VAR guide: Breaking into the cloud services market

With cloud computing taking hold, it's time for resellers to learn how to offer cloud computing services. This VAR guide shows resellers how to offer cloud services.

From the channel perspective, there are several drawbacks to breaking into the cloud services market. The market is so badly defined and poorly understood that customers are not completely sure what they'd be getting when investing in cloud computing services -- despite the fact that studies show that most enterprises are interested.

Cloud computing is, by definition, large in scale and generic in both delivery method and branding. Briefly, cloud computing is any set of applications or services that an end user can access easily through Internet connections, which can increase in scope according to the customer's needs, and for which the customer pays according to the level of resources used.

The best-known examples are Amazon's EC2 and Microsoft's Azure, both of which essentially provide data-centers-for-rent onto which customers load and configure their own software. The most common are software as a service (SaaS) providers such as Salesforce.com and Google Apps.

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Both Gartner Inc. and IDC predict astonishing levels of growth for the cloud services market, largely because it extends existing markets, including MSP services, SaaS, outsourcing and on-premises virtualization infrastructures. IDC estimates spending on cloud services specifically last year was a little more than $16 billion and predicts that it will reach $55.5 billion by 2014. Gartner predicts that 35% of IT workloads will shift into cloud environments during the next five years and that, by 2014, one company in five will rely on the cloud to such an extent that they have almost no assets of their own.

The advantage to customers is obvious -- top-quality IT services without having to buy or maintain either the technology or staff to provide them. For channel companies, the cloud is a challenge because customers typically demand much higher service levels of external providers than they'd expect of their own staff, according to Vince DiMemmo, general manager of cloud and IT services at Equinix, a colocation and data center operator whose infrastructure underpins the services of network providers including Verizon, AT&T, Japan Telecom, MCI, Comcast and YouTube. That means cloud platforms -- no matter how simple, flexible and cost efficient for the customer -- have to be rigorously designed and maintained by any provider that hopes to retain customers for any length of time, DiMemmo said. That's too high an investment for most channel companies.

How to break into the cloud services market

Fortunately, there are three ways to get into the cloud services market even without building your own high-volume, high-end data center. First is to become an aggregator of other providers' cloud-based services. Because cloud services are designed to be easily accessed, integration of several services isn't difficult and often delivers greater cost efficiency than services built entirely by one provider, according to Gartner's report.

The second way is to flat-out resell cloud services from other companies -- Amazon, Microsoft, Equinix, Terremark and others. Most customers want a flexible platform available in case they need to add compute or storage capacity but don't want to move a large chunk of their existing infrastructures onto someone else's platform.

The third way to break into the cloud services market is to sell cloud as the endpoint of a server virtualization project for internal use. Currently, according to research by Gartner and IDC, the vast majority of cloud projects focus on simplifying the interfaces among internal corporate systems and relying on virtualization to make the best use of resources on underused storage or servers.

Offering the best cloud services to your customers

Cloud platforms can live inside a company's firewall, outside -- under the banner of a service provider like Amazon EC2 or Microsoft Azure -- or can link the two.

No matter who owns the cloud, the key to making it work for the end users is performance, which, according to DiMemmo, means significant effort at improving performance and reducing latency in each of three major areas: networks, servers and software.

Even if they're virtualized and theoretically invisible, servers have to deliver high performance and throughput, which means not being stingy on components, DiMemmo said. Software has to be quick and concise, meaning that it strips out unnecessary UIs and, especially, reduces the chatter between client and server.

Most important is to keep the cloud computing network itself fast by putting high-bandwidth, low-latency access points as close to the end users as possible and keeping the number of hops any given packet takes to an absolute minimum.

"Every extra hop through another switch or router, or a long hop from the user's LAN onto the cloud backbone, [is] going to add latency," DiMemmo said. "No matter where our servers are, we try to put the access point inside the customer's building whenever possible, sometimes more than one."

End users, not the IT staff, judge whether cloud platforms perform well enough to replace or augment their traditionally LAN-based applications, so cloud providers and integrators have to make sure the new experience is at least as good as the old.

"If it seems slow to [the end users]," DiMemmo said, "they complain to IT, and the project runs into trouble."

For more information on cloud network services, check out this cloud computing network primer from SearchNetworking.com.

Kevin Fogarty is a contributing writer based in Boston.

This was first published in August 2010

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