IT and Business Insights for SMB Solution Providers

Cloud Computing: How Cloud Computing Shifts the VAR Model

Managed services is an ever-changing field, and the recent rise in cloud computing means that SMB IT service providers need to reexamine the VAR model. By Colleen Frye

Douglas Toombs is a senior analyst at Tier1 Research, a division of The 451 Group, where he covers managed services and cloud computing. In this conversation with writer Colleen Frye, Toombs notes some key trends, and why SMBs and the channel should get onboard and leverage their status as trusted partner.

ChannelPro-SMB: What are some key trends in managed services, and which are pertinent to SMBs?

Toombs: We’re seeing a lot of growth in the security, compliance, email systems, [and] business continuity and disaster recovery services space, as cloud computing comes more to the forefront of the industry. Cloud has proved viable for SMB computing requirements. Business continuity/disaster recovery is one example. Five to 10 years ago, it might have been prohibitively expensive to have a hot capability off-site in case of disaster. Now with cloud it’s considerably more affordable. [In terms of security,] there are a number of companies out there that offer SaaS and managed security solutions, and in many cases they will do both. At scale they can provide a more cost-effective solution than what smaller organizations had to do five years ago to deal with any number of threats.

ChannelPro-SMB: What technology innovations are driving this space?

Toombs: A lot of the work we’re seeing is around cloud orchestration software—software that takes things above and beyond a traditional hypervisor virtualization exercise on server consolidation. Cloud orchestration stacks let company developers add another layer of abstraction. These types of stacks are having a dramatic impact on the marketplace, in terms of customers trying to get to a multiple virtualization environment, and get to the next level with an internal cloud structure that is more agile and flexible. That helps open the bridge—now we have an internal cloud and we can get a connection to an external cloud and use it for burst capacity. That’s having a lot of impact in the market.

ChannelPro-SMB: What are the opportunities in SaaS, IaaS, and PaaS for the channel?

Toombs: PaaS is the more nascent of them, and harder to predict, but the general expectation is that there is abundant opportunity in the IaaS and SaaS markets. Look at programs like the Ingram Micro Seismic catalog and the Arrow ECS cloud services—that’s a shift in the traditional VAR/reseller channel model. There are service providers that have [IaaS] offerings and VARs that can leverage them. For SaaS, there are reseller programs for Google Apps, Microsoft online apps—those represent opportunities for the channel. Based on how many workloads are predicted to move to a cloud structure, I think more will go through a VAR. A VAR has a trusted relationship, in areas service providers are interested in getting traction from.

ChannelPro-SMB: Do SMBs, and the channel, really understand the cloud and how they can benefit from it?

Toombs: SMBs are somewhat lost in the marketing blizzard, and there are still reasonable concerns, such as vendor lock-in, security, and compliance issues, that make it challenging for SMBs. Whether the channel fully grasps [cloud] is secondary to the point that they really need to get it. SMBs need a trusted partner to help them and [determine] what could benefit their business. As business shifts into these models it will happen one way or other, so it would be beneficial for VARs to get in front, as opposed to customers figuring it out on their own and buying services directly.

ChannelPro-SMB: For SMBs, are there situations in which managed services or a cloud offering is not the right thing?

Toombs: They would be few and far between, as long as an organization doesn’t fall under any regulatory or compliance restrictions. That throws other variables into the equation. But if not, there is less and less need for on-premise infrastructure.

It’s definitely a big leap of faith. IT, whether in an SMB or larger enterprise, needs to transform into governance and vendor management. It’s one thing to say move all data to SaaS, but IT and the people making those decisions need to consider what the plans are, what the needs are, and how do I get back if it’s not working? If you move all data to a SaaS office suite, what’s the plan if you decide to change direction later? It’s a leap of faith, but it can be bolstered if you have a Plan B in mind for how you would shift that plan and workload down road [if necessary].

ChannelPro-SMB: How do you see this space playing out over the next 12 months?

Toombs: We see a few different trends. One is that of a cloud or managed services-only SMB or SME. We [at Tier1] fall into that category. We’re not managing much on-site. I think that trend will continue to grow. The other is cloud orchestration stacks. Lastly, one of the big things is that customers are interested in moving development and test workloads out to the cloud, and we expect to see a lot more traction in that space over the next year.

About the Author

Colleen Frye's picture

Colleen Frye is ChannelPro's managing editor.

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