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.

Microsoft’s Office Communications Server 14 is due later this year. But in this lackluster unified communications (UC) market, is that too soon?

This week, Microsoft pushed Office Communications Server (OCS) 14 at VoiceCon Orlando 2010. OCS is an add-on that works with Exchange Server and Microsoft Office. It includes support for instant messaging, voicemail, Internet telephony and conferencing.

Microsoft is touting its latest UC product as a replacement for PBX-based systems. But in a recent call with our Channel Advisory Board, members gave their take on unified communications services, and it wasn’t too promising.

“In the couple instances that we’ve seen, [customers] want [UC], but they don’t want to pay Cisco pricing,” said one of our board members. “They’re more than willing to play around in a Google environment, test it out and see if they want to go the telepresence route.”

During testing, customers realize that their business processes and personnel aren’t synced up for UC, and they can’t get the money. So they try something free and open source first, another board member said.

The corporate vice president of Microsoft’s Office Communications Group, Gurdeep Singh Pall, would probably disagree with that sentiment. At the VoiceCon keynote, Pall said more than 100 million Office users are connected to OCS, and he predicted that within three years, UC capabilities will be integrated into 75% of applications, according to Visual Studio magazine.

Regardless of whether or not UC will be a hit this year, solutions providers should keep an eye out for how they can integrate UC services into their offerings. Hosted UC services can be an especially attractive option for customers that don’t want to spend the money for on-premise UC. This point is best summed up in an article on hosted UC from SearchNetworkingChannel.com.

“In the hosted scenario, the hardware and applications software sit at the provider’s data center, where all of the management and monitoring also take place. For customers, that means no need to purchase equipment except for VoIP phones or cameras for video conferencing … As the service provider, you handle implementation, configuration and customization, and then updates and enhancements over time. Your customers simply pay the monthly bill.”

While many VARs may not agree with the now-approved healthcare legislation, those with a healthcare bent see it as a potential goldmine. This according to one member of the SearchITChannel.com Advisory board. Here are the top five takeways from yesterday’s quarterly advisory board call:

 1: Business is back!

Let’s lead with the good news for once: Several board members said they are seeing brisk business after quarter after quarter of dismal results.

“Last week was our best week in 63 weeks” in terms of services, said Database Solutions’ CEO George Brown. “People are coming back to custom apps work. We’re recovering but slowly.”

Luke Wignall, CEO Common Knowledge Technology, LLC, had to beg off this quarter’s call because he was so busy. (We forgive you Luke. This time….)

 Alvaka Networks lost a lot of good competitors over the past year, according to executive VP Kevin McDonald. “We saw a lot of the competition die and we’re getting a ton of resumes.”

And, despite talk about salaries and jobs rebounding, smart IT pros who once pulled down $180,000 are accepting jobs for $65,000, he said. That’s a positive thing for those VARs who are hiring but clearly not at all good for those that went belly up.

A big caveat to the business-is-brisk meme: Watch out for new taxes. Several panel members warned of the push by several states to enact new sales taxes on services. Yes, including IT services.

California has already rejected such a tax twice, but it could be back, said McDonald. Jason Sparks, vice president with Xiologics, said Oregon and Washington state both passed such sales taxes.

Now’s the time to speak out, McDonald said.

 2: Healthcare VARs are in the catbird seat.

Setting up healthcare organizations to comply with HIPAA regulations and/or to attain “meaningful use” of electronic health records (EHR) across 23 categories, is not something “you just do,” said McDonald. “It takes time to get up to speed on the law and regulations.”

Very basic questions must be answered. For example, the push to arm doctors with portable tablet devices raises security concerns. What is more easily lost than a tablet in a busy doctor’s office? How to protect that patient data from intruding eyes? Options include proximity switches and biometrics.

Healthcare IT has to to beyond HIPAA. Healthcare VARsalso  have to be up to speed on the Federal Trade Commission’s Red Flags rules to prevent identity theft. And don’t forget industry PCI mandates covering wireless transmission of credit card and other data. And then there are the 40+ states with their own rules.

3: Interest in unified comms is real: Actual purchases not so much.

Customers are interested in new technologies like unified communications but the vendor hype still far outstrips real demand.

Business customers “want to do it but they don’t want to pay Cisco prices, so they’ll play around with the Google stuff” and see what they can do without risking budget, said one panel member.

Pete Sclafani, founder of 6Connect agreed that there are a lot of conversations around UC.  ”It looks cool but then they realize that their business processes and personnel are not synced up to this and they’ve been burned by implementation issues in the past,” he said.

 4: Mobility remains HUGE!

Android phones, especially the Google Droid, are stealing Apple’s iPhone thunder. Droid just needs to stockpile applications.

“There’s no fundamental difference between the iPhone and Droid. I bought a Droid for $99 and i can buy a whole lot of apps for the$400 [I saved],” said McDonald.

And what about the BlackBerry, RIM’s popular handheld seems to have lost its mojo in recent months, but McDonald and Brown  said all it will take for the BlackBerry to recoup is “one good malware scare” in the Android universe.

The jury’s still out on Microsoft’s new Windows 7 phone edition, but most were so underwhelmed by Microsoft’s previous attempts that they’re hesitant to bless the new release.  Past Windows Mobile iterations “are right up there with Microsoft Bob” in terms of reputation, said Brown.

Microsoft must mend relationships with carriers that were burned by its past ho-hum releases but its plans to share revenue could sway them.

5: Virtualization is for real–yes on desktops too

 Virtualization is happening ”faster than I can keep up with it,” McDonald said. And that includes virtualization on the desktop where the end of support for WIndows XP is forcing desktop decisions that often include DVI,  said Brown.

 Sclafani said customers are really drilling down into potential savings and implementation niceties before taking the DVI plunge, however. “They want to know the financial benefits of virtualization, we have to lead the sales pitch with that. There’s a lot more fiscal input on the buying decision now.”

ROI details are key.  “New clients literally want to know ‘ how much will I save per user? How many hours of IT time will I save? How much user productivity will I gain?’” McDonald added.

 Security is also a concern. Many companies deploy VMs without thinking about the security implications and this is one area VARs can really help.

 Citrix remains the company to beat in desktop virtualization and it “owns” healthcare with its terminal services, said McDonald. Similarly, VMware retains its hold on server virtualization. And yet no one was prepared to rule out Microsoft on either the desktop or server virtualization scenario. “By version 3 or 4, Microsoft will catch up. It’s never out of the picture,” said Brown.

 Bonus: BPOS takes hold and Cisco firewalls are MIA

Brown reiterated his new-found enthusiasm for Microsoft’s Business Productivity Online Suite, something  he had blasted before. The service opportunities around the Microsoft-hosted applications have been under reported and smart VARs can make a lot more than the 18% referral fee on the first year if they work with multi-site companies to deploy BPOS, he said. The suite also gives VARs something to counter Google Apps in the field.

Also: Several members reported difficulties sourcing Cisco firewalls, especially at the low end.  “They’re just not available,” said one panelist.

And finally, someone on the panel has the world’s best hold music. You really can’t hear Don’t Fear the Reaper enough these days. (Although Heather Clancy requested more cowbell.)

For more from the SearchITChannel.com advisory board, click here.

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