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MARKET REVIEW


www.comms-dealer.com Cloud bursts into SME


The flexibility and cost cutting benefits of cloud-based solutions are set to transform the way smaller firms do business.


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or many SMEs the recession and the desire to make their businesses more efficient is a driving force behind their uptake of cloud- based technology. As businesses look for efficiency savings the cloud is a good option, offering a low capital expenditure for the organisation by removing the need to invest in hardware, enabling them to embrace remote working initiatives while cutting down on office related overheads. “The fact that businesses don’t have to invest in having hardware to host local applications is one of the main plus points,” said Carl Churchill, Managing Director, Daisy Wholesale.


“Falling access prices enable SMEs to benefit from the same services that their big business cousins have enjoyed for some time, and opens up the door for other SaaS and hosted applications. The hassle and expense of managing software in-house is removed and allows for simplified on-site IT. The second benefit is not just the capital requirement but also the operational cost of running feature rich software, SaaS, hosted applications, and virtualised environments provides a flexible approach to technology adoption and operation as apposed to big ticket license or management fees.”


The confidence to migrate away seems to be quite sector specific and again comes back to the issue of educating SME customers. For example, Churchill says a media based business is more likely to have greater exposure to the benefits of the cloud due to its connectivity and technological needs, as opposed to a


manufacturing business that may not have any real awareness to the benefits of moving some services to the cloud. “Certain businesses have experienced particular success is specific verticals but those that will be successful across a wide spectrum of industries will do more than distribute services, they will distribute services that are backed up by education for the end user and some very prominent benefits,” added Churchill.


“These are exciting times for resellers. Opportunities in voice have come down and the cloud provides a totally new revenue stream. It changes the discussion with end users to more about the right solution for their business and less about the limited opportunities of price benchmarking. For Daisy Wholesale, being able to maintain a competitive edge comes down to educating our resellers and providing them with the capability while supporting them through the transition from traditional communications into a truly converged sales opportunity and customer environment.”


Daisy Wholesale has invested considerably in its data centre capability. “We’re committed to an investment in the future of communications and the future opportunities for our resellers, simply because that is the way the market is shifting and evolving,” added Churchill.


There are good margins to be made from providing cloud-based services but for many resellers this will mean a shift away from the larger upfront margin to a smaller but regular ongoing revenue stream. “Cloud-based services offer SMEs access to systems


Carl Churchill


and applications that their larger competitors use, but without the large upfront investments and the complexity of supporting and managing such an environment,” reaffirmed Andy Gilbert, founder of Node4. “The SMB sector is striving to lower costs and improve operational effectiveness. Cloud solutions give them the flexibility to achieve business goals while maintaining costs. As with most SMB companies, their IT infrastructure can be diverse and pain points become evident when streamlining systems or integrating new solutions. Cloud solutions reduce the requirement for on-site ICT equipment and servers which gives them more flexibility plus cost savings.”


Cloud computing has many definitions and this has caused confusion across the IT marketplace. But Node4 is working with its customers to educate them, and is seeing a more informed community emerge as a result. “The customer is defining what they want from a cloud solution, and we have found that having flexible options allows us to provide the right price for the right service,” added Gilbert.


The primary reason for a shift of IT spending for small businesses from on-site infrastructure to cloud-based solutions is access to enterprise class technology


at an affordable price, agrees Seth Nesbitt, Vice President Service Provider Marketing at Parallels. “We believe that the real opportunity in the cloud is with small businesses. They rely on email, voice, calendaring and real-time collaboration tools. Many small businesses can now access messaging and collaboration solutions through the cloud, avoiding the cost and effort of deploying their own infrastructure.”


Everyone is becoming more comfortable with consumer facing cloud services, observes Nesbitt. “In fact many people are trading in their music catalogues for a Pandora account,” he said. “The business equivalent is cloud computing, so there is a natural progression for people to accept and utilise enterprise class cloud services. Service providers have to offer a broad range of cloud services to survive.”


To understand what the SME market will be buying in one or two years time, look across the pond at what US SMEs are buying, observes Andrew Dickinson, Managing Director at Griffin. “At the very low end – one to five employees – they are experimenting with public cloud offerings like BPOS, Amazon and Google-apps. At the very top end – 500-plus seats – they are building their own private clouds,” he said. “The interesting bit is in the middle. These guys are big enough not to want to entrust their applications and data to the ‘Wild Wild Web’ by signing up to public cloud offerings. They are moving from Internet facing connectivity to private, and it is predicted that more than 50 per cent of SMEs will have a private MPLS network by the end of next year.”


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88 COMMS DEALER NOVEMBER 2010


www.comms-dealer.com


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