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We've heard it so many times that it's almost a cliché: The public cloud is a disruptive technology. But the truism bears repeating, because cloud platforms like Microsoft Azure present virtually unlimited opportunities for IT channel companies. Not only are IT solution providers successfully monetizing Microsoft Azure, they are delivering added value to their clients.
"Azure partners have the opportunity to build a cloud business on Azure in a multitude of business models through delivering project-based services, managed services or [intellectual property]/apps," explained Josh Waldo, senior director of cloud partner strategy, Worldwide Partner Group, Microsoft Corp.
Christopher Hertz, CEO of New Signature, a Washington D.C.-based Microsoft systems integrator and managed services provider, agreed. "The projects can be enormously diverse. There can be some similarities, but Azure is such a flexible platform. There's an unlimited amount of opportunity [for] us," he said.
According to Waldo, "Microsoft partners can sell Azure in a variety of ways, including reselling the solution under Microsoft's Open Licensing program or through their own managed service or their own apps as part of a Microsoft Enterprise Agreement."
Public cloud growth equals business growth
Alex BrownCEO, 10th Magnitude
New Signature works with all of the Microsoft solutions and platforms -- on-premises, hybrid and public cloud -- but one delivery model is taking the lead. "Over the last four years, we've been transforming the business to lead with public cloud, largely because we felt that the economics made sense to our customers and we wanted to help them take advantage of the latest and greatest technology, and we thought that existed in the public cloud as opposed to on-premises," Hertz said.
Other IT channel companies like Chicago-based 10th Magnitude focus solely on delivering solutions on Azure. According to CEO Alex Brown, 10th Magnitude is one of the largest Azure pure-plays in the U.S. "It's been very exciting. The cloud market has been growing very aggressively. We're seeing similar growth rates for our organization, as well," he said.
"When we started, our client base was heavily slated to small and medium businesses. Within 18 to 24 months, adoption by larger organizations was increasing and we saw the client mix change, and now we have a healthy mix of large enterprise, mid-market and small and medium business," Brown said.
Understanding the opportunities
One of the ways IT channel companies are monetizing Azure is by helping client organizations discover what they can do with the cloud computing platform. "It's so complex for someone dipping their toe in the water. It is difficult for them to figure out what they can use Azure for," Herz explained. "We help address that [knowledge] gap. We have an analysis process where we understand their current and future state, and educate them on the opportunities that Azure presents to help them meet their goals."
Herz divides those opportunities into two buckets: infrastructure and development. "The infrastructure side is working with the customer to essentially take what used to be traditional infrastructure and move it into Azure," he said.
This is similar to the process that New Signature undertook for its own systems. The solution provider had servers in multiple data centers that it leveraged for high availability. "That meant that we had to lease or purchase equipment, lease the rack space in the data centers, manage the servers, and manage the infrastructure. We took all that infrastructure and moved it to Azure as PaaS [platform as a service] and SaaS [software as a service], allowing us to reduce the complexity and our time spent in managing that infrastructure," Hertz said.
And that brings us to development opportunities: "We're seeing heavy adoption around core cloud infrastructure migration," Brown said, "and that tends to pull with it development activity once they are through the initial phases and comfortable with the core operating principles."
Both New Signature and 10th Magnitude provide software development services on Azure. In addition to developing the applications on the platform, the Azure partners offer full lifecycle management -- running, maintaining and enhancing the applications on a fully outsourced basis.
"I believe one of the dynamics the cloud is driving is that apps will become much more strategically important at the expense of infrastructure, because now so much of the infrastructure is going to be taken care of for you," Brown explained. "The payoff for the investment in new apps is going to be much higher, so I believe much of the spend is going to swing to apps. If you're going to be a player in the cloud, you have to be a player in apps."
Brown added: "It's a big adoption lifecycle I see happening that increasingly will result in more and more focus and spend in apps and things that provide unique competitive advantage to an organization, rather than just plumbing and stuff that we used to see happen."
In addition to migration and development services, 10th Magnitude helps organizations plan and implement DevOps best practices. "We have found that most organizations beginning to embrace public cloud will typically ask questions around DevOps. They tend to go hand-in-hand," Brown said.
This is a "relatively unique offering" according to Brown, and underscores the point made previously: There are plenty of opportunities for Azure partners looking to monetize Azure. But offering Azure-related services is about much more than growing revenue streams for these solution providers.
"First and foremost, our mission is to deliver a great customer experience, and that means delivering the best solution from a technology standpoint to our customers," Hertz said. "Starting about four years ago, the cloud had hit a point where it was the best solution. Driving customers to the public cloud made good business sense to them. We wanted to help drive that conversation."
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