Building a future proof service portfolio

By Dale Vile

We constantly hear that cloud is the future and that distributors, resellers, integrators and software houses need to rebuild their businesses around it. But is there enough demand for you to really bet the farm on hosted services?

Our research at Freeform Dynamics suggests you need to be very careful here. As a simple illustration, take a look at this chart from a recent study of SMBs, which highlights the limited awareness and activity among smaller businesses (Figure 1).

Figure 1

In the same study, as with many others, we also picked up a general nervousness about handing data to a third party and potentially losing control. And across all of our research we consistently find that even among early cloud adopters, it’s rare to find businesses aiming to move all of their IT into a hosted environment. Cloud may be a religion among many service providers and pundits, but it isn’t for the vast majority of mainstream businesses. In fact for most, cloud is not even an objective or ‘end’ – it’s simply one possible means to an end.

At the same time, as we can see from the above chart, there is an appetite to look at alternative ways of buying and consuming IT such as financing, subscription and managed services. So, while opportunities exist to unlock incremental revenue and margin by offering new ways of meeting customer needs, this doesn’t necessarily translate to a total shift to ‘full-on’ hosted cloud. Meanwhile, the demand for most traditional products and services will not go away in a hurry.

Players like Microsoft, IBM, HP, Dell, EMC, Oracle, Symantec and others know this. If you take their marketing and PR on face value you might believe that everything is moving to the cloud, but when you look at where they are making their numbers, and will continue to do so over the coming few years, they still have a huge commitment to on-premise delivery.

So does this mean you can afford to ignore what’s going on in the cloud space? Absolutely not. More progressive customers, which are also generally the most profitable ones, are already exploiting new delivery models and will increasingly expect to be offered new ways of procuring or ‘consuming’ IT. Alternative models are also likely to ‘unblock’ investment activity among more conservative customers by removing many of the skills, resource and cash-related reasons not to act.

Against this background, if you are coming from a traditional IT channel environment, the imperative is therefore not to abandon your existing, successful business lines and stake your future solely on the cloud, but to extend your portfolio to embrace new delivery options and offer your customers a choice.

In an ideal world, customers should be able to buy traditional products and services from you in the traditional way, acquire on-premise IT but through alternative payment approaches such as financing, rental or subscription, or consume what they need as a cloud service. In addition, it will increasingly make sense to blend cloud and on-premise components into single integrated or ‘hybrid’ solutions.

As standards develop it will be easier to construct hybrid solutions yourself, but players like Microsoft have already done a lot of groundwork for you. The latest versions of Windows Server and Microsoft Office, for example, come out of the box almost begging to be plugged into cloud services. On-premise Microsoft environments can also be enhanced with hosted archiving from Mimecast, cloud security from Symantec, and many other ‘as a service’ options.

Beyond the established players, it’s also worth looking at innovative newcomers. Zynstra, for example, can provide you with a pre-integrated hybrid platform combining on-premise private cloud technology with hosted backup and recovery. Designed for SMB ‘cookie-cutter’ installation and remote administration, such solutions provide a robust foundation for delivering managed services in a future proof manner without a lot of investment on the part of you or your customer.

So next time you hear an evangelist telling you that your old business is dead and to bet the farm on cloud, just look across your customer base and ask yourself how many of them would applaud you for making that move. Then ask yourself what they really need and want, and develop your offerings accordingly.

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Dale Vile

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Dale is a co-founder of Freeform Dynamics, and today runs the company. As part of this, he oversees the organisation’s industry coverage and research agenda, which tracks technology trends and developments, along with IT-related buying behaviour among mainstream enterprises, SMBs and public sector organisations.