The substance behind cloud computing hype

Software as a service and cloud computing have come together to create a confusing range of vendor offerings that are being billed as the next greatest thing. But as the area evolves it is bringing new opportunities for resellers as well as significant caveats. All of the major vendors are now in some way involved, so it is important to monitor developments closely.

Telecom’s integration arm Gen-i has been involved in cloud computing for years. “Our capabilities span all three types of cloud services,” says head of infrastructure and business applications, Leanne Buer. “These are Infrastructure (IaaS), Platform (PaaS) and Applications (SaaS). We also offer communications-based solutions (CaaS) as hosted services.

"We are able to handle everything from the most simple cloud computing requirements through to clients with extremely complex needs. We are currently working on opportunities in the IaaS and CaaS space, which we can then build on as clients become more comfortable with IT being delivered over the cloud.”

Gen-i is seeing a growing trend towards cloud computing and significant growth in the range of services being offered over the cloud. The technology and the economic landscape have now reached a point where these types of offerings deliver both a cost benefit and an organisational benefit in scalability, speed of deployment and flexibility.

“We have been working in this space for many years and have a solid base of clients that currently use our hosted security (Safecom) as well as productivity SaaS offerings (Managed Mail),” says Buer. “Gen-i will also soon be launching a range of new infrastructure-based services offered through our cloud. We expect the overall uptake in computing, desktop and applications from the cloud to increase pretty sharply over the next 18 months as more clients see the benefits hosted solutions offer.”

Buer notes that it is important to realise that IaaS, SaaS and PaaS solutions may not always be the most effective solution for every business. “Each business should assess SaaS against their current and long-term requirements, which is something we do with all our clients,” she says.

Microsoft’s Online Services offers business email, calendar and tasks, internal websites, voice and video conference calls and indication of people’s availability. “Within the next 12 months Microsoft will have Office Web Applications available as well,” says national technology officer Brett Roberts. “The Microsoft solution will stretch across the desktop, browser and phone. Using the cloud services model is an attractive option for SMBs, as it has the potential to lower IT costs and it will ensure IT costs are more transparent. This purchasing model is certainly right for the current economic climate.”

Locally, Microsoft has been seeing those who already use its Office, Exchange and Sharepoint products getting interested in, and making enquiries about, the SaaS offerings.

“To address data security and service availability, we develop clear service level agreements with partners and customers,” says Roberts. “Our cloud solution also has a ‘reverse gear’ where data can be retrieved and stored alternatively should customers choose to do things differently.”

In addition to its SaaS offering, Microsoft provides the Windows Azure Platform. This is an internet-scale cloud services platform hosted in Microsoft datacentres, which provides an operating system and a set of developer services that can be used individually or together. The Azure platform can be used to build new applications to run from the cloud or enhance existing applications with cloud-based capabilities.

Microsoft’s business model is to work with local partners. “The majority of our revenue comes through the partner or reseller channel,” says Roberts. “In New Zealand we have 3500 partners, and are working closely with them to understand, position and sell Microsoft Online Services and cloud computing solutions.

NetSuite provides a SaaS business management solution, encapsulating Financials/ERP, CRM and e-commerce. The current economy has accentuated the significant trend towards cloud computing by SMEs, as well as larger businesses, says international products VP, Craig Sullivan.

“Businesses have seen their IT budget grow, and increasingly consumed, by maintenance and overhead, with little left over for innovation and gaining competitive advantage. Cloud computing fits the bill because it provides a zero capex solution coupled with easy, pay-as-you-go subscription services that eliminate costly maintenance and IT spend.”

Security and service availability remain a key area for any service provider to address. This is especially important when running a business application that is running core ERP, CRM and Ecommerce processes. NetSuite addresses each of these areas, and for service availability, provides a 99.5 percent service level commitment.

“We’re seeing robust growth in APAC as a whole,” says Sullivan. “According to Springboard Research, the market for SaaS-based ERP in Asia Pacific (excluding Japan) is estimated to grow from US$35 million in 2008 to US$193 million by 2012.”

There are substantial opportunities for the reseller channel, he says. “With the current economy, resellers of on-premise software have been particularly exposed to the unpredictability and risk of selling on-premise software,” says Sullivan. “The benefits of SaaS for resellers is that it delivers recurring revenues on customer subscriptions, year-over-year.”

IBM is seeing immense interest in internal clouds and about the SaaS/cloud market generally. “Growth within the past 12 months has been cautious, partly due to a lack of major local players,” says emerging technologies executive, Rob Varker.

“Google, Amazon and IBM have been offering cloud platforms, and there has been some takeup of these international offerings, but there has not been a large scale movement by major customers yet. Impediments to growth have been partly real, and partly perception, focusing upon discomfort with a new thing and concerns over security.”

Nevertheless, IBM’s view is that the market is likely to grow exponentially during the next 12 month, driven by reduced TCO and a favorable ROI. One issue is that companies frequently don’t review the TCO of existing infrastructure, which can grow and become less economic as the company expands.

Within the next four months, IBM will be introducing a virtual server service offering, designed to provide a managed hosting service to the SMB market. The service will scale and grow as required, and will integrate with existing services.

“For resellers, it is important to understand what aspects of client infrastructure are ready for cloud infrastructure,” says Varker. “The key to cloud computing is to standardise, rationalise, simplify and automate. For resellers, it is important to focus upon standardising and rationalising first.”

Revera is a locally owned and operated data centre and computing infrastructure provider. “We have feet in both SaaS and cloud computing camps,” says business development manager, Robin Cockayne.

“In the SaaS area, we provide ghosted IT infrastructure, maintaining our position as a pure-play infrastructure provider rather than software reseller. For software resellers we package monthly wholesale rated options, including software licenses, and additional service layers—such as help desk, storage, and disaster recovery. For example, we have spearheaded Microsoft’s local push into hosted CRM, adding necessary automated provisioning to our VDC (Virtual Data Centre) hosting platform to streamline channel delivery. Five years ago, SaaS was spooky. Not any more. It’s now a popular conversation inside IT departments and boardrooms.”

Revera also functions as a pure cloud infrastructure provider, concentrating on local clouds. As businesses accept that utility computing can provide the computing, network and storage resources that they need, deployment of applications into these environments is expected to accelerate.

“Point solutions, like payroll, CRM, and accounting, have spearheaded the SaaS market. Now we can expect to see chunkier applications lift off,” says Cockayne. “However, people should be aware that a not all clouds are the same. The current cloud hype fixates on international services over the internet. But a cloud is simply an easy way to connect to the things you need. And not all of that is provided by international internet. Domestic internet and private clouds are much less risky and more flexible.”

Revera white labels capability for resellers. “One SaaS example is locally owned CRM integrator Complete Solutions, which launched a CRM SaaS offering called CRMNow, bringing to market on-demand Microsoft Dynamics,” says Cockayne. “A feature of Microsoft Dynamics is multi-tenanted architecture, enabling hosting partners to run a single copy of the server application, but support multiple customers simultaneously and securely, easing hosting chores.”

Citrix has had a considerable amount of international success in the cloud computing market, selling solutions to some of the biggest vendors in the industry, including Amazon. “The key to a successful cloud venture is the delivery of content to the user,” says systems engineering manager, Chris Lockery.

“For example, using technologies like application virtualisation to deliver apps over any medium is a great enabler. Citrix covers SaaS and cloud through solutions such as the XenServer hypervisor, XenApp application delivery and XenDesktop desktop virtualisation tool. Also, this month has seen the availability of Citrix’s NetScaler VPX solution – a virtualised load balancing appliance which brings security and flexibility to acceleration solutions in the datacentre. “

Citrix has seen a spike in interest about cloud computing and SaaS from service providers - both in the enterprise and moving into the SME/SMB market. The company has seen special interest from service providers using Citrix products for application and desktop delivery and moving the market toward a hosted infrastructure model.

“Cloud in New Zealand is an emerging field,” says Lockery. “It’s an area that a lot of service providers are looking into and begining to invest in. There’s a big opportunity for small and medium businesses in New Zealand to benefit from the cost and management savings that IT as a service and cloud computing can bring them.”

Datasouth has traditionally been a provider of network infrastructure and software development services. In more recent times these services have evolved to include the supply of software and services to the mid market and SME business sectors.

“Datasouth’s focus in the cloud computing sector is to provide a complete solution,” says general manager, Craig Gerken. “We are not only hosting a client’s application or network infrastructure, but also supporting this environment at both the server and desktop level - as well as providing development and customisation of their line of business applications, business intelligence solutions and their collaboration and communication platforms.”

From Datasouth’s perspective, the interest in this area is from organisations having a requirement to deploy new applications, but the lacking capacity or capability to support this with existing on-premise network infrastructure. “A key example that we have seen a number of times is a client wanting to deploy Microsoft Office SharePoint Server, but being restricted by their existing infrastructure platform - and not having budget available to invest in the required platform upgrades.”

Software and services is still very much in its infancy. “I think the current hype will continue to grow over the next 12 months,” says Gerken. “What will be interesting over this time will be the increase in uptake by organisations moving to this deployment model. What is certain is that resellers that only focus on providing on-premise infrastructure platform support will find their business opportunities will substantially reduce over the coming years.”