Cloud Computing Success Requires VARs Embrace 'The New Normal'

And solution providers are looking to the cloud to develop a new revenue stream by way of services and consulting plays, as opposed to the traditional ways of pushing tin. For VARs, that means adapt or get left behind. And cloud computing is singlehandedly creating a new type of VAR.

"As you look at 2010 you'll see a continual erosion of traditional legacy solutions by cloud applications," said Eric Berridge, co-founder of Bluewolf, a New York City-based solution provider.

Berridge said the cloud presents a compelling story for VARs. While it introduces new levels of elasticity and flexibility and whittles down costs, cloud computing is also ready for prime time because IT budgets for legacy gear have continued to shrink.

One problem, however, arises when helping shape a client's cloud strategy. As with any new technology, the exact definition of cloud computing is elusive and can change quickly. As Berridge said: "It's easy to draw in a picture, but it's difficult to articulate in words."

"For larger consulting firms, this stuff is driving them crazy," Berridge said, adding that cloud computing changes the implementation dynamic by shortening the life of a project. Where past implementations would take one to four years and focus heavily on technology and process, with a little bit of focus on change management, cloud computing reduces the project duration to one to six months and focuses mainly on change management and processes with only a little attention paid to the technology.

According to Berridge, to take advantage of the fortunes of cloud computing, which are plenty, VARs now have to be part service provider, part consultant and, in some instances, part ISV. Meanwhile, VARs have to change how they approach the topic.

"Clients don't want someone to come in and push paper," Berridge said. "They're looking for knowledge. They're looking for services. It's a business processes discussion, not a technology discussion."

To be successful, the new breed of cloud VARs require a few things: a professional services arm tied to virtualization; a managed services offering; and an application development arm, not to write new applications, but to integrate data, services and performance management and monitoring, and make it portable.

"You have to transform the way you think," said John Ross, CTO at GreenPages, a Kittery, Maine-based solution provider. "You have to transform into a service provider."

As cloud computing comes into its own, Ross said solution providers need to pay close attention to the confluence of Platform-as-a-Service, Software-as-a-Service and Infrastructure-as-a-Service into an all-encompassing cloud. VARs investigating cloud computing as a new revenue stream, however, need to be wary of a few gotchas.

"I think it's a fallacy that it's cheaper at this time," Ross said. The case can be made for capital vs. operational costs, but it all adds up, he said. "I may not be actually saving money, but it is more predictable and month-by-month."

James Damoulakis, CTO of GlassHouse Technologies, a Framingham, Mass.-based solution provider specializing in data center consulting and services, said focusing on services will be increasingly important as VARs look to the cloud. While Damoulakis said the evolution will take time, VARs should start preparing now.

"The potential customer base over time will be different," he said. "VARs will need a services mindset and will have to pay closer attention to forecasting, planning and the utility model."

And VARs also need to get up to speed on monitoring the cloud to ensure performance and reliability.

"Resellers need to get very, very good at predictive usage modeling," Ross said.

New cloud VARs must also ensure they guide customers' policies and procedures while providing adequate training.

"The ones that are going to have a hard time being successful are the hardware-centric [VARs]," Ross said, adding that traditional server infrastructure as we know it has a life of about five to seven years before it's gone.

Still, for VARs who offer a "one throat to choke," cloud computing could prove lucrative.

"Customers don't want to have to manage everything," Ross said. "They'll pay a premium to resellers for that."

And regardless of the hype currently surrounding the cloud, Chris Pyle, president and CEO of Champion Solutions Group, a Boca Raton, Fla.-based solution provider that recently launched its own Champion Cloud Services practice, said VARs would be wise to keep their traditional business on track despite the allure of the burgeoning cloud, and use the transition to bone up on cloud architecture to be nimble when the market shifts. In Champion's case, its traditional systems integrator business is moving full steam ahead while its cloud-focused division finds footing.

"I certainly don't think it's going to happen overnight; we're not going to just flick a switch and move everything to the cloud," Pyle said. "This is not a revolution, it's an evolution, and it's something the channel has to pay attention to."

Later, Pyle added: "There's a new normal. We have to, as solution providers, figure out new ways to deliver in the new normal to accommodate what the marketplace demands."