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Cloud computing trends reveal business transformation in the channel

CompTIA's annual cloud computing survey reveals the cloud is the top catalyst for business transformation among solution providers.

For IT channel partners, cloud computing has come a long way in the five years that CompTIA has conducted its Annual Trends in Cloud Computing study, evolving from a potentially disruptive technology delivery mechanism to the No. 1 catalyst for business transformation, according to the report.

Forty-one percent of IT business partners noted that cloud computing is now the No. 1 catalyst for business transformation, followed by demand for new services and IT delivery, at 36%, and desire for recurring revenue model, at 35%.

In CompTIA's 2010 Annual Trends in Cloud Computing report, only one in 10 partner firms bothered with cloud. Today, most partners report some level of cloud adoption. About 400 IT channel firms participated in this year's online survey.

And, 93% of survey respondents are feeling pretty good about the impact that cloud has had on the channel: 63% described it as extremely positive while 30% described it as positive.

It makes sense that partners are optimistic about the cloud given that the lion's share, or 90%, of U.S. companies claim to have some form of cloud computing, with more than 60% of those companies noting that cloud components represent at least a third of their overall IT architecture.

We're still figuring out all the ways that cloud should be a part of our business model.
Mark WyllieCEO, Flagship Solutions Group

Taking a deeper dive in cloud adoption among end-user organizations, the CompTIA report stated that medium-sized firms lead the pack when it comes to cloud adoption, at 97%, followed by enterprise companies, at 96%, and smaller firms, at 84%.

Overall cloud adoption figures are on target with what Mark Wyllie, CEO at Flagship Solutions Group, sees among his customers, half of which are midmarket companies with between 100 to 1,000 employees and the other half of which are enterprise organizations. Flagship is a 7-year-old IBM-centric channel partner.

While the company's revenue is still primarily based on reselling IBM hardware and software, the partner also provides cloud-based managed services. Flagship, which is based in Boca Raton, Fla., is expanding its cloud-based managed services practice and increasing the percentage of revenue derived from that practice.

Channel survey respondents described their firms current involvement in these cloud business models as follows: 52%, build; 42%, provide/provision; 39%, enable/integrate; and, 47%, manage/support. Respondents also noted that their plans to provide services in the cloud business model categories within the next 12 months: 36%, build; 48%, provide/provision; 54%, enable/integrate; and 46%, manage/support.

Wyllie noted that Flagship works in all of the four channel-related cloud business models referred to in the CompTIA report.

While the prevalence and benefits of cloud computing continue to grow among end-user organizations, customers are still confused over cloud terminology, and can't consistently identify the cloud model (private cloud or public cloud) they use. "For now, agreeing on nomenclature is not critical. It is more important to understand how to use all the available options to build IT systems that drive today's businesses forward," the report author stated.

This type of confusion at end-user firms is what's fueled the buildout of a consulting practice at ePlus Inc. "With a lot of cloud services competing with the building of internal private clouds, customers are scratching their heads" as to which direction to go in, said Jerry McIntosh, senior vice president advanced technology sales at technology services company ePlus. Based in Herndon, Va., ePlus targets midmarket companies, as well as state and local government and education, also known as the SLED market.

Another factor, McIntosh said, is that many customers, even mature organizations, often don't know how much is being spent on applications that are hosted in the public cloud. He pointed to the ease with which line-of-business users can use a credit card to purchase cloud services without the IT department's involvement or knowledge, as a source of the lack of clarity.

Channel partners Wyllie and McIntosh agree that cloud computing is strategic to their respective business and is still a work in progress.

"We're still figuring out all the ways that cloud should be a part of our business model," Wyllie said. For example, he said he's working to identify services his company can provide that customers will value and pay money for and that are scalable and go beyond easily commoditized monitoring and managing services.

"There's going to be new opportunities that are not immediately obvious right now. Also, the shift to mobile will add complexity to the picture as well," he said.

Looking ahead to 2015, McIntosh believes that customers are going to need more help identifying how their portfolio of IT services should operate in a hybrid world. For example, they need to determine which applications should always stay in-house, which should be public, and which would be more efficient running in a hybrid fashion.

At a higher level, he explained that customers will need a way to self-service in an orchestrated and automated way across a set of providers of those services. "There's a lot of mystery for customers as to what cloud services map to what dollars for what workload. I think there's a future in helping customers figure that out," he said.

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Do customers have a better grasp on cloud terminology today than they did in previous years?
I think users do have grasp on what 'cloud computing' is but with so many options out there in the cloud world today, they might have difficultly understanding each one specifically.