Betting on Legacy Distribtuion Strategy for Cloud Future

Throughout the 1990’s Michael Dell was the poster child for IT Channel disintermediation.  His ‘direct’ sales model took the industry by storm.  Leveraging logistical efficiency and a ‘no middle man’ mantra were hallmarks of Dell’s strategy.  Interestingly though, Dell has in recent years given the entire model a rethink.  Nowadays, Dell sells heavily through the channel.

Pioneering giants of cloud computing looked very much like 1990’s Dell in the early days.  And, just like Dell, companies like Rackspace and Google are starting to realize that the Channel plays an important role in the IT service supply chain and broader ecosystem – a horn I have been blowing for years.

The realization of the Channel’s importance to sustained market success creates a rather interesting opportunity for IT channel distribution.  Distribution represents large-scale buying power and market coverage to aggregate the MSP and VAR communities on behalf of vendors.  Leveraging scale efficiency to sell large volumes on thin margins and a better logistical framework than any of the manufacturers allowed distribution to create an important niche for itself during the client/server era of computing.

The emergence of the cloud era represents a fascinating paradox for distribution.  It is not a business delivered through supply chain EDI, warehouses and net 30-day terms.  The cloud is a virtual technology product of sorts.

Companies like Ingram Micro have been very vocal about the channel and the cloud revolution.  But to date I would consider the effort, shall we say, lacking inspiration.

Why?

Because like most big companies in our market that can sense the disruption and fear obsolescence, they revert to what they know.  In the case of IT distribution, what they know is Product Line Cards.  PLC’s basically amount to glossy placards that list the names, descriptions and manufacturers of products they sell.

In essence, early adopters in distribution, like Ingram, have lined up some heavy hitters and they are trying to promote those brands the way they would promote printers, computers and peripherals.    Sure, they put it all under a new division and they wrap some captive managed services in there.  But isn’t that really just a pretty dress on the bearded lady (no offence to ladies with beards intended)?

The line card strategy is fatally flawed because it misfires on what is a volume business model (cloud) with what is needed to exact a volume play (access to markets).

So if the handy line card plays won’t cut it, what exactly is needed to realize the riches for Distribution?   That is a complex question that won’t get answered here.  But I can share some thoughts based on what I know about cloud and the IT service market:

1)   Standardized Skills

The cloud is a nascent and immature world where skillful market execution is extremely hard to produce and the skills to do it are even harder to find. Cloud is missing the underlying foundation of training and certification (think A+, CCNA, MCSE type programs), which buttress efforts to make meaningful market penetration in the IT service business.   Until that happens distribution needs to KISS (Keep It Simple Stupid).   Distribution needs to cast as wide a net as possible without overwhelming the VAR community with scores of technologies for which training is embryonic at best.

2)   Technological Abstraction

Winning at the distribution layer in the supply chain means recognizing what you truly need in order to capture the foundation of a nascent market.   I’ve blogged about this subject before, but what it comes down to is making complex technology simpler to consume.  Giving me brochures for a bunch of cloud vendors is a useful visual, but that’s about it.  Show me how I can reduce vendor sprawl, universalize my customer SLA, and expand markets with as little capital and effort as possible.  That would really raise some eyebrows.

3)   Integration & Interoperability

The cloud is not about selling product silos to your customer base.  That is so 1995.  The cloud is about selling the bridge between legacy IT and the future of IT delivery.  In order to do that you must have tangible and meaningfully integrated solutions that solve real problems for the partners who sell them and the customers that buy them.  I liken the cloud today to what the Remote Monitoring and Management software vendors went through during the early MSP days.  Selling RM&M product is nowhere near as powerful for the VAR partner and meaningful to the customer as selling an IT management solution in an MSP fashion.

All of this makes the early adopters in distribution at risk of either being too early (the market may be ready for line card distribution five years from now) or too late (they are now pot committed just like in a good game of poker and can’t turn back).

Either way, the field of opportunity for distribution is still anyone’s game at this point.  There is a lot of market to be had for the company that steps up with the right model to truly leverage the power of the IT service channel.

The 6fusion ecosystem gets bigger!

Building the ecosystem is critical for the cloud to thrive. This isn’t just a prediction for us, it is a philosophy – customers want solutions that are designed, tested, and certified to work together.  Recently, the 6fusion ecosystem got even better (and bigger) with the announcement that Network Box USA has been granted Certified Solution status with 6fusion.

For more details, see the announcement here

We are excited to welcome Network Box to the 6fusion family!  Stay tuned for more ecosystem announcements from 6fusion as we continue to build out the premier cloud ecosystem for the channel.

 

 

6 Things I Think I Think for IaaS in 2011

I love this time of year because it is one of those rare occasions during the corporate and product development process where creative ideas and concepts designed to stimulate future success enter the entrepreneurial blood stream.  It is that rare moment where you have the benefit of an entire year of business fresh in your mind to build upon and an entire new year ahead of you to set new standards and push the envelope of success. 

For our company and for the industry, 2010 was a huge year.   We completed our Series A round of venture financing, relocated the company to the coveted North Carolina State University’s Centennial Campus and tripled the size of our team.  Meanwhile, the industry took meaningful steps toward maturity as mainstream private sector businesses and governments of all shapes and sizes began giving IaaS a very serious look.   If 2010 was the year of formal organization, 2011 will be the year of some serious and meaningful growth.  Not just for our company and our technology, but for the IaaS market as a whole.

In a post I wrote recently I did my best to explain some of the core characteristics that would be central to IaaS achieving mass adoption as the technology revolution marches forward.  While I think it’s very difficult for anyone to offer up accurate predictions for the year ahead of any fledgling market, there are some specific ‘themes’ that I think, as we look back a year from now, will have clearly emerged as bell weather trends in the industry.

To borrow a format from Peter King, one of my favorite sports writers, here are the six things (6 things, 6fusion, get it?) I think I think (for the cloud biz in 2011):

  1. Hybridization Will Prove Critical to Enterprise Adoption.  I’ve been to the edge and back and I have a few words of wisdom to share with my peers about the Enterprise cloud.  Unless what you are doing bridges a gap between what exists inside the four walls of the enterprise data center and what might safely and securely exist outside of those four walls you are just another GUI in the Red Ocean peddling the same wares we’ve seen for years.  Hybridization is something enterprise buyers will use to separate the crème from the crop in 2011.
  2. Regional Clouds Unite.  The arms race among regional managed hosting providers to beef up for cloud services was evident in 2010.  But the silo approach to building up IaaS on a regional basis will prove difficult if not impossible to compete on scale – and it won’t take long to figure this out.  In 2011 expect to see the concept of broad-based IaaS federation become a much more prominent theme as owners of regional facilities and compute partner to create scale and increase market size in the quest to truly monetize their resources and compete with the national players.
  3. The Ecosystem is Bigger Than the Organism.  The IaaS industry is beginning to realize that the creation and quantification of IaaS demand is much more important than the creation of supply.  Its one thing to have the capability to power or enable the creation of IaaS resources, but it is entirely another to drive revenue and margin to the cloud.   The emergence of business ecosystems will be a consistent theme for the coming year because partnering is the key to success in a nascent market.  In 2011 you will see more and more eyebrow-raising deals announced based on ‘synergistic’ partnerships – partnerships that drive mutual revenue and margin between companies that are bound by the common interest of leveraging, distributing and powering IaaS.
  4. It’s All About the Channel.  Building a global business tackling one end-user customer at a time doesn’t scale if your business is supposed to compete with the market pioneers.  In order to generate a serious outbound push to globalize IaaS the cost of business acquisition will be too high for almost every player.  In 2011 IaaS vendors will wake up to the fact that they need help in order to scale revenues and ultimately generate the ROI they are promising shareholders.  Queue the channel gold rush.
  5. Communities Will Emerge.  I subscribe to the notion that one day every business in every vertical will consume a form of public cloud – but we are not anywhere close to this reality.  Large scale IaaS operated by a trusted third party and made available to a select group of common-interested stakeholders is a concept that has legs.  Trust me on this one.  Building out community clouds will emerge in 2011 as one of, if not the most important, concepts to help accelerate IaaS adoption. 
  6. A Course Will Be Charted for an IaaS Futures Market.  If you don’t subscribe to the notion that the final destination for this ride is a commodity exchange for compute, stop and take a look around.  Spot markets emerged in 2010, much to the surprise of many industry pundits.  But spot markets, as novel as they are, do not a true market make.  The real money and the real opportunity are in futures trading.  There are forces at work on this as I type away, and although you won’t actually see compute on a major exchange in 2011, do expect to see this theme to creep it’s way into mainstream IaaS thinking.

Ok, so with the predictions for themes and threads out of the way, I’ll conclude this post with the 6 things I’ll be watching closer than my wallet at a pick-pocket’s convention as 2011 progresses:

  1. Shifting Big Iron:  Companies like HP and IBM have yet to emerge with serious IaaS plays and if you read the tea leaves they won’t any time soon.  I’ll be watching to see if any of the whales in the pool make a splash in the IaaS business.
  2. Processor Plays:  Intel made huge moves in the cloud in 2011 and you don’t need your tarot cards out to see where they are going.  Anyone know what AMD is thinking these days?  I’ll be watching to see if this gentle giant makes any moves that can rival thier kool-aid-drinking-all-in-pot-committed competitor.
  3. Government Clouds:  The GSA announced a major IaaS initiative announcing a schedule of vendors that could be purchased from their schedule.  But will these IaaS vendors truly make any money this way?  I’m not so sure.  My personal opinion is that the money is at a different level of the Public Sector.  Can’t wait to see!
  4. Hypervisor Competition:  KVM is rocketing up the relevance chart.  No doubt.  I’ll be watching to see how VMware plans to keep it’s toe-hold on the hypervisor market as IaaS enablement begins to drive more and more purchasing decisions.
  5. Network Providers:  The accelerated adoption of cloud services will put a big piece of the pie squarely in the hands of the network operators.  I will be watching to see how Network operators jockey to position themselves.  I don’t think it is a foregone conclusion that operators will follow the lead of companies like BT and DT.
  6. Disclosure Watch:  As more and more private sector orgs make the move to the cloud, the greater the potential that something somewhere is going to go wrong.  I will be keeping a watchful eye on key disclosures and cloud failures which could dramatically stunt the industry’s pace of growth.

6fusion’s first webinar of our 2011 series called: “Make your 2011 New Year’s cloud Resolution Now”. I’ll be elaborating on some of these points and drilling down into how service providers can drive new business to kick the session off. Come join the discussion!

Join us for our first webinar of 2011 — “Make your 2011 New Year’s Cloud Resolution Now!”

Make your 2011 New Year’s Cloud Resolution Now!

Make your New Years Cloud Resolution now and sign up to attend this informative session.  6fusion will be sharing their cloud predictions for 2011 and will show you how to drive profit and recurring revenue from the cloud while locking in your customers immediately with no up front capital investments.

This is the first in a monthly series of informative and actionable cloud seminars designed to help service providers add cloud to their services portfolios.

Space is limited.
Reserve your Webinar seat now!

Join us for a Webinar on January 6

Or for a repeat live presentation on January 13

PR: Meridian Global Fund Services Moves to 6fusion iNode Network

New York, Hamilton Bermuda – December 13, 2010 – Meridian Global Fund Services Group, a leading fund administrator, is pleased to announce that it has implemented a managed hosting solution which moves their core IT infrastructure and data into a secure cloud environment.

Meridian has partnered with 6fusion, a leading cloud hosting provider who has developed a consumption-based billing model allowing hosted infrastructure to be billed as a utility through their solution partner network; and Ignition, an international IT managed services provider. 6fusion developed the managed hosting and consumption metering platform for Meridian while Ignition acted as the IT consultant in the set up process and will provide ongoing resources as needed.

“This initiative has significantly improved our scalability as a global fund administrator and has solidified our disaster recovery solution,” said Eric Smith, Senior Vice President of Information Technology at Meridian Global Fund Services. “We now have the capacity to manage our data needs and realize value from improved performance, improved reliability and lowered cost.”

”We are very excited about the strategic partnership with Meridian Global Fund Services,” said Rob Bissett, Vice President, Product Management at 6fusion. “Through 6fusion, Meridian is leveraging a distributed data network that provides  access to significant resources and the ability for virtual unlimited scalability and growth. Our utility metered model contributed to Meridian migrating to the cloud.” The 6fusion data centre is a state-of-the art secure facility with SAS 70 Certification.

“We look forward to supporting Meridian’s migration in Bermuda with a 24/7 help desk, quality assurance, managed services, and proactive network monitoring,” said Michael W. Branco, Senior Vice President, The Ignition Group of Technology Companies. ”Meridian has stepped ahead of its competitors by choosing a hosted infrastructure solution and managed IT services allowing them to concentrate on the core competencies of fund administration rather than managing their own day to day IT.” Ignition supports 5,000 plus users in 32 countries.

PR: New Kids on Campus – 6fusion Partners with NC State University

Raleigh, NC – November 11, 2010 – 6fusion, a company that has developed a system to take control of third party computing resources and create a single utility to meet the needs of the IT Service channel, is the latest company to become a partner on NC State University’s Centennial Campus.

The company is occupying space in the Venture IV building on the research park and technology campus.

“We are delighted to have 6fusion on campus,” said Dennis Kekas, associate vice chancellor of the Centennial Partnership office. “With its background in cloud computing and our research in that area, we think they are an ideal partner going forward.”

6fusion has developed an algorithm that radically simplifies the metering, consumption and billing of compute resources, called the Workload Allocation Cube (WAC). The company also has developed a platform called UC6, which provides a single pane-of-glass user interface for customers to dynamically provision cloud workloads internal or external to their organization.

“We spent a considerable amount of time with the team at Centennial Campus after we completed our relocation to the Research Triangle,” said John Cowan, CEO of 6fusion. “Centennial Campus is not only an exciting, intellectually stimulating place to locate an entrepreneurial venture – it’s also a unique venue that allows us to partner on research and development facilities in a campus atmosphere that is more than just office space.”

6fusion makes iNode computing power available exclusively through IT service providers, independent software vendors and managed service providers. The company uses iNodes to build and launch ‘cloud’ based services to its user communities and customers worldwide. The company bridges the gap between supply and demand of utility computing resources with the company’s software technology called UC6. UC6 is a single console that handles all of the metering and billing of the “infrastructure” and deployment and control of customer “applications.”

In addition to the corporate relocation, 6fusion has also partnered with NC State’s Institute for Next Generation IT Systems (ITng) to develop collaborative research initiatives. ITng is also located on Centennial Campus.

“ITng is a perfect fit for 6fusion’s long term R&D program,” said 6fusion co-founder and CTO Delano Seymour.

The IaaS Revolution: Report from the Frontlines

When we read about revolutions historically, they are invariably painted as a momentary epoch during which the world blissfully changes forever and where the victors relish in the glory of positive new direction. Granted, revolutionary ideas are often harmlessly hatched in pubs, coffee shops, online groups, and simple meet-ups. But the revolution itself is anything but blissful or momentary. Revolution is about upheaval. And upheaval only brings uncertainty, panic and divisiveness. Revolution is a mess. It’s ugly and unorganized. And the business of it is bloody. If you want to storm the Bastille you better be prepared for bloodshed because the incumbent regime is not going to go down without a fight. And what’s worse, chances are there will be a cadre of competing revolutionists all bent on their own version of the ideal (Lenin, Stalin, anyone?). You need to watch your back as much as you keep your eye on the prize. Trust me on this one.

The technology business is no different. The grass roots movement to shift the way in which IT is delivered – from single tenancy to a multi-tenant utility – has created an intense battle. The specter of IaaS looms large over the IT industry and nobody in the supply chain is truly immune from its impact. You can see it everywhere you look in the business. Lines are being drawn. Alliances are being formed. The existing regime is deflecting and dissecting. And in the quest for customers (you know, those people that ultimately decide our fate) it is getting ugly. Revolutionists and incumbents alike wantonly steal ideas, poach people, shamelessly rebrand (pretty sure even my car dealer sells cloud now), undercut pricing and might even engage in a little espionage as they ruthlessly jockey for position.

So why revolt? Why do we put ourselves through such madness?

It’s simple really. We initiate change because the will of the people (or the market) demands it. Be you a disenfranchised member of the Proletariat that’s had just about enough of your bourgeoisie counterparts or a private sector business that’s had just about enough of hardware and software lifecycle cost the impetus is the same. We simply get to point where the status quo must go (ok, get your sign, we’re about to picket now!).

So how do we know when the technology revolution is over? Essentially, it will conclude when the market rate of adoption topples the existing regime and the floodgates open. Moore calls this “crossing the chasm.” I call this “the reason I get up in the morning.” It’s basically that point on the technology adoption curve that starts the hockey-stick (eh) looking upward slope.

Despite what you heard at the latest cloud conferences (these things look more and more like political rallies lately, don’t they?!?), IaaS is not yet ready for prime time.

Allow me to elaborate.

I see three common characteristics among every technological revolution that eventually gave way to a brand new paradigm in consumer society. It helps to think of these characteristics within the context of something everyone knows. You can pick pretty much any technology, but let’s consider three very different omnipresent exhibits to illustrate my point: The internet, electricity and the automobile.

Characteristic # 1: Global reach. I can transmit email around the world with the click of a button. I can consume electricity anywhere in the modern world. A car is an acceptable mode of transport pretty much anywhere. In order for a technology to achieve the upward slope of adoption it must be able to scale the globe in a uniform fashion.

Characteristic # 2: Technological abstraction. My 80 year old mother can send an email and she has never even heard of IP. I am not an electrical engineer, yet I can use electricity. My car is a complex piece of machinery, but all I really need to understand are a handful of simple instruments to competently operate it. It is impossible for any technology to permeate society if it is not made simple enough for anyone to use.

Characteristic #3: Universal measurement. A kilowatt is a kilowatt no matter where we live. Bandwidth dictates how many IP packets I can transmit as defined by every service bureau. Gasoline universally powers my car and I pay by the gallon/litre. Imagine how difficult it would be if we had to calculate octane levels and put out an RFP to Shell and Texaco before we made a decision to fuel our cars? Where would the internet be if every ISP had it’s own version of a packet? Where would we be if you had to manually calculate volts and amps for every device in your house to guesstimate your electricity consumption?

Now translate this to our very own IaaS revolution:

  • IaaS today is regional at best, not global. Can I build a workload and deploy it anywhere I want in the world, from anywhere I want in the world? No. IaaS clouds are being stood up in silos by software peddlers capitalizing on hype and FUD.
  • Can the average business user tap into any of the pioneering IaaS platforms and completely self-serve their computing needs? No. Using IaaS is complex and limited only to engineers and sophisticated software developers.
  • Can I measure my compute utilization the same way whether I operate it in Chicago, London or Tokyo regardless of the local service bureau? That’s a pipe dream for most customers and even service providers. IaaS metering and billing is painfully done in private sandboxes and vacuums today.

The next phase of the revolution is upon us. As reach, abstraction and measurement become more uniform; more pervasive, simple to use, you will begin to see the light at the end of the path.

Take it from a self-proclaimed revolutionist: Only then will a truly new era of IT delivery emerge.