Published on April 30, 2014, written for Alchemy Systems International
Alchemy Systems International passes ISO9001:2000 Quality Management Standard assessment for quality management principles that reflect best practices and demonstrates ongoing commitment to customer care.
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OpenSource Cloud vs Proprietary Cloud; Making a Choice for the ISVs
For years, IT buyers have had the option to take the open source technology route for server and desktop operating systems and for back-office applications. The same options exist for cloud platforms, but which is the best option for ISVs when preparing their Line of Business (LOB) apps for the cloud and which is best for the business IT buyer?
Cloud for development
As ever, the industry remains split on the open source vs. proprietary cloud platform debate. In the case of software developers, there is a preference amongst many for the flexibility that building cloud services on open source software can offer; there are, however, many that prefer a fuller set of integrated features alongside an established service-level agreement, (SLA) that comes with a proprietary cloud platform, through a managed cloud service provider.
Open source cloud platforms, such as OpenStack and CloudStack can offer cloud service providers (CSPs) access to a large number of developers, updates that can be made available quickly and don’t lock customers into any single vendor. There are some ISVs that want a highly customisable platform that is open to contributions from a broad range of developers and that has access to rapidly available updates and upgrades, and are beginning to embrace open source clouds. However, the dynamically evolving nature of open source technology is, in itself, a challenge for software developers and ISVs that may not have the specific skill-sets or experience needed to manage such complex technologies.
OpenStack-based offerings need a lot of maintenance and ongoing development after they are initially designed, and within ISVs you often find that IT teams with traditional skills are desperately trying to learn about, and deal with, open source technologies on the fly. While OpenStack includes complex technology, it can be a good fit for ISVs that would prefer not to be tied to any specific vendor.
Gaining the necessary IT skills to build and maintain a test and development cloud environment is a challenge for the ISV and many will choose to work with a CSP that partners with a commercial vendor to provide a fully flexible, feature-rich proprietary cloud platform; this is a more appealing option as they can rely on the vendor for training and support when testing, developing and integrating line of business applications and solutions. Established cloud service providers already offer proven, commercial cloud platforms and it is unlikely that any CSP would consider delivering open source solutions to an ISV that are less market mature and in some cases even still evolving. However, vendor specific cloud platforms can result in higher operational costs in the long term, as a result of recurring licencing fees.
Open source, proprietary or a mixture of both?
As the cloud market matures, there will be a greater diversity in users with specific requirements, and as open source platforms become more established and the growing number of cloud providers that support ISVs in developing LOB applications gain the expertise and skills they need, it is likely that a hybrid approach that will emerge, combining both platforms and offering the best of both worlds.
Providers will not only need to make multiple technologies and platforms available to support these ISV partners, and offer the most suitable technologies for their other target customers, but to also increase their own agility and breadth of offering. Despite this multivendor approach, it is still acknowledge that even OpenStack can lock down customers. Once customers have made the significant commitment to adopt either open source or vendor cloud environments, they will soon discover how painful it could be to switch from one platform to the other. It could be said that OpenStack helps you to more easily explore other options, but there’s still remains a significant amount of lock-in (or inconvenience of moving to a different service) to the platform.
Cloud for business
Currently most OpenStack solutions are geared toward small to medium business IT buyers and are ideally suited to smaller or more agile companies rather than large enterprise-scale businesses. Yet, sophisticated buyers and more established players within larger organisations (that have extensive IT investments) are very aware of the potential of cloud lock-in and are looking towards a multi-cloud strategy, either through multiple platforms or through deploying a purely open cloud platform.
Choosing an OpenStack platform for the longer term will be very popular with the SMB where saving money is paramount and where no legacy platform exists to migrate away from; the enterprises tend to be far more risk-averse and have to protect investments they have already made, and therefore cannot be as aggressive in their adoption of new cloud platforms.
Cloud for resellers
One of OpenStack’s downsides is that the multivendor aspect of the open source strategy eliminates the likelihood of a cohesive technology road map. This can make it much more difficult for resellers and channel partners to map out mid to long terms strategies for their customers. Not having a comprehensive road map to refer to will be a major issue; as time goes on this will become even more important because customers often want to move quickly – outpacing the CSPs’ ability to see over the development horizon and guide their customers on best practices, based on emerging developments.
Indeed, the lack of road maps is definitely something that businesses need to look at, in terms of their chosen CSP’s ability to develop appropriate long-range plans. Customers rely on channel partners like ASI Cloud, to help them make decisions regarding OpenStack or proprietary solutions.
Ultimately, for the reseller, it is always a question of maximising value to the end customer; adding cloud services to the portfolio will add value to whichever products and services they currently resell. VARs need to take a very close look at their technical capabilities and the needs of their customers before choosing which route to take.
Are you a reseller having trouble choosing which cloud route to take?
Is your ISV business looking at both platforms for IaaS and PaaS options?
Are you a SMB looking to switch your IT procurement to a subscription model?
What is your experience of implementing and maintaining an OpenStack platform?
How will you choose the right Cloud Service Provider to Partner with, and the right Reseller Model for your business?
With so many Cloud Service Providers, (CSPs), and Managed Service Providers, (MSP’s) offering a glittering array of reseller models to choose from, which is best suited to you, your business and your customers?
The majority of business customers would prefer to continue buying from the trusted IT partner with whom they have enjoyed beneficial relationships for many years. But with so many customers moving to the more attractive subscription model of hosted SaaS, in place of traditional hardware and software purchase, many such IT resellers are faced with adding a cloud-stream – if they haven’t done so already, and even changing their business model entirely, often at considerable cost. In every case the traditional IT partner is faced with how they take advantage of the Cloud marketplace, whilst continuing to add value and differentiating themselves; in the me too cloud space.
Of course there are a number of cloud service models that reseller can choose from that don’t require huge investments in infrastructure, technical training or lengthy efforts in marketing. Here are the primary models:
- Reseller or Subcontractor model: In this case, the cloud service provider (CSP) will sign an agreement with the reseller, who in turn, signs a general contract with the IT buyer to deliver cloud services. In some cases, the resellers will sign a single contract to enable the provision of cloud services to multiple customers. In other cases, a reseller-customer contract may include specific points and clauses that require an equivalent contract between the CSP and the reseller. The subcontractor model is ideal if the reseller wishes to bundle their own services with those of the CSP to add extra value to their business customers.
- Assignment model: Under this model, resellers purchase a quantity of contracts from the CSP for customers and will sign over the rights and any obligations to avoid the legal burden of the principal-agent relationship.
- Agency model: This model enables resellers, (acting as an agent) to sell the provision of cloud services on behalf of the CSP and arranges a contract to be signed directly between the customer and the CSP. In the event that the reseller provides additional services or software as part of a deal with the customer, a separate purchase agreement should cover these.
- Referral model: This is probably the most popular model. Resellers simply refer customers to the CSP in exchange for a commission or some other benefit. Ownership of the customer relationship is likely to be shared in this instance, but should be agreed before-hand between the referrer and the CSP.
As all these models will have some effect on the business and customer relationships, it is vital for resellers to research the CSP they choose to deal with, and the sell-partner models they operate.
If you are a reseller and are looking to partner with a CSP to provide cloud services and products, here are a few pointers that will enable you to profit from the cloud space:
- Integrate cloud services with your traditional products and services: As a cloud reseller, you won’t be required to remodel all your business practices; your CSP should help you to integrate cloud services with your regular offerings where they can support the needs of your clients. This will bring in additional revenue streams while you continue to look after your traditional user base and maintain ownership of the customer relationship.
- Maintain your trusted IT partner status: Resellers should be able to continue in this role when adding cloud services. Many customers are still unsure of how cloud services can meet their unique business needs and will seek advice from their trusted IT partner. It is important for resellers that sales and technical teams understand the cloud and how business customers can benefit from it; make sure that your CSP partner provides all the necessary training and support you’ll need to successfully take your cloud services to market.
- Retain customers with added value: By offering cloud products and services under your own brand you will be able to meet the needs of those business customers that are looking to switch to a subscription model and prevent them from buying cloud services from your competition. Reselling cloud services will help you achieve a greater share of the customer spend and develop new, high value recurring revenue streams.
- Aggregate & Integrate: Look for cloud partners that do NOT lock you in to their current solutions set, but that can aggregate services from a wider CSP, ISV or global vendor base and that offers a suite of services, on a ‘pick and mix’ basis, in an integrated fashion. Preferably one that also offers a roadmap of not just commodity applications but a visionary and high value stack of future services.
It is important to choose a CSP partner that can support you and your customers equally. They must provide you with the core technical skills and capabilities, and the right mix of sales and marketing resources to take you to the cloud market quickly and easily.
Your new CSP partner must have the ability to plan and implement cloud strategies that will complement your exiting portfolio and provide you with access to a catalogue of mature SaaS options and ISVs that produce a whole range of cloud-ready LOB applications for you to introduce to your business customers.
Finally, you should choose a CSP that that takes the time to understandwhich reseller model is best for your business, and that offers you the flexibility to adapt to your specific market and challenges.
Are you looking for a partner to help add cloud space services to your portfolio?
Is your IT reseller business going through major changes to keep up with customer demand for cloud services?
Do you have any experiences of choosing a CSP partner you’d like to share?
Peter Stephen is a Surrey based freelance creative and marketing copywriter – to hire, call 07917 36 01 01 or email firstname.lastname@example.org