Umbrellar's Michael Foley: "No one owns the customer"

Umbrellar's Michael Foley: "No one owns the customer"

How Umbrellar disrupted its own business

Michael Foley (Umbrellar)

Michael Foley (Umbrellar)

Credit: Supplied

Auckland-based Umbrellar is pioneering a new model of solution delivery its says puts the customer in the centre – and solves the problem of channel conflict.

Last year, Umbrellar launched its own Azure and Azure Stack cloud portal and has since been opening that to partners to create an ecosystem of more than 30 providers going to market in collaboration.

In the process it disrupted its own business, the cloud distribution chain and the unfortunately still common idea that a vendor can "own" the customer, said CEO Michael Foley.

To fully understand what has happened, it pays to know a bit of company history.

Umbrellar's origins go well back into a time before the cloud – to the 1990s and the days of the garage internet service providers.

It's origins were in web hosting, which morphed into being a managed service hosting provider. In other words, it was a server-based business.

Its brands included FreeParking and small ISP and hosting outfits who teamed up to build scale as the market consolidated.

Five years ago, Digiweb in Christchurch acquired Web Drive and its various brands after receiving a significant investment from Pencarrow Private Equity. Other distributed elements of infrastructure hosting, mostly based around VMware, were also added.

Free Parking was added to the group a year later.

One of the drivers behind that, apart for a quest for scale, was that customers were outgrowing shared hosting and asking for virtual machines, Foley told Reseller News.

The result was a company with good critical mass in online – domains, web hosting, email and so on, accounting for about a third of market. It was a good cash business with, initially at least, very little churn.

Enter the cloud and leakage out of traditional hosting began to become apparent.

"We decided two years ago we had two propositions – online and VMware hosting," Foley explained. 

Those two operations have now been operationally separated, or "air-gapped", with the Umbrellar brand applied to the hyperscale cloud division, which currently focuses on Azure and Azure Stack.

"We came to the conclusion that trying to compete with hyperscale was not on," Foley said. "Multicloud was where it was at. No one was going to win the cloud wars."

Timing is everything, and not just in comedy. Around the same time, Microsoft was launching its Azure Stack product, allowing its hyperscale Azure cloud to be deployed locally.

Azure as the host platform was also designed to allow other hyperscale cloud integrations. Further, Microsoft was heavily partner-centric organisation.

Umbrellar needed to build a new business from the ground up, a serverless business built around SaaS products. What followed was a year and a half of hard graft starting at the beginning of 2017.

To support the business, it stood up Salesforce as a service and Zoora for subscription consumption billing.

"We genuinely disrupted ourselves," Foley said. "We didn’t want to tether the cloud business to legacy systems."

Nine months in and still in build phase, Umbrellar stood up Azure Stack. 

"We made it look exactly like public Azure," Foley said. 

"We don’t price it as a premium product and customers can deploy locally at the click of a button. 

"It needed to be seamless, to push the edge of the public cloud out to Auckland."

At that point, Umbrellar was able to sell direct to customers. But it also had a number of resellers as customers, and wanted to be able to push software through them.

In other words, in a highly unusual move, it wanted to become a distributor as well.

At first the suggestion was rebuffed by Microsoft because it did not have such discretion in the at local market. Three distributors were already appointed in New Zealand in Ingram Micro, Dicker Data and Exeed.

"We kept chipping away at it, at what we thought was an inevitable evolution of the distributor model," Foley said. "It was evolution rather than disruption to add a lot more value than simple transaction engine."

The breakthrough came last July when Umbrellar was granted Indirect Cloud Solution Provider status on top of direct. Rhipe also came as an Indirect CSP at the same time but was not direct.

"We do not promote ourselves as a distributor in traditional sense and don’t intend to," Foley said. "But I think we can use that arrangement in a different way that genuinely puts the customer at the centre."

Indirect CSP status also required a rewiring of the Umbrellar portal.

From the get-go Umbrellar was not aiming to use the distie model – rather it planned to build a partner ecosystem that takes all the capability in Azure and bring together an ecosystem of specialist players to help customers leverage those capabilities.

Read more on the next page...

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