What about the cloud? How is Insight jumping on board of the cloud trend?
Lamneck: "We've been on that journey for the past two to three years ... We don't build our own data centers; we think there's so much capacity there and there [are] great partners that we're partnering with to deliver that. And then that, of course, is the infrastructure side, the compute and storage. And then the SaaS side, Software-as-a-Service, is really focused primarily initially as collaboration, messaging and office suites.
It all comes back to services. If you can't provide these services, you really can't be effective at selling the cloud to the client. So the services really are a wraparound of a cloud assessment, being able to migrate the data securely, being able to integrate into the hybrid world and then ... how do you monitor it all? We've got a network operation center here and then a backup in Plano where we can manage today hundreds of clients' networks 24/7.... It's migrated now beyond just the network and into the data center to include storage and server devices as well. The cloud is the critical component as clients migrate.
Of course, most of that sort of migration today is occurring at the SMB level, and it's primarily in the 'S,' [small business] but it's certainly migrating to midtier clients, too, in the next few years. Even large-scale clients will certainly move towards the cloud, but they're a little more concerned about security and also scale. They have enough scale where private clouds make a lot of sense for them from an economic point of view at this stage. But most of the clients we do business with will be in the hybrid world."
Why have you chosen to not build your own data centers?
Lamneck: "On the infrastructure side, we've opted that we think there's too much capacity there and there's some great world-class players that we would partner with. We think that's becoming very much a scale game, and if you're building your own data centers you've got to be very committed to it because it's a different business model. Some of our competitors have done that. We don't buy into that long-term strategy. We'd rather partner. You've got to have good connections, though, because the benchmark is what Amazon has provided out there in infrastructure, and you've got to make sure that you make it seamless to your clients as Amazon has made it."
Why do you think that small businesses are driving so much of the cloud adoption trend?
Lamneck: "I think a lot of it is just because of economics. When you look at your business, the small, SMB side ... can get great capability here -- support structure ends up being a little bit better; you're actually going to get all of the updates that are going to occur seamlessly to you. From a capability point of view, I can get access to this application that I probably couldn't have afforded [before], to do the kind of work and install ourselves [and] it gives me all the capability I need. So I think small companies do it to take advantage of capabilities that they would have found it difficult to implement themselves, just from a scale point of view, a technical capability point of view, and then the cost just makes a lot of sense.
Now, large companies, they can invest. They've got the technical people, they've got scale already so the economics, in some cases, may not be as compelling, or as obvious as it is for a small company."
The product -- hardware and software -- that side of the business has undergone some pretty serious pricing pressure. Is the same thing happening around services?
Lamneck: "We haven't really seen that. Again, it depends on where you are on the services food chain. If you're down there in the sort of lower-value services offerings, then you're probably going to have that kind of pressure. But if you get into more of a higher-value services with really great capabilities, you don't find that you're under that much pressure there. We fall underneath that umbrella and, of course, they have pretty good margins on services business, and we certainly complement that as well."
PUBLISHED JAN. 24, 2014