage the resultant infrastructure. I know from experience when we built our environment at my company “Quantix” www.quantix-uk.com , the set up costs were close to £700k ($1.1m) and it took a significant amount of lobbying and convincing of the board to make the step to diversification. All being said, it has paid off, and we now are in a position whereby our contracts, more than cover our initial outlay and the future looks rosy. This high cost to entry though will mean that few MSPs will be able to make the jump and only the most committed will be able to enter the market!
Cheers,
Andy
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