Tag Archives: IT Channel

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.

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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!

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.

PR: IaaS Leader 6fusion Launches Comprehensive Cloud Computing Platform for Data Center Operators and IT Service Providers

June 7, 2010 — 6fusion today announced the launch of UC6 3.0 beta for data center operators and IT service providers. The new release includes a number of important new features, including:

– Building, controlling and maintaining cloud workloads running on 6fusion’s iNode Network or privately within the customer’s own data center
– Integration of the light weight 
UC6 Profiler agent, released in 2009, into the UC6 Console dashboard, giving service providers the capability to perform deep pre-migration analysis
– Capability for data center operators and customers to launch new 6fusion Infrastructure Nodes anywhere in the world from a centralized NOC
– Instantly ‘unplug’ workloads from the cloud and redirect them elsewhere
– True metered utility powered by 6fusion’s patent-pending Workload Allocation Cube algorithm
– Integrated granular charge back capability for enterprise resource segments
– A rich set of integrationg capabilities to allow external programs to take advantage of the highly modular design of UC6.

UC6 is a software platform that converts virtualized servers, network and storage into a billable utility and makes the utility computing resources accessible to external users. 6fusion federates independent third party data centers, which comprises its iNode Network. The iNode Network is used by IT Service Providers and Independent Software Vendors to deploy cloud based solutions on behalf of their customers, paying only for the compute resources consumed. 6fusion is the only 100% channel-only focused IaaS enabler in the market.

UC6 can also be deployed inside a private enterprise by 6fusion Solution Partners, which 6fusion has been quietly doing for the past several months. “The ability to create a single interface for Enterprise customers to deploy workloads internally or externally onto the iNode Network is in very high demand in the cloud industry,” said 6fusion co-founder and CTO Delano Seymour, the principal architect behind UC6. “Using UC6 3.0, customers can deploy workloads to either their own private data center or one of our multi-tenant data center partners in a matter of minutes,” he added.

UC6 3.0 was also designed to be hypervisor independent, a key feature for the future of IaaS. “There is a lot of debate going on right now over the viability of virtualization vendors offering full cloud management solutions, but our customers don’t want to be locked in to one vendor,” said 6fusion co-founder and CEO John Cowan. “UC6 3.0 architecture will allow the customer to use their choice of hypervisor without compromising the richness and functionality of the cloud or getting locked in,” he said.

The new 6fusion platform also features the UC6 Profiler, which was introduced to the market a year ago. Since launching the free tool, customers and partners have been using it to analyze the potential cost of moving to the cloud before conducting any actual migration. “Profiler allows our partners to gain valuable insight into the cost performance of customer applications they are thinking about migrating to the 6fusion iNode Network,” said 6fusion Director of Partner Development Doug Steele. “With our new release, the Profiler agent can be deployed directly from the UC6 Console,” he added.

Data residency control and self-service provisioning were considered high on 6fusion’s priority list for UC6 3.0. “When we started our company customers gravitated to us because we could assure them control over where their data sits,” Steele explained. “Now, customers in one geography can ensure that some data remain local and other data can be processed in a completely different geography, without ever having to leave 6fusion’s console to accomplish the task,” he added.

UC6 3.0 usage is based on 6fusion’s patent-pending algorithm, called the Workload Allocation Cube (WAC). The WAC algorithm dynamically blends the critical compute resources required to operate practically every x86 based software application, yielding a single unit of measurement. “The Workload Allocation Cube is the most granular unit of measurement for cloud infrastructure on the market,” said Mr. Seymour. “Our customers have been using the WAC for over three years to meter cloud infrastructure because of our unique ability to simplify the cloud consumption experience,” he added.

UC6 3.0 is first being made available for existing partners and customers, followed by a general public release scheduled for later in the year. For more information about 6fusion UC6 3.0 or other 6fusion related technologies, email info(at)6fusion(dot)com or visithttp://www.6fusion.com

Key Suppliers in the New ‘Cloud’ Order

In the Perezian sense, as the fervor and hype of a technology revolution gives way to a new technological paradigm – a new order, if you will, to the way in which we perceive and do things – there is tremendous disruption among the supply chain participants across entire industries.  Within this disruption there is equally tremendous risk and potential reward.  It is this change process within which we often refer to clichés phrases like ‘survival of the fittest’ and ‘the crème rising to the top’, etc.

Without a doubt, cloud computing – or the idea that I can get all the computing power whenever I need it, wherever I need it,  scale up and down on demand paying only for what is consumed – is going mainstream faster than anyone expected.  And you don’t need to consult Gartner or Forrester to figure it out.  Just tune in to any NFL football game on the weekend and spot the slick new IBM advertisement on TV!  (I felt like calling my Mom in Canada and asking her to tune in, since she’s been asking me for five years exactly what it is I do for a living!).

Mainstream media advertising aside, the real impact of cloud computing is still developing and will be for a while now.

As methodologies and best practices for IT deployment align with fundamental technological changes (such as that represented by the idea of cloud computing), empires built on old-world processes and systems can come crumbling down.  Witness the profound directional changes dumped onto companies like Microsoft in recent years.  The existence of companies like Amazon and Google, purveyors of all things cloud, and Salesforce, the grand poobah of SaaS, have literally forced the largest software maker on the planet to change its direction completely or risk its prestigious 30 year reign of relevance to consumers.  I’m not one of the Chicken Little pundits that think Microsoft’s days are numbered. Far from it. But the changes coming from MSFT these days are arguably like none other in its history.

At 6fusion, we see four critical groups in the supply chain that will live or die with the sea-change of cloud computing.  Those groups include:

  • The Channel (IT Service Providers)
  • The Network Providers (ISP, Telecoms companies)
  • The Hardware Manufacturers (Dell, HP, IBM, etc)
  • ISVs (Independent Software Vendors)

Here is what I find amazing about these four groups:  The pendulum for the next several years will be wild and dramatic.  Embrace change and potentially ride a revenue wave like you never thought possible.  Resist change, and leave your fate to chance.  Maybe I need a bit more excitement in my life, but I personally think a front row seat to this action is the best ticket in town! Here are just a few of the major league questions facing industry stewards:

  • Managed Hosting Providers and purpose-built SaaS companies want to own the end user customer relationship. The cloud represents the biggest disintermediation threat in recent memory. How will the modern IT Service Provider stave off the biggest threat since Dell’s direct model in the 1990’s?
  • The network is the most commoditized resource in cloud delivery. As the role of the modern network provider changes, some of the big telecoms firms have decided to become cloud service providers in order to reach beyond the packet for revenue. What are the risks inherent with Telco’s playing in the cloud space? How can Telco’s and ISPs leverage their position as a key raw material component of the cloud to position themselves for a more profitable future?
  • The days of competing on logos and laurels are dead and buried. In a new world where the purchase and supply of hardware is being driven by ROI, footprint reduction, more support for less money and hyper-efficient supply chain logistics, will the big iron shops be agile enough to compete? What are the implications for the big firms that decide to inter the cloud computing service fray, going head to head with other market entrants, possibly even existing clients?
  • SaaS is clearly the future business model for the delivery and licensing of business-value software. But two facts remain: 1) getting there takes a complete overhaul of legacy systems, the kind that represents massive strategic shift and 2) the world is full of legacy systems, contrary to the hype cycle in the industry. Where is the bridge between the old order and the new order for software companies and how will they cross it?

Most that know us know our technology is beginning to play a key role in the future direction of these supply chain participants.  We develop technology with an eye for making computing simpler, which removes proprietary silos that only serve to slow down the realization of a world where cloud computing methodologies are included in standard deployment best practices for IT.

Over the next several weeks I plan to dedicate some blog space to each of these core groups and unfold a bit of what 6fusion has been up to as we continue our quest to deliver the promise of this new technology to the widest audience in the cloud.

Implications of the Twitter Hack for the IT Channel

One of the biggest industry news stories in recent memory happened this past week when Twitter’s back office was ‘hacked’, causing an information leak of epic proportions. When the story broke many read in stunned amazement. What I found in most of the blogs and stories I read following TechCrunch publishing the confidential documents was just like an eye-witness account to a horrific train wreck. There were plenty of stories about the shock and horror of it all. But there were very few stories that got past that and began to deal with the real questions.

In my mind, here is a real question: What the *%@$ is Twitter doing using Gmail and Google Apps?!?!

The point of this whole sordid affair, in my opinion, is not that Twitter got hacked. Software systems get hacked every day. And no, it’s not that the Cloud failed, as many mainstream naysayers hinted. The cloud did not fail.

I could not believe Twitter, a company with billions on the line and a bull’s-eye painted on its chest, chose to trust their most sensitive trade secrets and corporate documentation in the hands of a software service for which Twitter management could only have had limited control. Nobody failed here except Twitter (or Twitter’s IT Management/Advisors).

The implications for the IT service channel are clear: You can’t trust your customer’s data in the hands of third party application providers for which you cannot ultimately guide and control security and compliance.

The Twitter leak underscores the importance of maintaining 100% control over your customer’s information when making the decision to recommend a ‘cloud computing’ solution. It also shines different light on the same argument I made for IT Service Providers to avoid the trap of the Google Apps Reseller model. In that blog post, I wrote that if you chose to align with Google Apps, “You are giving up the control over the operation of your customer most important applications: Productivity and Email. Opening up your IT Service practice to Google is nothing short asking the fox to guard the henhouse.”

At the time I was writing from the perspective of protecting the information assets of the IT Service Provider. But the same argument holds true for the information assets of their customers. As a trusted advisor to your customer’s business you would never recommend they store sensitive information on a shared application system (i.e., a SaaS product you can’t control or make a party to your customer SLA). Never. Period. End of discussion. It’s not only Compliance 101, it is pure common sense. SaaS has its place in the new paradigm of cloud computing and 6fusion is a huge proponent of the multi-tenant architecture.  But it doesn’t mean companies should ever disregard the principles and best practices of Risk Management.

I’m not out to slam GOOG in particular. It just seems platforms like Google Apps, or even Microsoft’s hosted Exchange and Office suite, are only geared for home consumers. I think this model has a long way to go before it is considered optimal for IT Service Professionals and their real-life business clients. It’s not about how big Google or Microsoft are or how much money they can plough into security. It is about control over the systems and data.

Let’s pause for a bit of Channel introspection: Imagine for a moment what would happen if YOU were the consultant or Managed Service Provider that recommended to the CEO of Twitter that he trust his company’s most sacred information on the Google platform, trying to shoehorn security best practices into what is, at best, a consumer price-driven product. Then imagine you got the call when the breach happened. Forget about why or how this happened. And don’t even think about pointing the finger at Google. The why or how is a moot point.

Whose precious reputation is really on the line in situations like this? Yours or Google’s?

Here’s the simple truth: After an incident like this, it would be nearly impossible to recover from the reputational damage to your IT Service operation. And Google? Well to Google, your IT Service practice would be but minor collateral damage incurred on route to their seemingly relentless quest to topple Microsoft.

The message behind the unfortunate events at Twitter are clear: IT Service Providers must trust in themselves, and their own ability to harness the cloud, in order to earn the trust of their customer, which makes aligning your cloud strategy with the Google Apps of the world a very questionable step.