Channel Chiefs: How To Capitalize On The Cloud Services Boom And Beat AWS

Shining A Light Through The Public Clouds

The public cloud means different things to different companies, requiring unique needs for every customer's journey to the cloud. To facilitate specific business outcomes, traditional VARs are transforming into strategic service providers that act as independent trusted technology cloud consultants.

Solution providers who have made the shift to the strategic service provider model, according research from CRN parent The Channel Company, are driving a higher percentage of sales based on solving business problems, have $1 million more in annual revenue and nearly double the percentage of cloud and managed services sales than those that have not.

To get a closer look at the today's cloud landscape, CRN asked three channel executives at top vendors to weigh in on the market dynamics driving the public cloud boom, how their companies play in that environment and just what they're doing to beat AWS in the sales trenches.

How Are You Beating Amazon Web Services In The Sales Trenches?

Vice President Channels EMC Virtustream Sean McGinn

We don't see AWS that often because our key capability is to provide production SAP on the cloud, or production Oracle ERP on the cloud. We do that through a utility model that's based on a micro VM. A micro VM is not a virtual machine. It's a unit of measure. What we do is we compute the demand of the workloads on the resources: compute, network and storage. We're able to build for the customer, based on usage of a micro VM unit. It's basically akin to a utility model for electricity. We're not allocating assets. We're not allocating VMs. We're breaking it down based on about eight years of statistical measures, the ability to compute a micro VM.

Secondly, we're a very secure, very stable cloud platform. Customers are looking for that in the enterprise space. Thirdly, production. SAP, particularly HANA environments, are often times on the physical server. Whether it's physical, or vHANA, we're able to provide those resources, again, in a consumption-based billing model. That's just something that we've developed over the years that is unique in the industry.

HPE Cloud Chief Marketing Officer Bobby Patrick

AWS is a standard, in addition, to being a public cloud. We believe there is a need for AWS-based private clouds and AWS-based compatible clouds. We're working with Azure on Azure private clouds, as well. Being able to deploy these clouds, we call them satellites sometimes, where you may have a workload that has been built, tested, and developed at Amazon, and now you want to move that easily, without recoding it, into a secure data center somewhere. That's a great opportunity for a partner.

Some companies – including big manufacturers - want to have multiple clouds. Partners can get into that ecosystem where the private cloud equation still makes a lot of sense. And partners can manage the workload on both sides.

Microsoft Corporate Vice President Phil Sorgen

Our focus and proposition is, first and foremost, the fact that we offer a breadth of solutions across cloud that we think is the most comprehensive in the industry. From PaaS, to SaaS, to IaaS and multiple SaaS offerings, all wrapped with a common identity management security stack that makes it very easy to integrate across those. Those become potential multiple business lines for each unique partner to grow their business. The second part of that is we know every customer's journey to the cloud, especially in enterprise, especially where they have an existing IT infrastructure, it's going to be a unique and differentiated journey. We can uniquely position our partners to help each customer on their unique journey whether that's hybrid, a mix of private hybrid, and then, ultimately, to public cloud.

They get to walk in and say to their customers, "What is it that you're trying to accomplish? What are you trying to solve?" Then, they can be a consultant, the strategic service provider that tells them: 'This is the right path for you.'

What Is Driving The Public Cloud Growth And How Do You Play Within That Environment?

Microsoft Corporate Vice President Phil Sorgen

We have 1.2 billion users on the planet of Office, so there's familiarity and knowledge of the application. I'll put that in the category of existing relationship. We understand enterprise support, we've been with our customers for a long time. We brought, traditionally, a breadth of offerings, and now we're being more holistic than ever. We have partnerships with HP to enable hybrid and private, we're working with Linux, we're working open-source. You look at all of those dimensions, we're coming to our customers saying that we understand the environment they're in, we know how to support them, and there's a familiarity with many of the applications, so the time to benefit, we can help accelerate.

I think that's an important place when a company is making potentially their first, second, or third venture into the cloud. We can help them with that progress. To be clear, we can't do that without our partner ecosystem. That's why it's so important that we have both our existing partner ecosystem continuing to build the skills and capabilities to help them be successful for the long term, and that we're welcoming many new partners into our ecosystem to participate with out.

HPE Cloud Chief Marketing Officer Bobby Patrick

Netflix was born in the cloud, built all around Amazon, predominantly. They spent a ton of time and money on tools to build around vulnerabilities in Amazon, and to build around availability issues. Every enterprise doesn't have that luxury, perhaps, of doing everything only that way. They've got to make sure it's secure. They've got to know where the data is.

For an automotive company I was just with, the location data, and the data that's coming from your car to their private cloud is more worrisome to them than the credit card data associated with other stuff they do.

I think there are many scenarios where you could be putting your company at pretty big risk with public cloud. I think that's where companies like ourselves come in and say, "Look, we have the ability to secure end-to-end and to do things from encryption between clouds, to log tracking and threat protection, and all these things you need to have.

For most of the world, enterprises and governments who have a combination of traditional IT at different scales, different systems, different applications, different data, different regulatory requirements and things, it's just not as simple at Netflix. I think that you'd be making a gigantic mistake if you thought that you could really go and put everything in public cloud.

Vice President Channels EMC Virtustream Sean McGinn

We're not at a point where there's one public cloud provider and they're the default to go to. You've got the lines of business that have some degree of autonomy, and they're making their own decisions to go put certain workloads on certain public clouds. Then, you've got the CIO driving a holistic enterprise application strategy and migration to the cloud. Then, we see a lot of our RFP (request for proposals) out there- so there's tremendous competition amongst some of us sitting here, and some of us that aren't sitting here. There doesn't appear to be a dominant player. You could argue AWS is a dominant player, but they don't serve the whole market, either- not by any stretch.

What Are The Market Dynamics Driving The Cloud Services Boom?

HPE Cloud Chief Marketing Officer Bobby Patrick

There is a move to free up costs and put those costs towards R&D or building new businesses.

Developers also have become more powerful within an organization because they're the ones who are building applications quickly, they're downloading open source on the weekends. They're making technology decisions, long before CIOs actually recognize those decisions that you made. I think that both of those are equally important.

What's nice, though, is we're actually coming in right in the middle, where the economic benefits of private cloud now, with the technology like Open Stack and Cloud Foundry, are now proven and quantifiable, in terms of cost savings. Combine that with the ability for developers to program to it, you now have, in a private cloud, a public cloud-like experience.

Microsoft Corporate Vice President Phil Sorgen

The way companies buy cloud services, and who's buying cloud services is changing radically. We think 60 plus percent of all projects will be business unit IT, or just line-of-business influence, and another 20 percent will be jointly developed. You get about 82 percent of net new projects, net new to the organization, are being driven heavily by the line of business needs. That's why you see a lot of these surveys where CIOs are shifting their focus from what has historically been a little bit more operational, to chief innovation officer.

I saw a survey of CIOs who said in three years, more than 50 percent of CIOs will be more chief innovation officers than what they've been in the past.

Vice President Channels EMC Virtustream Sean McGinn

We're seeing tremendous demand and growth in the VAR space. They're recognizing the same thing we all recognize, which is the customer is transforming their IT environments. They want to participate in that, and they see the tremendous opportunity around different ISV applications in the different verticals. They want to participate in that growth model as well. It's our challenge to enable them to, to show them how to do monthly recurring revenue billing, to do the analysis of the infrastructure, compute the TCO (total cost of ownership) of a migration story and to really become more of a strategic service than a traditional VAR.

How Important Are Standards For Moving Workloads Between Multiple Clouds?

HPE Cloud Chief Marketing Officer Bobby Patrick

I think the standard is one that, at least at HPE, we have the ability to think across the full mix. AWS wants nothing to do with private cloud, at least not yet. The standard is one that we can then bring to customers and say, "Look, you're using it this way. You can use it this way over here, you write the code the same way." That's where we see a big opportunity, that's certainly part of our partnership with Microsoft on the Azure side.

Microsoft Corporate Vice President Phil Sorgen

Many companies are not single-cloud companies. Even when you talk about any cloud platform, AWS, Azure, or anybody's, there's different kinds of implementations in that cloud. There's everything from deep, integrated applications, to VMs, to backup and storage. You also have to get into, "What's the use case?" I think it's a little hard to talk about it generically as we need interoperability in the cloud. Then you get to the app layer, and that's a whole different discussion. Customers are definitely going to continue to push anybody they do business with for longevity, ease-of-use, predictability, and continued innovation. Those are the things I think we're all addressing.

Vice President Channels EMC Virtustream Sean McGinn

The founders of VirtuStream had a vision to cloud-enable non-native enterprise applications. That's really the story of VirtuStream. It's led to investment from some great partners, and obviously the acquisition from EMC. It's provided tremendous value to clients and Fortune 500 companies.

The focus for us is really on those customers who have invested significant Capex (capital expenditures) into the software side of the house, the IT equation, and are looking to move to more of an opex model.

Our model is pretty much a bring-your-own-license model, by the way. The types of partners that will work with VirtuStream in the future are really going to be those that have industry expertise, best practices, software knowledge, but aren't necessarily a reseller of software. They need to understand the mechanics, the art, and science of migrating customers to the cloud.

Over the next couple of years, we see a transition from on-prem, to hybrid, to completely off-prem, in some cases. Those partners are going to need to bring those types of skills, but also develop them into vertical expertise, managed services expertise, and so forth.

Microsoft Corporate Vice President Phil Sorgen

We know 85 percent of the Fortune 500 consume or use more than one of our cloud services. In one respect, you could say that's a proof point that enterprise is adopting cloud. By the way, if you were to bring many more vendors in here, they would give you impressive numbers of how much enterprise is consuming in the cloud. Does that mean they're consuming everything, and that there's not far more room to go for them? I think the notion of enterprise consuming public cloud is quite broad. Then, you get into different industries, different usage scenarios, different customers, different countries. I wouldn't define enterprise as slow in adoption of public cloud, if you're using just the broad word "cloud".

We see continued growth in Office365 in the enterprise, we certainly consider that cloud, and we don't minimize that. At that point, a customer has trusted what many companies consider a mission-critical application in email to the cloud.

Vice President Channels EMC Virtustream Sean McGinn

We need to be specific when we're talking about enterprise cloud, what we're talking about, from a workload perspective and the characteristics of those workload. The infrastructure that's required to support them, optimize, be cost-efficient, be dynamic, be flexible, and be secure. That's really, at least from our perspective, what an enterprise is looking for: to deploy production landscapes into the cloud.