Demand for cloud services has continued to grow exponentially as customers look for cost effective, flexible, scalable and secure IT infrastructure solutions. Those that have already migrated to the cloud are realising the multitude of benefits ranging from improved data storage to advanced analytics. And those that are considering cloud adoption are doing so largely because they have outgrown their existing infrastructure or its too rigid, outdated and expensive.
With business spend on cloud computing infrastructure forecast set to top $1 trillion for the first time in 2024, according to the International Data Corporation, its uptake will only continue to accelerate in future years – a trend that the Channel should be looking to tap into.
“Businesses are increasingly migrating more complex workloads to the cloud, creating new opportunities for cloud vendors and independent software vendors,” said James Baker, managing director for cloud at Giacom, which has reported double-digit growth in its cloud offerings this year. “This shift indicates a dynamic and rapidly evolving cloud services landscape, where organisations are leveraging cloud solutions to meet their changing needs.
“Additionally, the rise of generative AI has significantly boosted demand for AI-powered cloud services. The ongoing migration to the cloud and the emergence of ‘industry’ clouds – cloud environments tailored to specific industry needs – are further shaping the market, highlighting the growing importance and versatility of cloud technology in modern business environments.”
So how can resellers and MSPs capitalise on this huge opportunity to build cloud offerings that will resonate with their customer base? And where can they add most value as trusted providers?
Cloud services refer to a wide range of solutions provided by cloud computing vendors and delivered on demand to customers over the internet. They are designed to provide easy, affordable access to applications and resources, including the ability to instantly check emails and collaborate on documents, without the need for internal infrastructure or hardware.
Cloud services are provided in three basic forms: as a software-as-a-service (SaaS), infrastructure-as-a-service (Iaas) and Platform-as-a-Service (PaaS). SaaS encompasses a variety of services, such as file storage and backup, web-based email, and project management tools. IaaS provides the infrastructure that many cloud service providers need to manage SaaS tools. PaaS serves as a web-based environment where developers can build cloud apps.
Public vs private cloud
There are essentially three types of cloud: public, private and hybrid. Public clouds deliver resources, such as compute, storage, network, develop-and-deploy environments, and applications over the internet. Public clouds are known for their scalability, cost efficiency and accessibility. And because they are owned and run by third-party cloud service providers such as Google Cloud, maintenance and updates are handled externally, thus reducing the burden on in-house IT teams.
“Public cloud is easy to scale and access with fairly limited staff upskilling,” said John McKindland, head of partner channel UK, Sona Business. “Demand has grown over the last 12 months but I also think it’s started to peak with some of the biggest market players as companies look at alternative providers such as Sona Business who offer wider choice whilst still providing all the support and services required on a very simple, easy to consume basis.
“We take a lot of the management and heavy lifting away to allow the public cloud to be accessible and easy to use in a very cost effective way.”
Private clouds are built, run and used by a single organisation, typically located on-premises. They provide greater control, customisation and data security, but come with similar costs and resource limitations associated with traditional IT environments.
The ability to customise the environment allows companies to tailor the infrastructure to meet specific needs, optimising performance through dedicated resources. Businesses also retain full control over their infrastructure and data security, which is critical for organisations that require stringent compliance and governance measures.
Hybrid option
Hybrid clouds are environments that mix at least one private computing environment (traditional IT infrastructure or private cloud, including edge) with one or more public clouds. They enable the user to leverage the resources and services from different computing environments and choose which is the most optimal for workloads. The key benefits of hybrid clouds are flexibility, cost optimisation, scalability, control and disaster recovery capabilities. The hybrid approach allows organisations to use public cloud resources for less sensitive data and workloads, while keeping critical data and applications within a private cloud for enhanced security and control.
“Public cloud versus on-premises should not be seen as an all-or-nothing decision,” said Neal McMahon, regional sales leader, Avaya. “Cloud should be seen as an innovation journey, not a destination.
“A stepped approach with hybrid cloud gives enterprises access to innovative features without the disruption of throwing away what works. Existing investments can be enhanced with new cloud capabilities at a measured pace, according to organisational preferences.
“That allows an enterprise to capture incremental gains. It also minimises the negative impacts of change management processes. In essence, a hybrid deployment should be seen as a migration, rather than a transformation.”
Anthony Dobson, regional director, sales for Arrow’s enterprise computing solutions business in the UK and Ireland, added, “There are benefits across public, private and hybrid cloud environments. The key is to understand end user requirements, not just at a C-level discussion, but also from a user perspective.
“This will build a picture of what is needed now and for the future. It’s also important to include the criteria for knowing when to exit services, for example, cost increases becoming prohibitive with excessive usage or business goals have changed.”
The cloud landscape has been changed markedly in recent years by the advent of AI. Given the security issues associated with public cloud and the cost of implementing it privately, the technology is, therefore, best applied in a hybrid setting.
“While it may still be in its infancy, AI is having a significant impact in cloud services and there is a tension rising between customers wanting cloud services to be secure and private on one hand versus low cost and ubiquitous on the other,” said Bertrand Pourcelot, CEO, Enreach for Service Providers. “With publicly available engines, it might be assumed that any data put into those is accessible by anyone.
“Businesses therefore need to consider private AI servers, but as soon as they do that, they incur the costs of a powerful processing engine. This is where the hybrid service model comes into play because it enables organisations to choose different types of building blocks for each service element, with the sensitivity of the type of data or customer being mapped to the appropriate block.”
Support services
With so many different solutions available, MSPs, resellers and VARs need to help their customers to find the best one for them. By using their expertise, strategic support and training, they can deliver a customised solution that perfectly fits the end user’s needs.
Giacom’s Baker said that the best place to start is to carry out a thorough assessment of the customer’s business goals and IT infrastructure, identifying key areas where cloud solutions can add value. With a deep knowledge of the various platforms, he said that providers can offer expert advice on the strengths and weaknesses of each, helping customers understand the implications of their choices in terms of cost, scalability, security and compliance.
“Partners can also design tailored solutions that align with customers’ unique needs, optimising performance and cost efficiency,” said Baker. “Giacom supports this process by providing access to a comprehensive suite of cloud solutions and access to experts that can provide go-to-market planning, solutions assessment support, marketing support and training programmes.
“We also help partners engage with key customers, create joint business plans and identify new opportunities within their customer base.”
John Colgan, CEO, Solgari said that deciding on the right cloud model begins with determining the customer’s goals. That essentially comes down to price versus flexibility and scalability, he said.
“If the customer is cost sensitive then they’re more likely to be attracted to public cloud solutions as they typically have a lower upfront cost associated, and presenting TCO comparisons can help that customer see the reality of the benefits,” Colgan said. “Equally, if the customer is focused on high levels of scalability and flexibility, again they’ll be looking to public cloud and its ability to scale resources with the utmost efficiency and its global reach with exceptional low latency. And if security is high up on that list of objectives, the customer is going to need assurances around threat defence, encryption, compliance standards and certifications, and alike.”
For McKindland of Sona Business, budget and skillset are the main customer considerations. Then they need to adopt a steady, step-by-step approach at the implementation phase, which is where channel partners come in, he said.
He explained, “Going all in and throwing lots of money at it might not be the right way to go. A slow or phased migration is better, supported by the partner means less overall risk.”
Alex Finn, Evolve IP global partner manager, added, “Post-migration support is important too, where partners continue to support customers, ensuring optimal performance, security and cost management. Regular reviews help to adjust strategies as needed.”
Growth areas
Among the biggest shifts in cloud services in recent years has been partners shutting down internal assets such as native IaaS environments in favour of hosting with a wholesale vendor, according to Lee Walker, head of cloud sales at PXC. A big driver of this change is cost, both in terms of cashflow required to support growth and the fact that the price differential for owning the asset is closing, he said.
“Another factor is the need for increased capabilities within the cloud space and the new routes to market vendors can provide,” said Walker. “As an example, businesses can take our cloud environment and deliver their managed services on top.
“They can also opt to white label our platform and sell it directly to the end customer, should the IT function wish to maintain control over their cloud workloads.”
The voice space is also experiencing a big shift towards cloud-based communication. This is being driven by trends such as remote work, business agility and scalability.
“We estimate over 50 million cloud users will be active by the end of 2026 and many are already on their digital transformation journey to ensure their businesses are future-ready and benefiting from the latest advanced cloud technologies,” said Evolve IP’s Finn. “Demand for integrated cloud technologies will continue to intensify and reshape the world of work.”
One of the biggest players in cloud services is Microsoft, which has multiple marketplaces, enabling cloud products and services for Microsoft Teams, for example, to be bought online either directly or through channel partners. It’s this second area, however, which is undergoing the most growth, with Canalys forecasting that one third of marketplace procurement will be through partners on behalf of their customers in the future.
“Microsoft latest multi-party private offer for its marketplaces is driving growth for partners, enabling them to sell their offering via a channel partner, direct to an end customer online,” said Richard Jones, commercial director at Tollring. “Purchasing through marketplaces makes transactions easy, deployment quick, involves little admin, and provides partners with the ability to leverage proven and secure solutions.
“When the multi-party private offer extends to cater for multiple channels in the coming months, this will enable the Channel to work with vendors to create a bundled marketplace solution that can be sold via their channel on the marketplace. This streamlining of procurement offers peace of mind through operational control and governance, and accelerates time to value and innovation.”
Implementation challenges
Despite the clear advantages that cloud services can bring, they’re not without their challenges. Chief among them is security. Organisations often worry about data breaches and losing control of sensitive information, making it challenging to ensure data security and compliance with regulations. Additionally, network performance can be a critical issue, as cloud applications can strain network resources, resulting in problems such as latency and downtime, particularly for real-time data processing applications.
“Cloud providers can ensure end users’ data security and privacy by implementing a multilayered defence strategy that incorporates several key measures,” said Giacom’s Baker. “Data encryption is fundamental, ensuring that data remains unreadable, even if intercepted, both in transit and at rest. Alongside this, strict access controls, such as multi-factor authentication and role-based access control, are essential for limiting access to sensitive data to only authorised personnel.”
Evolve IP’s Finn said, “Safeguarding data is a shared responsibility, and collaboration between IT professionals, providers and end users is crucial. It’s important to control access to sensitive health data. Transparency and trust matter too, whilst effective data lifecycle management helps minimise risks. Balance data availability during breaches with robust security measures.”
Upfront costs can be prohibitive too. But those can be reduced by taking a more measured approach. Sascha Giese, tech evangelist at SolarWinds, said, “Many organisations may be concerned about the upfront costs associated with a move to the cloud due to the temporary increase in work while services, applications and data are transferred. During the cloud integration, organisations must continue services undisrupted, creating additional work and costs.
“If organisations are to gain the benefits of the cloud, an intentional and thoughtful approach will be required to reduce upfront costs. One way to do this is to consolidate services by creating an IT agency.”
Another major challenge is change management. Transitioning to the cloud involves significant changes in workflows and processes, which can be met with resistance from employees. Without proper training and support, this can slow down or even derail cloud adoption, so a shift in organisational culture and processes is often needed for successful implementation.
Cost management is another common stumbling block. While cloud services can be cost effective, managing and predicting costs can be difficult, with unexpected expenses from data transfer, storage and additional services potentially straining budgets. The shift from a capital expenditure model to an operating expenditure one is an additional concern for some businesses, as it requires a change in financial planning and budgeting practices.
Skilling is another key barrier to implementation. Many organisations lack the in-house expertise to deploy and manage cloud solutions effectively. That’s evidenced by a 2020 PwC CEO survey, which found that 77 per cent were worried about the availability of key skills needed to use the cloud.
MSPs and resellers should, therefore, look to partner with professional service providers to help them deploy solutions that fall outside their skillset. They can also provide the training required on how to use the technology effectively.
Avaya’s McMahon, however, cautioned that cloud-only isn’t always in the customer’s best interests. He said that businesses shouldn’t compromise their existing strengths and capabilities just for the sake of innovation, but rather take the bigger picture into account.
“The notion that an organisation must take backward steps, such as ripping out and replacing well-integrated systems and processes with entirely new solutions, is counterproductive as it not only disrupts established workflows, but also risks losing the nuanced understanding and optimisations developed over time,” said McMahon. “Presenting businesses with only one path to digital transformation is often a barrier to cloud migration.”
The future
As the availability of cloud services continues to expand at a rapid rate, changing the way that businesses work to make them more efficient and nimbler, so their uptake will only increase. MSPs and resellers, therefore, need to provide their customers with the expertise and support needed to take advantage of this huge growth opportunity.
Ritchie Butters, EMEA business director at 8x8, said, “This is still a period of incredible opportunity for resellers. Not only because so much of the market has still to move to the cloud. Add in factors like the delayed PSTN switch-off, there’s considerable scope and opportunity. The market’s going to continue to grow.”
This market report was included in our October 2024 print issue. You can read the magazine in full here.