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Cloud plus on-premise vendors best placed for SMB SaaS opportunity 

Walter Adamson | Sep 5, 2010 112 views No Comments

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AMI Partners recently reported that the greatest growth in Cloud/SaaS for SMBs would be in email/messaging, online storage and backup, and document management/collaboration solutions. They made the point that the Cloud plus on-premise vendors are best placed to take advantage of this shift, and in fact to help accelerate the shift.

“SMBs have their doubts, particularly around the security of a 3rd party hosting confidential numbers. But companies like Microsoft and IBM who provide a convergence of on-premise and SaaS are clearing these concerns for interested SMBs who are trying to maximize the combination of cloud and on-premise issues,” said AMI Senior Associate Yedda Chew.

AMI believes that SMBs are easing into the concept of local plus cloud-based computing rather than leapfrogging into a pure-play platform, allowing companies like Microsoft, who not only provide hosted solutions like exchange online in its BPOS bundle, but also its ubiquitous “exchange on premise”, to live in co-existence.

This on-premise plus Cloud flexibility provides visibility of the Cloud opportunity to SMBs while assuaging their security concerns. And then, in time, as the realization of the TCO of on-premise becomes more visible in comparison to Cloud, SMBs then have the potential to migrate from their on-premise Windows and .NET-based applications to the cloud.

Although AMI mentions both IBM and Microsoft to be well placed in having Cloud plus on-premise, I’m struggling to think how IBM fits here execpt for Lotus Live, which has little market penetration. In a comparison between the two Microsoft would have to be not only a country mile ahead but also an organisational generation ahead in transforming to this business model.

In another related cloud study AMI confirmed that CRM, payroll, accounting/financials and web-conferencing tend to be the leading applications currently used in the Cloud. Adoption intentions remain strong for CRM, Business Intelligence (BI) and web/video conferencing for the next 12 months.

So if we again compare the IBM and Microsoft cloud portfolios then, in fact, there is no comparison since IBM is barely on the map in all those cloud applications whereas Microsoft has a strong position in several. Of course IBM does have the on-premise applications, a monstrous suite of them, but not Cloud, not cheap and not simplified. And it’s those last two points which accelerate Cloud adoption in the SMB space.

How should resellers and channel partners respond to this shift?

The first necessity is to go with the flow – the Cloud shift is not going to go away, and even if you deny it your customers will not.

  1. So first step is to make sure that their current solutions are working well, and are as cost-effective as possible (I’m thinking on-premise here), and that you are familiar as you can afford to be with which features they are using, and which they don’t need.
  2. Second step is to work with them to understand which Cloud applications they are using and how they sourced them and how they feel about them, and how they link or do not link to their on-premis suite. Also note their wish-list for their potential integration of these services – between Cloud or between Cloud and on-premise.
  3. Third step, and this might seem counter-intuitive, is to work with them over time to help them understand the proper TCO of their on-premise. This can be easier said than done because of all the hidden costs – a rough rule of thumb – take what they say are the costs and double them.
  4. Fourth step, be pro-active in migrating them to an online suite, like Microsoft’s BPOS, which cuts their costs and builds your goodwill. This may seem counter-intuitive since it will also cut your revenue, but that’s not necessarily true. It will be done over time, and if you initiate it you will guide that timeframe and can plan for it. You will also have the opportunity to now know where to add other higher value on-premise and Cloud applications which will add value and grow your income e.g. Remote Managed IT Services.
  5. Fifth step, having worked with your customer you’ll be able to find additional applications which will suit their business needs and are Cloud and where you can provide services. Notably, there is growing interest in using cloud-based productivity suites, along with bundling additional value-added components such as security, storage and wireless broadband access.

Following these steps will bring you closer to the customer’s issues and place you in a position to close the knowledge gap on Cloud and SaaS, and help them migrate to SaaS applications where you can add value.

As a channel partner how would you help your customers move into Cloud?

How do you think Microsoft and IBM compare in their Cloud plus on-premise offerings?

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Republished with author's permission from original post.


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