Hype or Hope?

Hype or Hope?

Carl Churchill of Daisy Wholesale
Carl Churchill of Daisy Wholesale

How are we progressing on the hype cycle for cloud-based applications? Have they taken over the world yet? Comms Business Magazine talks to suppliers and resellers to see where we have got to with cloud-based applications to determine if they are still hype or now a new hope for resellers.

It’s hard to ignore the fact that wherever you seem to look in the ICT market the dominant topic of conversations is ‘the cloud’. We’ve seen some hype cycles in our time but the cloud has left all of those in the shade, not least in terms of the pure volume of outpourings and evangelising on the subject.

Surveys in to adoption and likely adoption of cloud-based services and applications abound and we have a few findings here for you to digest but in our view there are a couple of key takeaways to think about right away;

1. Cloud-based services are not exactly new. We have been using remote data back-up for years for example.

2. Connectivity, in the form of availability, quality and reliability, is key and vital for any application that even approaches a need for real time.

3. Whilst not new, the wider roll out and deployment of cloud-based applications is embryonic – in its infancy. The benefits have still to be recognised.

4. The channel has a challenge on its hands in terms of separating wheat from chaff and making a margin at the same time.

The Surveys

Over half of UK businesses are seeing the adoption of cloud-based services as being more about business process innovation as opposed to just technical efficiency, according to the findings of survey undertaken by the Cloud Industry Forum.

However, the survey of 5,800 primarily UK-based individuals, which was conducted in October 2011, identified that the vocabulary of cloud computing still led to confusion. Over a third – 36 per cent of the sample – stated that they were still unclear about the differences between public, private and hybrid cloud delivery models. Further, 56% of the participants also choose not to differentiate between cloud services and other forms of hosted IT services.

The survey also confirmed that material concerns still persist over where data is physically stored with just under two thirds (67 per cent) of those questioned stating that data sovereignty was a major issue with only 17 per cent stating that it was not. A clear majority of participants preferred data to be retained in their own country (i.e. the UK) over the EEA or other jurisdictions.


Key findings:

• 22 per cent of the sample stated that their primary interest in the cloud is its ability to deliver agility and flexibility in IT deployment.

• 16 per cent claimed the cloud would enable them to access IT solutions they currently did not have in-house.

• 14 per cent stated that the cloud model would help in improving customer service.

• 13 per cent stated that it would assist in containing costs.

• 59 per cent of the sample want their data stored within the UK and a further 24% required the data to stay in the European Economic Area when selecting a cloud service provider.

• Security of data (38 per cent) remains the number one concern for many businesses

• The majority of respondents felt that the cloud would be a more affordable solution than running existing IT systems (89 per cent); that the Cloud would be more reliable (89 per cent)



Andy Burton, Chair of the Cloud Industry Forum and CEO of Fasthosts, stated, “The opportunity that cloud services represent is clearly winning over hearts and minds in the wider market and it is encouraging to see that they are now more often considered part of the wider IT strategy. However, the hype of the early days has left a level of confusion and disconnect, with one third of the participants still unclear about the various different cloud deployment models, evidence if evidence was needed that the industry as a whole needs to continue to educate the market. And yet many of the fundamental benefits the cloud can bring to a business – flexibility, scaleability, affordability and reliability appear to be resonating and are thoroughly understood.”

Over recent years the public face of cloud service marketing has been primarily focused on the cost savings afforded by cloud migration and yet, as the research yet again proves, whilst financial benefits are achieved and do drive further investment from companies already using the cloud, it is the flexibility and agility given to businesses to deliver new services, access technology quickly and to offer solutions that they did not already have that so often drives initial adoption.

“This research reiterates the widely held belief that cloud services are more about delivering innovation and advantage to the business community through improved agility and flexibility, as opposed to being just a technical innovation. This means both cloud service providers and their customers need to understand the impact that cloud is having in terms of enabling faster and more efficient change of IT capability and build that into their solution design and message to endusers,” concluded Burton.


Who is buying?

Following a survey of global cloud providers, OnApp, a provider of software for the hosting industry, reports that 49 per cent expect the small business sector to drive take-up of cloud services in the next 12 months. A total of 27 per cent expect the enterprise sector to be their primary source of growth, while just 18 per cent see consumers as their greatest opportunity.

What is Cloud Computing to the ‘average’ customer?Well Michael Davies, Head of Product Management, MDNX says it means different things to different people, which is a problem in a sales environment. “To some it’s all about Salesforce.com and the noise coming from Google. To others, including MDNX, it’s about virtualising business applications to deliver lower cost of ownership, better performance, flexibility and scaleability.

“Security and resilience are the biggest concerns, which is where the distinction between Public and Private Cloud must be drawn. Virtual Private Cloud, our focus, gives a customer private access to a shared infrastructure and thus offers the best of all worlds – specialist managed network services and a physical, tangible place where applications run and users can see, touch, and even visit.”


Triple Digits!

Carl Churchill, Managing Director at Daisy Wholesale reminds us of one of the key takeaways; “Whilst there’s much hype and buzz around cloud computing at the moment, it’s important to remember that applications ‘in the cloud’ are nothing new. The cloud is simply the way in which types of services are delivered and referred to, many of which have been around for years. Email, for example, is a service in the cloud that many businesses have been using since the Internet as we know it began.

“From a telecoms prospective, it’s not always easy to manage the transition from being a voice reseller to an applications business, but that’s where the role of the aggregator lies.

“The most important aspect is launching services that will clearly benefit both your business and the end-user.

“I often hear people talking about the cloud, but forgetting to address the opportunity for the channel in terms of what the reseller can learn and make from it. As with any service, deploying cloud applications has to be driven by customer demand.

“For Daisy Wholesale, our advice for the channel is work with your aggregator to develop the services you understand. Don’t try to immediately embrace mass application; gradually ease yourself in by offering quick win applications, such as hosted email and collaboration. Remember you will not be able to convince customers to make the move to the cloud overnight.

“It’s just as important for resellers to remember that embracing new products is also about mitigating your risks. You need to get to a position where you are able to offer the same and better applications than your competitors, who will also be thinking about their clients’ strategy.

“Start thinking about how you can launch applications to suit a requirement in your customer base and protect your traditional business. Loyalty in customers is important and the greater the mix of services, the larger their trust in you, the stickier the relationship and the longer they will continue to work with you.

‘One significant benefit for the channel is that cloud applications offer a much better margin than traditional voice – sometimes triple digits. The same opportunity tends not to present itself with traditional communications services.”

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