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IT firms move to cloud, incorporate cloud into business operations

Channel companies see agility, scalability and cost benefits from working cloud services into their business operations. Smaller channel partners lead the pack with internal cloud adoption.

It is difficult to imagine a company that could not benefit from moving at least some of its IT systems or data to a cloud services environment. The same can be said for the IT channel. The agility, scalability and cost benefits that are achieved by customers of channel companies can also be realized by the channel companies themselves. Because value-added resellers (VARs), managed service providers and systems integrators are in the business of IT, you could even argue that they stand to benefit more from a move to cloud.

One driver for moving internal IT services to the cloud is to relieve staff of the maintenance and management of those systems. The same holds true for channel companies, which can suffer from the "cobbler's children with no shoes" dilemma, according to Ted Roller, vice president of channel development at LogMeIn and chair of the CompTIA Cloud Community.

Roller explained that solution providers can get so busy tending to their customers' systems that they don't have time to tend to their own. "If they can leverage cloud technologies that are by-and-large back-office operations, then they can escape that cobbler's shoe scenario and have updates at the same time their customers are getting them, which is very nice," he said.

Small up-and-comers ... don't have anything they are converting and see cloud as a chance to compete against bigger legacy providers.
Jason Bystraksenior director for cloud, the Americas, Ingram Micro

Another driver motivating solution providers to move to cloud is something that's unique to the channel. "What I see as a significant difference between channel providers and customers is that channel providers are getting an early start with cloud apps. ... There's an early-adoption, eat-your-own-dog-food mentality. They aren't going to sell it unless they're using it and seeing great success with it," Roller said.

Christopher Hertz, CEO of New Signature, a Washington, D.C.-based Microsoft systems integrator and managed services provider, echoed this sentiment. "The decision to [use cloud services] was largely made out of the desire to make sure we are delivering a great experience to our customers," he said. New Signature uses all of the cloud services it offers clients. "We started doing that many years ago. If the customer says, 'This sounds great, but are you doing it?' we can say, 'Yes, because the same economics that hold true for you also hold true for me.'"

If any company has the resources to manage its applications internally, that would be New Signature, which employs more than 30 Microsoft experts. However, Hertz pointed out that it is still to the solution provider's benefit to move from on-premises-based Microsoft Exchange to cloud-based Exchange. Instead of patching and managing the infrastructure, New Signature's experts are able to exploit and leverage the advanced enterprise capabilities of Exchange that present business value to the solution provider and its customers. "It allows us to do a better job of making that an option to our customers," he said.

According to Jason Bystrak, senior director for cloud, the Americas, at Ingram Micro and vice chair of the CompTIA Cloud Community, some channel companies are resistant to moving their operations to the cloud, but not for technical reasons. "Where we do see some resistance is with larger, established IT resellers that have built their business with on-premises delivery," he said. The transition from selling servers and licenses for Microsoft Exchange, for example, to selling subscriptions to a hosted environment can be painful for these channel companies. In the traditional model, resellers see payment in net 30 days, but it can take a year to see revenue and profit in the hosted model, Bystrak said. Because they are not selling the services, they have yet to move their operations.

Meanwhile, smaller channel companies are leading the pack with internal cloud adoption. "Small up-and-comers are excited and starting to adopt [cloud solutions] very quickly. They don't have an established book of business, so they don't have anything they are converting and see cloud as a chance to compete against bigger legacy providers," Bystrak said.

Such is the case for 10th Magnitude, a Chicago-based cloud consultancy and solution provider. "We were born in the cloud. We have never owned hardware. From Day 1, all of our financials, storage, everything was up there," CEO Alex Brown explained.

Brown said 10th Magnitude uses SaaS applications for back-office tasks like accounting and billing, while all of research and development and training take place in Infrastructure as a Service (IaaS)-based sandboxes. "We automate much of [the process to set up an IaaS sandbox] to keep a handle on costs and make it easier for our developers to learn new things without having to set up all sorts of things. ... Plus, it's a great training exercise in and of itself," he said.

Brown feels strongly about the value 10th Magnitude's use of the cloud brings to customers, and has made it an explicit part of the channel company's marketing message. "We can share security and regulatory compliance strategies, and it gives [customers] a lot of comfort knowing that we're living what we're espousing," Brown said.

Hertz agreed, and while customers don't often ask about New Signature's use of the cloud, Hertz deliberately refers to the company's own experience to assuage any concerns that customers may have with moving to the cloud. "We are in a place where we understand the customer's concerns. We've done this ourselves, so speaking that way can be helpful. We volunteer our experiences to provide an easy example that essentially creates a connection between what they are going through and what we went through," he said.

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