Channel Marker

Jun 3 2010   11:42AM GMT

Cloud computing craze could oust certain VARs

NicoleH Nicole Harding Profile: NicoleH

 

A few months ago, I wrote about the bright future of cloud computing services. Many experts agreed that the demand for cloud computing platforms and applications would continue to increase, and it looks like their predictions are proving true. Just check out the news from the past few weeks alone:

·         VMware recently unveiled its “Move Beyond” campaign, which encourages customers to use cloud computing for data center management. VMware launched the campaign, which is expected to run through the end of the year, in response to feedback from channel partners who wanted their customers to be more aware of virtualization, according to a company blog post. And, of course, VMware is touting vSphere as the virtual infrastructure product of choice for enabling cloud computing.

 

·         Hewlett-Packard also made cloud headlines this week, cutting roughly 9,000 jobs and revealing plans to invest $1 billion into its Enterprise Services business. The company said it will reduce the number of its data centers by half and will focus on cloud computing initiatives, according to SearchCloudComputing.com.

 

As expected, VARs reeled from the news, especially since of the 9,000 jobs cut, HP will re-hire 6,000 people for sales and services delivery. In a call today with SearchITChannel.com’s advisory board, several members expressed angst over what HP’s news means for their businesses.

 

 “HP is adding 6,000 new service delivery and sales professionals. [So] they’re cutting 9,000 and adding 6,000 in direct competition to us,” said one member.

 

HP’s move means that VARs have to either stay in the trenches with two or three points in margin or figure out some sort of angle around business engineering and business processes at a higher level, said another member. Overall, board members agreed that business intelligence services are going to be a VAR’s best bet at ongoing revenue.

 

“Since Dell started selling direct, that’s when you started to see that vendors can make money without VARs. We’re five years out with just making money on services and implementations. We’re moving toward business intelligence, software compliance [and] workflow management, things that vendors can’t do with clients,” said board member Kevin McDonald, executive VP with Alvaka Networks.

 

·         Finally, Google continues to encourage cloud adoption with its new Go Google cloud calculator. Google partners can use the calculator to show customers the benefits of Google’s cloud computing applications. It asks a series of questions and uses the responses to generate custom URLs, presentations, spreadsheets and posters about the benefits that cloud computing will have for that particular company, according to V3.co.uk.

Many solution providers remain unsure of how they fit into the cloud scheme, and at least one company is trying to help in this area. Arrow Fusion, Arrow’s Enterprise Computing Solutions’ professional services business unit, is aimed at helping resellers with their service offerings.

 Arrow Fusion offers new cloud services that solution providers can use, including Security and Software as a Service (SaaS), Infrastructure as a Service (IaaS), data center monitoring and management, business continuity and disaster recovery. Solution providers can implement Arrow Fusion’s SaaS offerings for email disaster recovery and archiving, Web defense and message archiving. They can also use Arrow Fusion’s services to give customers reports on data center performance and monitoring.

One thing is clear: VARs will have to work hard to compete with big vendors that are eyeing cloud services.

SearchITChannel.com’s board members agreed that small businesses and large enterprises that can afford to set up test environments for the cloud will benefit the most. But mid-sized companies and small-end VARs will find it hard to succeed as the cloud continues its ascent.

 

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