Who’s afraid of the big, bad Cloud service supplier?

09 May 2012

There are around 25k IT suppliers in the UK currently – companies who hold direct business relationships with users, helping them with anything from disaster recovery, to software deployment and – most importantly – managed services. These trusted advisors include many types of company from the largest SIs and distributors to self-employed experts looking after the needs of small companies.

Cloud Computing concepts offer users the chance to acquire virtual services directly from suppliers or distributors, whose offerings often turn from software to service categories in the process. Since 2009 this has increased the channel’s fear of dis-intermediation – to borrow a term from the study of economics.

In the UK the threat was not immediate. Initial offerings were from suppliers such as Amazon and Google extending their free-to-use consumer applications to businesses from data centres based in the US. Data jurisdiction issues quickly made these public Cloud offerings a ‘no no’ for user organisations’ production systems: either for reasons of legal compliance or because they wanted to avoid the American government scanning their data under the Patriot Act. As with most important new technologies public Cloud use was also slowed by claims of its inherent insecurity, especially as a multi-tenanted solution.

During 2010 the big suppliers started rolling out UK regional data centres to launch their own Cloud services – not just the social media players, but also systems suppliers such as IBM, Fujitsu, HP and Dell. The channels’ fear of dis-intermediation was mitigated by declarations that even (and sometimes ‘especially’) in these new areas vendors still valued and needed their partners to book the customers’ business. A number of distributors also began to offer reseller-driven Cloud services, whether relatively simple Jamcraker based SaaS or more advanced sets, such as Computerlink’s ALVEA services. However the wheel keeps turning….

In 2012 the fear is on the rise once more for a number of reasons. In particular:

-The weak economy is accelerating the adoption of Cloud services for customers who want to step away from running their own applications and/or take advantage of shifting from Cap Ex to Op Ex

-Systems suppliers are reorganising and putting a stronger emphasis on their own direct Cloud offerings, building out from test and development to production and even mission critical services, new software and services are addressing the security issues more effectively

-US companies such as Paychex, Elders, SHI International and Dating Outside the Box (at a recent HP analyst meeting) are talking up their positive experiences of public Cloud offerings

Even new IT price comparison Web sites such as Managed Service Expert may increase direct selling, even if others, such as Comparetheware are reseller-based systems.

In talking with the channel it is clear that most understand and have plans for shifting from supplying physical to virtual offerings and they’ve proved adept in the past in meeting the changing shape of the industry. It’s time for them to put those plans into action quickly, or else their number will decrease substantially.