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VAR500 See Cautious Optimism, Economic Growth Behind The C-Word

Cloud, virtualization, managed services and business analytics dominated the growth conversation among VAR500 solution providers at the VAR500-CIO 50 event in New York.

VAR500 solution providers say there's no question the economic climate is improving, and cloud computing opportunities are moving beyond hype and beginning to deliver real business wins.

But neither the recovery nor cloud adoption is progressing as fast as many people think, they conceded.

"Things are clearly getting better," offered Daniel DiSano, president and CEO of Axispoint, a New York-based solution provider, in an interview at Everything Channel's VAR500-CIO 50 event in New York. "Customers are starting to open their wallets again, and the good news is that purchases were delayed, not lost. We didn't necessarily lose any of that business, it was just delayed."

The stock market may be improving, DiSano said, but the credit markets will be a better indicator of recovery. Access to credit -- or lack thereof -- is what's hurt customers most, he noted.

Whereas application services continued to grow throughout the downturn, infrastructure services took a beating, DiSano added. Axispoint is focused on 2010 being a year of basic recovery, and expects to see a return to growth in 2011 and especially, 2012.

Among key technology areas, the notion of Enterprise 2.0 -- the arrival of video and other collaboration tools as legitimate enterprise infrastructure, and not just luxuries -- is really taking off, he said. Growth in data center and cloud-based solutions will continue apace, and from a vertical standpoint, DiSano said he expects health care, an Axispoint specialty, to stay hot.

It's that c-word -- cloud -- that continues to dominate the conversation. Bill Dolan, vice president of business development for Jersey City, N.J.-based solution provider DataPipe, said that among his largest enteprise customers, the push to outsource business processes or infrastructure -- or at least make it cloud-ready -- has been a recent trend, catching on fast.

"There's still a lot of confusion," Dolan said. "The marketing around cloud is great, but the execution just isn't what's getting fully realized yet. Right now you have a lot of CEOs leaving conferences yelling at their guys, 'We have to move to the cloud,' without really knowing what the next big move is. That's where we can come in."

Growth among many managed services specialists has been strong throughout the past year, and that was certainly the case for both Dolan's business and for David Powell, vice president of managed services at TekLinks, a Homewood, Ala.-based solution provider.

TekLinks' managed services business grew 67 percent last year, Powell said.

"What's happened is that for many of these companies, the workforce was laid off, but the workload was not," he explained.

NEXT: Managed Services No Longer "Either/Or"

One of the biggest changes, Powell said, is that customers have started to understand managed services as an "and" and not just an "either/or," in that they don't have to outsource their entire IT infrastructure and can instead look to a combination of on-premise and off-premise solutions.

"They now see what pieces of their IT are commodities and which we can take out and manage for them," he said. "They're being a lot smarter now about how they spend and doing a better job of understanding. That's because they have to."

For managed services sales, TekLinks pitches the "what" not the "how," meaning that it's not the hosting and managing the customer understands first, Powell said.

"A lot of sales guys in the channel are accustomed to selling on speeds and feeds. You can't do that anymore, not after last year and not with what's out there," he said. "When the customer begins to probe the 'hows,' then we get into it."

Along with cloud and the growth of managed services, business intelligence and analytics continue to come up, say VARs.

Customers are spending very cautiously and want to know more about their IT than before, especially at a management level, said Ram Kangyampeta, business manager, solutions, at Marlabs, a South Piscataway, N.J.-based solution provider.

"They are weighing options." he said. "Cash is still king and still a problem for many. But spending has picked up. They want analytics and dashboards and want to make informed decisions."

With IT infrastructure so pressured to keep up with the explosion of data, it's the CIO of a company that "not only has the ability to [transform infrastructure] but the imperative to do it," said Marcia Trant, vice president of IBM's business partners, solutions and integrator sales.

According to IBM, cloud computing will represent $60 billion in opportunity by 2012, with about half of that in the midmarket.

"The cloud isn't all buzz. This is a space that's evolving very quickly," Trant said, describing the shift toward cloud as both an offensive and a defensive move for many companies, in that they're both evolving their IT and keeping up with their competitors doing the same thing.

Look for greater levels of partnership -- everything from co-opetition among VARs to active, strategic partnership between VARs and systems integrators or ISVs -- as the industry continues to consolidate, and the realities of cloud gradually filter out from the myths.

"The ecosystem is very important. Everyone in this industry is going through this change together," Trant noted.

"We're focused on midmarket and we have some of the biggest firms on that list [VAR 500] asking us to partner," said Axispoint's DiSano. "Historically we've grown organically. But partnership is getting big, and there are so few folks who do it really well right now."

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