9 Strategies For Selling Into The Data Center Now
The data center continues to be a dynamic source of business for solution providers, despite the current economic downturn.
Which isn't to say that the bedraggled economy isn't having an impact. The most successful data center solution providers are those that have tweaked their sales pitches to focus not just on popular technologies (think virtualization, storage, blade servers, and power and cooling) but also on the new rallying cry of the down economy: return on investment.
For many solution providers, that means moving away from a dependence on hardware-based solutions, and instead building or expanding their services and software capabilities, according to the results of the 2009 CRN State of Technology: Data Center survey of more than 300 solution providers.
Because of the economy, customers are just not doing long-term projects anymore, said David Stone, vice president of business development at Solutions-II, a Littleton, Colo.-based solution provider.
"The ROI has to be incredibly quick to do anything," Stone said. "But you have to pick the right projects. Virtualization, data deduplication, WAN acceleration can all have 12-month paybacks."
When combined with related technology trends such as converged IP and storage networks, or efforts by vendors such as Cisco to converge servers, storage and networking into a single architecture, 2009 seems to be the right time for solution providers to look at new ways to help customers better manage their data centers. From quick payback to hot technologies, here are nine strategies for digging into the data center market:
1. Show Customers How To Cut Costs: Customers are under pressure to cut costs, and VARs are under that same pressure to help them do so. Since the data center is typically the cost giant, there's no better place to trim the fat and tighten up the bottom line.
A staggering 42 percent of VARs responding to the CRN State of Technology: Data Center suryvey said reducing costs is the key objective customers now hope to reach through the implementation of data center solutions. In addition, a massive 40 percent of solution providers surveyed said cost and budget are the greatest challenges customers face today when grappling with the data center.
Bob Olwig, vice president of corporate business development for St. Louis-based solution provider World Wide Technology Inc. (WWT) said he's seen firsthand that customers are turning to data center solutions that can save not only on operating costs, but also capital expenditures.
Virtualization and data center consolidation can cut hardware and software maintenance costs, while also reducing customers' data center footprints and whittling down power and utility spending, Olwig said.
"The economy is forcing companies to reduce their CapEx and IT budgets," he said. "Energy costs have gone up, and they're a big cost in the data center. And real estate is scarce; companies are running out of physical space."
At the same time, Olwig said, CIOs remain under pressure to roll out new applications and support more branch offices, and the budget is not growing to accommodate that. That's where consolidation and virtualization truly come into play, he said.
"Virtualization helps customers cut and manage costs and still solve business issues," he said.
NEXT: Virtualization Gaining Ground
2. Get More From What They've Got: Cost-cutting is key, but coaxing better performance out of the technology customers have already deployed and have already invested in should also be a critical piece of today's data center solutions.
Customers' No. 2 objective as they roll out new data center solutions is increasing server and network availability, which in many cases means optimizing the technology they've already got for better performance, solution providers said.
"Our customers are interested in doing more with what they have," Olwig said. "In reality, customers have budgets that are flat. And the dollars that they do spend, they spend those dollars to get more out of their current infrastructure."
WWT helps customers understand their data centers in order to "optimize what they have" through assessment and consultation services, Olwig said. He recalled one federal customer who said the data center was running at such a high capacity that he couldn't plug in a hair dryer because there was no power available. In cases like that, consolidation and virtualization of servers and storage can make a great impact, while still taking advantage of solutions already deployed.
"They have to understand what they have and understand the environment in their data center," he said. "We try to come in and understand all of the different aspects of the data center and identify areas for better management."
3. Server Virtualization: Build On It, Don't Just Sell It: Server virtualization has quickly become one of the key pillars of the modern data center. Success, however, comes not from selling virtualization, but instead from the services built on a virtualized infrastructure.
The momentum behind server virtualization is only getting stronger. Over one-third of solution providers said they now sell virtualization technologies, and the majority of surveyed solution providers (nearly 60 percent) said it's getting easier to sell.
Data center virtualization is the technology expected to show the most growth over the next 12 months, and an overwhelming majority of partners said server virtualization, in particular, is the virtualization technology that offers the best profit opportunity.
Customers already have been talked to death about VMware, Citrix Systems or Microsoft hypervisors, said Zeki Yasar, enterprise consultant at ePlus, a Herndon, Va.-based solution provider.
With all that built-in buzz, solution providers need to change the conversation in order to be heard above the din.
"Virtualization is now a commodity," Yasar said. "Now the conversation has shifted to what customers can do with it, and what services they need."
A virtualized environment is the foundation on which to build services that help customers meet new challenges, said Solutions-II's Stone.
Regardless of how bad the economy is, customers are being forced to spend more on data replication, secured backups and compliance for government regulations, all of which can be done easier after their data centers are virtualized to some degree, Stone said.
"We have been helping customers find ways to save money for years," he said. "This is important when customers say they absolutely have to find a way to secure backups. The first step is virtualization. They have to simplify their environment. Their complex environments are the reason they haven't done this yet."
NEXT: Security Is Central To Data Center Solutions
4. Make It Simple And Reliable: Data center technology continues to refresh and evolve. Yet, more and more, solution providers are finding that there are two constants that hold irresistible appeal for data center customers: operational continuity and reduced complexity, which is why VARs identified them as their top two selling points, respectively, when it comes to data center solutions.
Customers rely on their data centers to provide maximum uptime, yet they need simplified management of data center resources so they can easily keep everything in check, so they are looking to solution providers to manage various technologies, including blade servers, virtualization and shared storage, while continuing to reduce costs and ensure constant uptime.
"Over the years, we've seen the growing trend of bringing in systems to manage systems to manage systems," said Philip Alfrey, director of business development for Solid Networks Inc., a Modesto, Calif.-based solution provider. "Customers are asking solution providers, 'How do you manage and maintain technology with the least amount of people and [least amount of] other technology?'"
For Alfrey, as well as other solution providers, the pendulum is swinging toward fewer systems and better management.
"There's been a collapse in large IT organizations that used to be able to maintain a separate staff for storage and [a separate staff for] networking, for example," Alfrey said. "Companies aren't able to do that anymore. That makes continuity and reduced complexity of solutions more important."
5. Lock It Down: No company, big or small, wants to become a victim of a data breach, which makes security a crucial component of data center maintenance. Surveyed solution providers saw security as the No. 2 challenge customers face in operating and maintaining their data centers, second only to budgetary concerns.
Partners said that some of the biggest security threats to data center security stem from insiders -- disgruntled or laid-off employees -- or outsourced third parties, who abuse access to critical information. Meanwhile, the problem of locking down data is even more acute for smaller customers, which typically don't have the resources or staff to implement comprehensive security measures.
"The Fortune 50 can focus on one guy for Exchange Server security," said Daniel Duffy, CEO of Fresno, Calif.-based Valley Network Solutions. "In the SMB, they don't always have [the right] options available to them. There are just so many things vying for attention."
To overcome those challenges, solution providers recommend that companies classify and prioritize the critical data that needs the most protection, and then start investing in data loss prevention and data logging products. And in light of tightening budgets, solution providers increasingly are rolling out managed vulnerability scanning and monitoring services to increase response time and cut costs.
"A lot of companies, if they had their druthers, wouldn't spend on upgrades at all until the market turns, but many are obligated by law to take corrective action," said Tim Carney, CEO of Fremont, Calif.-based NetworkGuys. "Managed services is an area where we see a lot of growth, and we're jumping on it with both feet."
NEXT: Storage And Disaster Recovery Are Top-Of-Mind
6. Don't Skimp On Storage: Even when the economy is down, the amount of data a company stores continues to increase.
As a result, data center storage was the No. 2 technology expected to show growth, second only to virtualization, according to surveyed solution providers.
The push towards a more virtualized data center has helped keep storage at the center of solution providers' business, said Marty Lantz, vice president of operations at MapleTronics, a Goshen, Ind.-based solution provider that also acts as an Internet service provider, managed services provider and hosted data center for its clients.
"Storage has become the core of the entire virtualization movement," Lantz said. "The last two years have seen clients move from direct-attach storage to SANs because of server virtualization."
Disaster recovery is another huge opportunity, Lantz said. Customers are starting to co-locate equipment in MapleTronics' data center and use a variety of different technologies to replicate data there.
"It's probably the hottest market we have going now," Lantz said. "Customers are looking to replicate to our end, and push the disaster recovery part to us. We weren't originally selling or creating an off-site disaster recovery solution, but instead were selling FalconStor and VMware as part of an off-site replication solution."
Solution provider Chi has seen the market for virtual tape libraries (VTL), which are disk-based appliances that take the place of tape, skyrocket, said Greg Knieriemen, vice president of marketing at the Cleveland-based company.
Instead of the normal one or two VTL sales per year, Chi is already involved in five deals this year worth $500,000 to $1 million each, Knieriemen said.
"Customers are typically financial companies," he said. "The irony is they're laying off their IT staff, but they still need faster, better backups. They know that backups impede performance, and that data growth is not going to stop because IT budgets fall."
7. Keep Cool: Solution providers ranked power and cooling as the No. 3 challenge facing data center customers, an issue that only stands to gain more attention as the green technology movement gathers momentum and brings efficiency concerns to the forefront.
Power and cooling technology can be a profitable differentiator for data center solution providers, Solid Networks' Alfrey said.
"To be blunt, power and cooling can be very good financially to solution providers when it's done based on energy savings and not just on trying to cool equipment," he said. "Bringing in the traditional UPS, and traditional power and cooling technology won't create very much money. But if you bring in highly efficient new technologies, clients are going to be willing to pay for that value."
NEXT: Services Seal The Deal
8. Amp Up Application Servers: Solution providers pointed to application servers as the enterprise application technology that offers the best profit opportunity in the data center over the next 12 months.
Adam Steinhoff, president and CEO of DedicatedIT, a division of Steinhoff Consulting, a West Palm Beach, Fla.-based solution provider, said he's noticed increased attention around application servers, especially as it pertains to is Citrix business. DedicatedIT offers Citrix XenApp, an application delivery system that manages applications in the data center and delivers them as an on-demand service to users.
"We have heard a lot more noise recently by both our smaller and larger customer bases," he said. Steinhoff said smaller companies are turning to application servers to deliver better application performance without the need to replace PCs. Larger customers are turning to application servers to drive disaster recovery and business continuity, using a centralized application delivery system vs. delivery applications from various data center locations, he said.
"We've sold more [Citrix] XenApp in the last year than the previous years," he said, noting that application servers tie into overall virtualization strategies, which start with a virtualized desktop and then move to application delivery.
"People still have to upgrade and when it's time, application virtualization will be a big play," he said. "If they're going to spend money and it has to be done, my bet is on application virtualization."
Software-as-a-Service and cloud computing are also capturing mind share among solution providers, as 60 percent of surveyed partners said they currently offer those solutions to data center customers. Among partners that are not currently offering SaaS or cloud computing solutions, nearly half plan to add them to their portfolios over the next 12 months, according to the survey.
9. Don't Forget Services: There are huge opportunities to attach services to a variety of data center technologies, with virtualization providing the No. 1 services opportunity, according to surveyed channel partners.
About 95 percent of solution providers are offering professional or technical services of some sort to their data center customers, with design/configuration, implementation and integration topping the list of services partners are offering.
Of all the different technologies in the data center, server virtualization seems to be the most commonly cited opportunity for attaching services, followed by application, storage and desktop virtualization. Disaster recovery, networked storage and blade servers were also cited by VARs as big services opportunities in the data center.
For solution providers, this means product sales by themselves no longer provide the kind of value that customers require, said Kip Lindberg, vice president of enterprise sales at Ncell Systems, a Minnetonka, Minn.-based solution provider and partner to Sun Microsystems and IBM.
"It's a wild world," Lindberg said. "You better have a value-add. But if your value-add is selling products, you'd better be worried."
For Ncell, services is now the key to doing business, Lindberg said.
"We may have one of our storage architects in place at a customer site for 18 months helping to develop a strategy, and then we start to bring in products," he said. "Once we are in place, we try to drive customers' projects including services, project management and implementation. A lot of those customers may be HP shops, and there's no way we are going to push HP out. But we can be there driving additional services like virtualization."
By expanding their data center services capabilities, forward-thinking solution providers are on the right path to the next technology prize, which is cloud computing, said Jim Guinn, executive vice president of the solutions division of Partners Consulting, a Buena Park, Calif.-based solution provider.
"Look at SaaS," Guinn said. "It's a way for customers to get away from the raised floors, piping, software and management, and treat IT as a run-time, ad-hoc cost. When someone says, 'I'd like to understand cloud computing,' they're looking at a new way of doing the same thing: They need it so they'll use it, or they don't so they won't pay for it."
Joseph F. Kovar, Andrew R. Hickey, Stefanie Hoffman and Brian Kraemer contributed to this story.