As the computer business becomes a more a commoditised place and margins on hardware continue to slide downhill, Reseller News asks if some of the industry players are showing signs of abandoning procurement in favour of selling cloud services. We spoke to three resellers who have all made changes in the way they offer services and procurement and get their future view on the reseller world.
Last year Exeed began offering cloud services in the form of SMX email security and is increasing its range of services and products available through its cloud platform.
"Given we are a distributor -- is it relevant for us to respond to what resellers are doing in the world of VM?" says Justin Tye, managing director of Exeed. "From our perspective generally there is still a very strong market for resellers participating in the traditional business of server deployment, exchange/SQL setup and on-going servicing," he adds.
Tye says the way ahead is more towards virtualisation as remote tools become more available and easier to use. "Without any doubt the trend towards virtualisation is having an impact on the way resellers manage part of their customer base as tools to manage servers remotely become more widely used.
"Part of procurement has shifted towards managing the requirements customers have to support these environments and resellers are doing more with less as technology enables them to manage more complex tasks remotely," says Tye.
He says that moving away from hardware procurement has the benefits of freeing up cash flow resources but doesn't think it is a trend. "Hardware has to a degree become commoditised but is has not scared off most resellers from continuing to offer this as part of the service ecosystem that their customers expect.
"I don't believe that outsourcing procurement is a trend except for those that want to remove themselves from the risk of cash flow management which is an inherent part of procurement.
"Those that are good at it will retain a larger share of the addressable market -- those that opt out of procurement will restrict their activity to a service led engagement with the customer."
Robert Elcombe of MiIT based on Auckland's North Shore says their virtualisation or cloud services are continuing to gain in popularity as customers become more aware of products such as Microsoft 365 and Google Apps.
"We invested in the hardware with the support from Dell themselves with the cost of some of the hardware. We have a co-hosting solution with a local datacentre and we host our own equipment and we now offer our clients virtual services as well as tangible assets," says Elcombe, adding that he is not dropping procurement in the future as the two go hand in hand.
"Selling virtual services is becoming a bigger and bigger part of our business. Just 18 months ago where most people only went for tangible assets, because that's what they knew, now people are coming to us and inquiring about virtualisation as a solution for their company as a first option. One can only assume that that is down to the publicity that the likes of Microsoft has done with 365 and Google has done with Google apps because a lot of people have come to rely on their mobile phone as the gateway to office applications," he adds.
"I think it's a case of all the big vendors can see a market change on the horizon and they're all jumping into virtualisation no matter who it is. IBM has a datacentre on the North Shore, but our advantage compared to the likes of Microsoft is that our datacentres are here in Albany and they're not in Singapore," adds the MD.
He says they're offering the whole range of services in the cloud. "At the moment we don't marry in MS Exchange with our telephone solutions. We've not found a huge uptake on it at the moment.
"I think it's going to become more prominent as time goes on and more and more people move towards visualisation and less people buy tangible assets. The tangible assets will continue to get more expensive which will continue the spiral into virtualisation. There's no reason for people to move away from visualisation if it's resilient and reliable, which it is and the UFB project is only going to cement that further."
Last year, Softsource made a huge investment and opened its own $10m Tier 3 datacentre offering cloud services.
Director and general manager of Softsource Pablo Garcia-Curtis says it is becoming more about saving on the large expense of upgrading older equipment. "The offering that we've got has given them [the customer] an opportunity to go from a cap ex to an op ex type of budget where there's a set price and they know exactly where it is and there are no surprises in their day-to-day operations. Although the hardware has been commoditised and there are less and less margins in the hardware, the hardware still has a place to play. Although we are consolidating to a single piece of hardware it's got higher requirements and it's got more processing power, more ram and more disk attached to those solutions, so there is a place for more hardware still but what we are finding is a lot of people are looking to hybrid models," he says. "They want to change some parts of the business locally and put the other parts in the cloud. They're basically looking at what their internal IP is and best utilisation of those, and in areas where they've got strong requirements around financial and they want to keep that localised then the rest can be put into the cloud."
Garcia-Curtis says he is getting a lot of support from the vendors in pushing cloud options. "Most vendors are looking to provide some sort of cloud option particularly software manufactures, most of them have some sort of solution out there and they're looking at localised partners to enhance their solution. The licensing schemes of Microsoft are changing through the use of SPLA and other things like that."