Spoilt for choice

Phil Parent describes the mature state of New Zealand's datacentre market, and how that benefits resellers and their customers

The New Zealand datacentre marketplace has matured with a number of providers now offering a wide range of datacentre products and services. For resellers, this means that, regardless of your customer’s requirements, you can help them select the right datacentre, or mix of datacentre services, for them to store their data and/or host their applications. The benefit for your customers is that they can decrease their reliance on in-house ICT resources, focus on running their businesses and perhaps even reduce their overall ICT costs. The benefit for resellers, of course, is that you can increase your revenue streams by offering value-added services such as consulting, remote management or service aggregation.

The challenge for resellers is to understand the ICT service requirements of your customers, ascertain which ICT services can be off-loaded to a third-party datacentre, identify which of the many competing datacentres is the best match for those requirements and then prepare a business case for the transfer. Resellers that can demonstrate clear cost savings coupled with no degradation of end user services will be well placed to take advantage of this rapidly-growing market.

Datacentres for all applications

The depth and breadth of datacentre solutions available in New Zealand means that resellers can fully leverage their skills to offer the most appropriate combination of products and services for their customers. For instance, a reseller specialising in Oracle implementations would be well placed to engage with the brand new Oracle datacentre. Or resellers in the government market might look to partner with Revera and its Stack Alliance programme. For those resellers that have a wide variety of customers with aging infrastructure running legacy applications, the Vocus co-location offerings would be an attractive proposition. A reseller wanting to ‘white label’ third-party datacentre services as their own might want to look at IBM’s solutions. Or a reseller looking to leverage an existing brand might find a good match with OneNet or Entrada (from SoftSource). And the list goes on.

In short, you as a reseller can extend and enhance your skill set and add additional revenue streams by engaging with the most appropriate (or set of appropriate) datacentres.

Datacentres make good sense

Datacentres have passed the ‘talk’ stage and have become a viable option for organisations of all sizes. “Customers want more services, more applications, more flexibility and more scalability but are faced with a number of challenges,” says James Spenceley, CEO of Vocus Communications. “Many organisations have a lot of turnover in their IT departments, the rules for licensing and upgrades for applications can be daunting and the markets are moving so fast it is hard to keep up. At the same time, they are reading about the cloud and all of the benefits and talking with others who have initiated datacentre activities and have realised concrete benefits. As a result, when resellers talk to customers about looking at a datacentre for specific services, the customers are primed to listen.”

Engagement for customers can be as little or as comprehensive as appropriate. “Co-location is an easy first step, with a clear path to porting more processing and hosting to the datacentre,” continues Spenceley. “Once clients come to rely on the datacentre for some of their processes, they typically continue to add additional services. Ideally the reseller will have systems integration skills to manage the transition process from in-house to the datacentre. Our particular partner programme allows our channel partners to purchase services at a wholesale cost structure and then the reseller can set their own margins.”

Replacing hardware sales

“Resellers are losing traditional hardware and software sales,” says Pablo Garcia-Curtis, director and general manager of Softsource, operators of the entrada datacentre. “The ones who embrace the cloud will see growth rather than stagnation. Moving your client’s ICT services to a datacentre environment provides an ongoing annuity that will go a long way to offset the declining margins on hardware. The clients like the datacentre model because they can budget more accurately with regular, predictable operation costs instead of capital expenditures that might have a tendency to creep beyond their budgets.”

Initial engagements can happen very quickly. “We can set up a private cloud for customers in as little as 15 minutes,” says Garcia-Curtis. “Obviously, the more services the resellers can offer, the more margin they can earn. We have a number of services as well as training tools to help resellers get started. One service that is ideal for porting to a datacentre is testing. We can add additional processing power for specific projects, enable the client to run as many simulations as they see fit and then, when the application moves to a production environment we can terminate the service. Customers that have adopted a cloud strategy for testing, software development, special projects and regular spikes in processing are finding that they can speed up the development process without major costs. They find they have more flexibility with a ‘pay as you go’ model.”

Aggregation skills essential

“Resellers with the right ‘datacentre aggregation’ skills will be well-placed to help their customers take full advantage of the datacentre opportunities currently available,” says Robin Cockayne, CEO of Revera, one of New Zealand’s largest datacentre solution providers. “In fact we have set up a reseller programme, called the Stack Alliance, in which we provide the IaaS (infrastructure as a service) hosting capabilities and our Alliance partners offer specific services to add value to the IaaS offerings. We encourage our Alliance partners to collaborate, drawing on each other’s strengths, so that the end users can receive the best value for their investments.”

Revera has a focus on providing services to the public sector. “We have been in the IaaS market since 2007 and have brought a new, locally-based datacentre to the market on average every two years,” continues Cockayne. “We have around 150 staff members and complement that expertise with our Stack Alliance partners.” Revera has a team of business development managers who work with Stack Alliance partners to help them identify datacentre opportunities within their client base.

Plenty of capacity

The datacentre market is primed to take off. “Maybe a year ago there were capacity issues,” says Andrew Fox, general manager - global technical services, IBM New Zealand. “But since then there has been a lot more activity and there is now an abundance of capacity distributed amongst various datacentre providers. And the sales model is changing as well. Traditionally, many datacentre providers sold directly to their customers. But now we’re recruiting more resellers as they have a broader reach into the market and can take over many of the sales and support tasks. Plus they have a much better visibility into their client’s requirements.”

While it isn’t strictly necessary to be an IBM Business Partner to take advantage of the IBM datacentre products and services, IBM BPs have a distinct advantage. “If you have already developed IBM-based business processes for your clients it is almost second nature to port them to a datacentre environment,” says Fox. “You can start with simply back-ups and move on to hosting or even full-blown cloud-based services. Resellers need to look at the exact processes involved so that they can build a viable business case for their clients. We offer a ‘white lable’ service so that resellers can rebrand the services as their own and still have the entire weight of the global IBM infrastructure to back them up.” IBM has specialist business development resource on tap to help resellers - IBM BPs or not - take advanatage of the datacentre opportunities.”

Market driven by demand

Selling datacentre solutions has become easier in the last year, simply because customers want these services. “It wasn’t too long ago that we had only mild interest from resellers when we approached them about our products and services,” says Dr Michael Snowden, founder and director of OneNet. “These same resellers are now coming on board as they are realising that if they don’t offer these services to their customers, they’ll go elsewhere. In the last year alone we have added 50 resellers to bring the total number of channel partners up to 130.”

OneNet has developed a full set of datacentre services that can be onsold by their channel partners. “We have built a strong brand that offers a high level of trust,” says Snowden. “We don’t want to rely exclusively on the expertise of our partners and employ a highly-skilled team of engineers who work closely with our resellers to deliver the desired outcomes. This way we maintain full control of our services. Resellers that have gaps in their solution set can lean on our resources to round out their offerings to clients and prospects.”

The advantage of partnering with a mature datacentre service provider such as OneNet is that you can earn revenue immediately. “Building your own datacentre is a costly and time-consuming exercise,” says Snowden. “We know that because we have done it. It can take years to turn a profit and it is too easy to underestimate the resources involved. ”

OneNet’s business development managers provide a single point of contact for partners and maintains a full ‘knowledgebase’ for resellers. “Today’s organisations cannot afford downtime,” says Snowden, “and businesses are realising that off-loading a portion of their IT functions makes economic sense. We have been in business for ten years and can host almost any application running on a range of operating systems such as Microsoft or Linux. Resellers can buy our services wholesale and onsell them at retail prices, in effect setting their own margins.”

Understanding the client’s requirements

With the variety of datacentre solutions on the market, it is essential that resellers fully understand what their clients are trying to achieve. “Data sovereignty is a major issue for many organisations, especially in the health and finance sectors,” says Ken Albert, director of strategic solutions at Oracle Asia Pacific. “As a result, organisations have been hesitant to place their sensitive data assets in a datacentre environment. But there are other functions, such as building a test environment, that can be ported to a datacentre quickly and easily. The key is to clearly identify the functions within a client organisation which lend themselves to a datacentre approach and then show the customer how they can benefit.”

Demonstrations are essential for building the datacentre side of your service offerings. “Many organisations haven’t been exposed to the real power of PaaS (platform as a service) or IaaS,” continues Albert. “When they see the benefits, compare the costs and add in the levels of services and support they can expect they are more likely to adopt the datacentre model for at least some of their requirements. We have a full set of application templates that can be deployed rapidly and have a technical team to help out newer resellers that require assistance. A high level of trust is required between the end-user organisation, the reseller and the vendor. The advantage of the Oracle datacentre is that many resellers already have expertise in the delivery of solutions and the datacentre simply removes the requirements for establishing the processing at the client site.”

Conclusion

There are heaps of datacentre products and services available, the vendors are looking to increase their reseller networks and your customers are primed to buy. Selling datacentre products and services brings in on-going revenue almost immediately and can go a long way in replacing traditional hardware and software margins.

In this market, product knowledge is paramount. The more you know about the various vendors and their services - and the more you know about your client’s requirements - the easier it will be to make the sale. It’s not a question of ‘if’ your clients will become datacentre users but when. In fact, the only variable is who they purchase those services through. And it’s a good bet that they’ll select the reseller that can prepare the best business case.

RESELLER NEWS CLOUD ROUNDTABLE: 10-page report discusses the opportunity and challenges in the New Zealand market for Cloud service provision to enterprises and SMBs. Download now

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