IT and Business Insights for SMB Solution Providers

Converged Infrastructure: Makes Life Easier, Profits More Challenging

Replacing infrastructure in one step is a huge time saver. The tricky part is replacing that time-and the money you would make-with new revenue streams. By Erik Sherman

Converged infrastructure, now aimed at the SMB market, offers a radical alternative to traditional hardware infrastructure architecture. The channel pro brings a tuned combination of servers, storage, and software to the client. In as little as an hour or two, things are up and running with a single administration panel. Offered at competitive prices, the streamlined approach can enable a VAR or integrator to get in and out of an engagement.

That's the good news. The bad news is that many channel business models see efficiency as an enemy. Converged infrastructure becomes another factor that will push channel players who want to stay in business toward diversified services to add value.

One Term, Many Definitions
"Converged infrastructure" is currently a difficult term to pin down. Many vendors want to define it to their marketing advantage. Some say that everything must be in a single box. Others disagree.

"It's not a specific bill of materials," says Brian Allison, director of partner solutions at San Jose, Calif.-based Cisco Systems Inc. "They're reference architectures ... that have been validated by Cisco, NetApp, or EMC." They don't necessarily ship as an integrated system, although, he says, "We have partners who do integrate these systems into one system."

Baloney, says Steve Kaplan, vice president of channel and strategic sales at competitor Nutanix Inc., also in San Jose: "That's not converged infrastructure. It's adjacent infrastructure."

Some channel professionals, like Tim Singleton, owner of Boulder, Colo.-based Strive Technology Consulting, think the category includes specialized, self-contained building blocks, like backup and recovery appliances, that you can plug into the network as needed.

It's best to consider the various views as steps on a continuum. On one end are appliances. In the middle you could have a vetted reference architecture with all the hardware and software necessary to make it run. At the other end is a single, self-contained box with all the necessary components and unified management software.

In general, a converged solution should include at least one server, storage, necessary networking, and management software. But make no mistake: The trend is toward general systems that can replace traditional infrastructure in one step. Converged architecture, once available to only the largest corporations, can now be used in an SMB, providing some powerful benefits.

"The advantages are that you really do get an enterprise-grade solution for a small market," says Singleton, specifically talking about backup and recovery. When you consider the more general systems, you enter the world of virtualization in a box.

"To me it's an on-premise cloud solution," says Christian Petrou, CEO of Las Vegas-based RVNUE Technologies, an MSP and integrator. "You can build a nice turnkey plug-and-play. Everyone's too focused on the technical aspect of virtualization. The window is opening up for [users] to be able to administer more services more easily."

"We've deployed VDI [video desktop infrastructure] as turnkey solutions that encapsulate all of the equipment that gives them the servers, virtual desktops, and disaster recovery," says Michael Fraser, CEO of Seattle-based VDI Space Inc. "There is no way to deploy a singular VDI solution without having the whole converged solution."

Keep the SMB in Mind
Available configurations are more than just enterprise solutions rebranded for an SMB, which is what offerings had been, according to Brian Payne, executive director of Dell server solutions. "If I'm in the U.S., how do I run it off 110 [volt] power and have a meaningful configuration?" he asks. "How do I get some advantages like the ability to move VMs, [and] flexibility to allocate and reallocate storage?" Now converged infrastructure products from multiple vendors have 110-volt support and integrated virtualization, meaning an easier implementation decision on the part of a client.

Petrou thinks that ultimately converged infrastructure will allow the concept of hardware as a service. The channel provider will go into a client, drop off the latest converged infrastructure boxes, connect them to an existing network, and then charge for hardware and managed services on a monthly bill.

But choosing the right solution for a client can be confusing, given the wide range of offerings and the accompanying prices. For example, Dell's PowerEdge VRTX with two servers and storage starts at $9,999, according to Payne. Depending on the vendor and what hardware and software is included, the price can quickly hit $60,000 and much higher.

However, the right solution can offer significant savings. John Flisher, technical consulting manager at Mt. Pleasant, S.C.-based eGroup, an IT solutions provider, has been evaluating a converged infrastructure product. "We're looking at a 20 percent, 30 percent savings [over sourcing separate components], and you can manage it in one place," he says.

Whether it makes sense depends on the particular customer. If you just need file and print, it would be difficult to justify," says John Eaton of Eaton & Associates, a Nutanix reseller in San Francisco. "But if you have 50 to 150 people, I think the ROI can be very positive." Change the needs of the customer, the type of converged infrastructure device, and the price and the ROI point will be different.

With all the positives for the client, there are considerations for the channel pro. One is that, like other hardware, the margins are low. Willie Jordan, CEO of Emerging Technology Integrators Ltd. in Columbus, Ohio, is a Cisco reseller and estimates that he only gets 4 to 6 percent margin on the device sales. Cisco also sells a maintenance program in which its technicians will diagnose equipment remotely and send a replacement if necessary, so forget about money on break-fix. Instead, he focuses on "customer loyalty and recurrent business" for services to bring in 25 to 35 percent margins over the long haul.

For many VARs and integrators, there will also be the concern about being heavily tied to a given set of vendors. Can the current vendors offer the type of integration the channel player needs, and will a shift in strategy mean a new learning curve and a potential loss of marketing and technical support? It may be best to treat converged infrastructure as an additional type of product line.

A more uncomfortable question may come from customers who want to know why the channel partner previously suggested more complicated and expensive options. The simple answer is that converged infrastructure for SMBs is relatively new and often suited to a new installation or logical replacement for dated hardware.

Even with the potential concerns, converged infrastructure can become a powerful tool for channel pros who have already moved toward a service-based business model.

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