Getting Ready for Cloud Computing

Setting Your Strategy

ndustry experts agree: Cloud computing is growing fast and here to stay. Over the next few years, SMBs in the United States and elsewhere will steadily shift an increasing portion of their technology spending from on-premise services and hardware to solutions hosted in the cloud. For VARs and managed service providers, that means now is the time to begin preparing to compete and win in the cloud computing marketplace. Choosing a go-to-market strategy is the first key step every IT provider must take on their road to the cloud. This white paper guides you through some of the critical issues to consider and questions to ask, drawing on insights from these experienced cloud computing veterans: n Bob Breitman, president/CEO, IT That Works (www.ittw.net) n Joe Markert, managing director, FunctionOne (www.functiononeit.com) n Joe Nardone, CEO, Expert Data Labs LLC (www.teamedl.com)

Understanding the Cloud Opportunity

Though cloud computing accounts for a relatively small share of IT outlays at present, its slowly but steadily becoming a significant new market. Consider, for example, these facts: n Analyst firm IDC expects cloud services to outpace spending on traditional IT services over the next several years, rising to $44.2 billion in the U.S. alone by 2013. n Analysts at Gartner Inc. expect worldwide cloud service revenues to reach $149 billion by 2014. n Between 2010 and 2014, spending by SMBs globally on cloud services will rise at a compound annual growth rate of 13 percent to more than $95 billion, according to technology research firm AMI-Partners Inc. Such bold predictions arent hard to explain. Cloud computing offers businesses a host of significant benefits, including these: Pay-as-you-go pricing: Most cloud service providers charge their clients recurring, usage-based fees. That enables companies to avoid the high up-front costs typically associated with new solutions while also converting IT from a capital expense into an operational one. Faster ROI: Thanks to those lower up-front investments, cloud-based solutions generally pay off more quickly than on-premise systems.

Flexibility and scalability: Most cloud solutions give end users the freedom to scale their environment up or down swiftly as their business requirements change. Reduced downtime: Cloud solutions leverage virtualization and other advanced technologies to achieve high levels of availability. No matter how wary of cloud computing your clients may be today, advantages like these will eventually persuade most if not all of them to move a sizeable portion of their on-site IT resources into the cloud. Ignoring cloud computing, then, is not a viable long-term option for anyone who makes their living managing servers, desktops, and applications. The smart move, rather, is to get started in cloud computing now, supplement your existing income with lucrative new revenue streams, position yourself for future success in a changing IT marketplace, and steal a march on your competition. And heres the best part: As an MSP, you already have most of the skills youll need to succeed in the cloud. After all, you know how to support infrastructures remotely, you have experience with service contracts and SLAs, and youre familiar with recurring monthly pricing. Making the jump to cloud computing will definitely entail acquiring new capabilities, but probably not as many as you think.

Surveying Your Options

Adopting a cloud computing strategy would be significantly easier if cloud computing itself was easier to define. Unfortunately, however, cloud computing is a catch-all term for a range of different services that can be delivered in a variety of different ways.

Cloud Computing Service Models

At a high level, most cloud services can be divided into three categories: Software as a service (SaaS): Hosted remotely and consumed via the Internet, SaaS solutions enable organizations to run everything from email to line-of-business applications

Were running into a situation where more and more of what we used to deploy on site is now shifting to the cloud, so theres less for us to manage. We all need to be aware of that. That revenue is going to go away.
JOe MaRkeRT

FunctionOne

We think any right solution ought to be a mixture of public cloud, private cloud, and general on-premise stuff. There is no one solution. Its a balance. The MSP of the future will be the guy who knows how to find that balance.
BOB BReITMaN

IT That Works

without buying, deploying, or maintaining costly server hardware. Microsoft Business Productivity Online Suite (soon to be renamed Microsoft Office 365), Google Apps, and Salesforce.com are all popular SaaS offerings. Infrastructure as a service (IaaS): Available from providers such as Amazon and Rackspace as well as many smaller firms, IaaS solutions deliver processing power, storage space, and other computing resources on demand. Platform as a service (PaaS): Like IaaS solutions, PaaS solutions offer cloud-based infrastructure resources. Unlike IaaS solutions, however, PaaS systems also include programming tools that provide developers a complete environment in which to create, host, and scale applications rapidly. Microsoft Windows Azure and Google App Engine are two of the best-known PaaS options.

Cloud Computing Deployment Models

There are basically two ways to deliver cloud services to your customers: n Public cloud solutions reside in off-site data centers and are delivered via the Internet. VARs and MSPs can either resell services that are hosted by a third party or host services themselves in dedicated or leased data centers. Reselling a vendors service spares you the expense of building and administering your own infrastructure. Hosting your own services, however, gives you more control over what you offer, how you offer it, and how you price it. n Private cloud solutions employ the same basic technologies and protocols as public ones, but run on privately owned or leased servers that sit behind a corporate firewall. Unlike public cloud solutions, which tend to be highly commoditized, private clouds offer more opportunity for customization.

these important considerations in mind: Profit potential: Though there are no hard and fast rules in the matter, vendors of public cloud solutions generally pay their resellers significantly lower margins than most MSPs are accustomed to earning. Private cloud solutions, by contrast, give you greater control over pricing and hence profits. account ownership: Some providers of public cloud solutions insist on handling matters such as billing directly, potentially weakening resellers customer relationships. Private cloud solutions typically dont involve a third party vendor, so friction over account ownership is a rarity. Operational control: Though public cloud solutions free you from the burdens of hardware maintenance, they also leave you and your customers at the mercy of a third partys technical support team if something goes wrong. Private clouds require more administration but also empower you to take prompt and direct action when problems arise. Security: Public cloud solutions require end users to store their customer files, sales records, and other sensitive information in a third-party vendors data center, where its potentially vulnerable to intrusion if the vendor is lax about security. Moreover, many public cloud service providers maintain multiple facilities, some of which are overseas. Its nearly impossible to know which of those facilities contains a specific customers dataand therefore which local regulatory requirements and privacy laws govern the storage of that dataat any given time. Private clouds give businesses complete control over their data and its location, reducing security concerns and legal exposures. availability: Public cloud solutions are delivered over the Web, so theyre only as reliable as a users Internet connection. Private cloud solutions operate over a clients local-area or wide-area network, so theres significantly less chance of connectivity-related downtime. Salability: Concerns over the security and reliability of public cloud solutions are common among SMBs at present. As a result, private clouds are often an easier sale, since they dont require business owners to give up control over their data or suffer lost productivity during an Internet outage.

Making Your Choice

As you work through the process of deciding which cloud service and deployment models to support, be sure to keep

The private cloud is a perfect next step to capitalize on what weve already been doing for the last few years: optimizing infrastructure through virtualization.
JOe MaRkeRT

FunctionOne

Focusing initially on services with strong and immediate appeal to customers can also make selling cloud offerings easier. For example, most businesses appreciate the importance of safeguarding their data, so cloud-based business continuity solutions can be a great first offering, especially if many of your clients still rely on tape-based backups. SMBs often find the economic benefits of cloudbased email and collaboration systems easy to understand as well. Over time, as your customers slowly become more comfortable with cloud computing, you can gradually introduce them to other, more sophisticated services.

In a traditional environment its hard to control what your customers do to their hardware. With a private cloud, its much easier to control that, which actually makes management easier too.
JOe NaRDONe

Expert Data Labs LLC

Choosing Your Partners

Success in cloud computing hinges on establishing the right partnerships, so be sure to do your homework before selecting vendors. In particular, ask the following questions of potential partners before signing any agreements: n Do they offer a white label option allowing you to attach your own name and logo to their service? If not, your new cloud venture could end up diluting the brand equity youve worked so hard to accrue with your clients. n Under what conditions, if any, will they contact your customers? Who will handle billing and offer first-line help desk support? n How strong are they financially? Partnering with firms whose future is uncertain can be a risky move. n Do the guarantees in their SLA meet your expectations and those of your clients? n What kind of data center architecture and management practices do they employ? How stable is their infrastructure? Does it have enough redundancy?

How solid is their security? When was the last time their security was audited? Do they have a SAS 70 or ISO/IEC 27000 series certification validating their use of rigorous security processes?

Conclusion
In the years ahead, cloud computing will represent either a massive opportunity or an equally massive threat to todays MSPs, depending largely on decisions they make today. Those that embrace the cloud early and look for ways to profit from it will position themselves for continued success in the SMB technology marketplace. Those that stick to doing business as usual will gradually become less and less relevant to their clients. Fortunately, making your move to the cloud neednt be as painful a process as you may fear. Evaluate your service and delivery options; look for solutions that will protect your margins, your brand, and your client relationships; and then seek out partners you can rely on and trust. Doing so will take time and effort, but the sooner you get started the sooner youll turn the cloud from a cause for anxiety to an engine of growth.

MSP Roundtable Group

Brett Beveridge: Founder & CEO, Symbits kevin Brown: VP of Partner Development, Kutenda Mike Cooch: President, Kutenda, Online Marketing, SEO, EMS for MSP companies Mark Crall: Executive Director of Community and Business Development, Autotask Corp. Randy knutson: President, Symbits Ilene Rosoff: President & CEO, The Launch Pad Inc. arlin Sorensen: CEO/Partner, Heartland Technology Solutions Pat Taylor: President, Atypical Business ken Thoreson: President, Acumen Management Group Ltd. Jamison West: CEO, JWCS Cecilia Galvin: Executive Editor, ChannelPro-SMB Michael Siggins: Editor and Publisher, ChannelPro-SMB

Written by Rich Freeman on behalf of ChannelPro-SMB

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