THINK IT Services

The topic of building effective channel alliances in the Cloud continues to gain greater attention. This past week, I spoke at two events and attended a third in the Boston area in which Cloud channel strategies and solutions were a central theme.

The first event was a local gathering called, “Mondays in the Cloud”, organized by Sonian and hosted at the UMass-Boston Venture Development Center. The session was kicked off by Greg Arnette, Sonian’s Founder and CTO, who provided his perspective on the state of the Cloud marketplace. I followed Greg with a talk about the Cloud industry trends driving the demand for a stronger channel network to build on the initial success of Cloud services. My talk was followed by Erik Sebesta of cloudTP who talked about how Cloud integration services companies like his are becoming an important channel to market for Cloud vendors seeking to sell private Cloud solutions into enterprises. Brian Matsubara of Amazon Web Services (AWS) concluded the event with a description of AWS’s channel strategies, programs and success stories.

The next day, I presented and moderated a panel about the state of the Software-as-a-Service (SaaS) and Cloud marketplace, and how established independent software vendors (ISVs) can capitalize on these trends at Progress Software’s “Revolution” customer and partner conference. The overall event attracted over 1,000 attendees, an illustration of Progress Software’s worldwide user and partner base. My breakout session, “Winning the Revolution at the Next Frontier—In the Cloud”, was followed by a panel discussion which I facilitated consisting of Grant Christensen, General Manager-Operations at Supercorp Technology Pty Ltd. based in Australia; Sten Petersson, CEO of Exicom based in Scandinavia; and Tim Diassi, Executive Vice President and General Manager, UnicornHR based in New Jersey. The companies not only operated in different continents, but also delivered very different solutions. Supercorp Technology supplies data services to insurance and financial service companies. Exicom offers an enterprise project management solution. And, UnicornHR provides SaaS-based payroll services. All three companies are experencing growing demand for their Cloud-based solutions and benefiting from their channel relationships with Progress Software.

Yesterday, I attended the ASCII Group’s Success Summit in the Boston area. While it wasn’t promoted as a Cloud event, nearly every speaker addressed the opportunities and challenges associated with the Cloud from a channel perspective. The event attracted over 100 local IT service companies and value-added resellers (VARs), as well as a couple dozen sponsors. It was an impressive gathering with a number of good speakers offering practical advice for channel companies moving to the Cloud.

All the talk about Cloud channel strategies and success stories reinforced the timeliness of the Cloud Channel Summit. You can hear more of my views regarding the forces bringing Cloud channels into focus in the podcast I recorded with Brett Martin and Mike Vizard of Channel Tech Network in Episode 52 of their Channel Happy Hour series.

The extraordinary success of Amazon Web Services’ (AWS) Infrastructure-as-a-Service (IaaS) solutions has prompted nearly every major hardware and software vendor to offer their own IaaS, Software-as-a-Service (SaaS) or Platform-as-a-Service (PaaS) solutions as well. This has put tremendous pressure on traditional hosting companies, communications service providers (CSPs), and Value-Added Resellers (VARs) to respond with their own offerings in this increasingly competitive marketplace.

This week, I had the opportunity to participate in a full-day analyst briefing and attend the kickoff session of Parallels’ 2011 Partner Summit. [Disclosure: Parallels paid my travel expenses to attend the event.] This year’s Summit built on the momentum of last year’s conference by unveiling numerous enhancements to its portfolio of Cloud enablement solutions, including:

• Parallels Automation for Cloud Infrastructure
• Hosted PBX
• Microsoft System Center Hyper-V Cloud
• Microsoft Office 365 Syndication

Parallels also promised to make an increased investment in its Application Packaging Standardization (APS) Program to permit greater portability of Cloud services.

What I especially liked about this year’s event was the way Parallels’ management team attempted to alleviate some of the anxieties among its partners and potential customers about the increasingly competitive Cloud marketplace by emphasizing the tremendous opportunities in the SMB segment and identifying industry best practices that can win hosters, CSPs and VARs success.

While the Cloud Computing market is evolving quickly, mainstream adoption of Cloud services among small- and mid-sized businesses (SMBs) is still embryonic. Parallels is attempting to accelerate the growth of this segement of the market, and help hosting companies, CSPs and VARs capitalize on this tremendous market opportunity with its Cloud enablement products and channel support programs. It is also expanding its role as a Cloud “broker” by recruiting  more Software-as-a-Service (SaaS) to participate in its service catalog.

The company also announced a leadership change with  Birger Steen assuming the CEO position and the company’s founder, Serguei Beloussov, retaining his positions of Executive Chairman of the Board and Chief Architect. Steen brings extensive business experience and strong Microsoft relationships which the company hopes will help it grow from approximately $100 million in revenue to $1 billion over the next five years.

An acquisition by Microsoft might come before it reaches this milestone. The company’s concerted efforts to align itself with Microsoft include many of this year’s product enhancements; moving its headquarters to Renton, WA; and adding other former Microsoft executives to its leadership team such as John Zanni, Vice President of Marketing and Alliances, who was formerly GM of Microsoft’s Worldwide Software + Services Industry, Communications Sector business unit.

A clear measure of Parallels’ growing presence in the Cloud enablement business was the larger number of attendees and sponsors it was able to attract to this year’s Summit. The energy and enthusiasm at the event also demonstrated the strong allegiance which Parallels’ partners feel toward the company.

With few vendors able to offer a comparable portfolio of Cloud enablement tools to hosting companies, CSPs and VARs, Parallels has an opportunity to grow quickly as its partners attempt to keep pace with the tremendous growth of the Cloud Computing marketplace.

Two announcements on the same day this week vividly illustrated the scalability and ubiquity of today’s Cloud Computing phenomenon. They also showed the diversity of users seeking to take advantage of Cloud Computing services.

The first was Amazon’s announcement that it is offering a free usage tier of its Amazon S3, Amazon Elastic Block Store, Amazon Elastic Load Balancing, and AWS data transfer services for new users for a full year. 

Amazon Web Services’ (AWS)  innovative and groundbreaking approach to packaging, pricing and delivering computing power has been the primary impetus and standard bearer of the Cloud Computing movement. Its commodity and even spot-pricing techniques have captured the attention of entrepreneurs and enterprises alike.

UBS Securities estimates that Amazon will generate $500 million in 2010 and $750 million in 2011, making it the largest Cloud vendor by far with minimal marketing effort. Yet, this still only represents less than 3% of Amazon’s total revenues. But, Jeff Bezos is suggesting that AWS could generate as much revenue (and maybe more profits) than its e-commerce business. This is a major reason why Amazon has tripled its capital spending on infrastructure, and why it is attempting to eliminate any economic barriers to user adoption of its AWS capabilities by offering its services for free to encourage even greater growth of its Cloud Computing service business.

Verizon also announced on the same day that it had won a portion of a major new contract issued by the General Services Administration (GSA) of the U.S. federal government aimed at migrating its operations to a private cloud environment.

Under this agreement, Verizon will provide cloud computing services – including server, network and storage capacity – to federal government agencies. The company will provide Infrastructure-as-a-Service (IaaS) capabilities and will help federal agencies meet their virtualization and data center consolidation requirements. The IaaS platform will consist of virtual and physical servers, storage services, backup services, and application support services to create a more responsive and cost-effective, on-demand computing environment.

Verizon was among eleven (11) awardees selected by the GSA to negotiate with government agencies and provide services under a blanket purchase agreement valued at $76.5 million over five years.

These announcements exemplify how rapidly the Cloud Computing movement is expanding.

One of the most controversial aspects of the rapidly evolving cloud computing market among industry insiders is the idea of ‘private clouds’.

Purists insist that cloud computing is all about exchanging legacy, on-premise, inhouse IT resources and functions with online, shared resources via the Internet (i.e., the ‘cloud’).

While this is the origin of the cloud computing concept, a variety of forces have conspired to create an alternative approach referred to as ‘private clouds’.

These include valid customer concerns regarding privacy, security, reliability and performance; along with proprietary concerns among various hardware and software vendors seeking to usurp some of the spotlight away from cloud upstarts like Amazon, Google and Salesforce.com.

In addition to the sourcing and marketing forces fueling the idea of private clouds, there are various debates regarding the technical implementation of private clouds which have raised questions about the viability of this idea.

Just as it pioneered the practical deployment and delivery of public clouds, Amazon Web Services (AWS) is now taking the lead in offering ‘virtual’ private clouds as well.

Anyone who shares my background and experience in the telecom world, can easily see the parallels of today’s AWS announcement with the evolution of the virtual private network in the 1980s to meet the peculiar needs of individual organizations.

Numerous members of the AWS ecosystem have been offering enhancements to its public cloud capabilities to make it more palatable for enterprises to use individually in a safe and secure fashion. Now, AWS is lending more of its resources and reputation to extend their capabilities further to meet users’ unique requirements.

This move will stimulate more customer interest in cloud computing and spark more competition among legacy vendors seeking to legitimize their private cloud efforts.