Cloud Industry Forum,
This article is an excerpt from the latest White Paper “Cloud UK & Ire: The Critical Role of the Channel in Driving Cloud Adoption”, which provides a comparison of both end user and channel responses to key questions relating to the growth of this market, and offers direct guidance to channel participants to ensure they are ready to service customer requirements and be ready for the opportunities presented as the pace of adoption increases through 2013. For the purposes of this report the IT Channel is defined as Managed Service Providers, Systems Integrators and technical VAR’s.
Drivers of Cloud adoption
Based on our findings, The IT Channel largely perceive the ‘number one’ benefit that end users’ seek in adoption of Cloud Services is that of cost savings, closely coupled with a reduction of capital expenditure in favour of an Opex led purchase. However, this is not backed up by end user research which clearly shows that whilst costs savings are a real driver of adoption, the primary reasons for initial adoption of Cloud service relate to flexibility of the delivery model, a need for scalability and a focus on 24/7 availability driven by limited internal resources and lack of in-house skills.
Whilst this disconnect is not fundamental, as the IT Channel do recognise the majority of opportunities that end users seek, it does raise the risk that too much emphasis can be put on the area of costs savings and financing, when end users are more concerned about agility, time to market and de-risking operational delivery. A point worth noting though in regard to end user behaviour is that when they seek a supplier of Cloud Services, cost of the solution is the number 1 factor upon which they filter their choice, followed by relevant industry expertise, reputation and proven SLA’s.
Further, end users when reviewing their experience on the migration to Cloud Services believe that it could have been more swiftly, simply and cost effectively achieved and that their supplier could have offered more effective tools and services. It is encouraging to note that the majority of Channel (59 per cent) do offer implementation services for their customers, as this is seen as a critical part of demonstrating competence and relevance to the end user community.
Managing fears around adoption of Cloud Services:
When it comes to understanding end users concerns about Cloud computing, the Channel is largely in line with its target market. Unsurprisingly the issues of data security and privacy continue to top the bill, with sovereignty, internet connectivity and establishing trust with the service provider following closely behind.
Pace of Adoption
As evidenced by our research, end user confidence in Cloud is growing with three quarters of existing customers expanding their current Cloud footprint and 25 per cent of non-users claiming to invest in their first Cloud service during 2013. In real terms this suggests end user adoption of additional Cloud Services will equate to 45 per cent of all end users and new users will increase the pool of active customers by 10 per cent, and that rate of growth is also increasing. Statistically this would suggest the market has tangible sales opportunities within 12 months across 55 per cent of UK and Ireland businesses, and that in turn represents growth of around 80 per cent of new sales opportunities year on year.
Without doubt, Cloud Services represent a significant departure from more traditional IT delivery models and requires a fundamental review of the impact upon an organisation’s infrastructure, processes, skills, contracts, training, customer relationships, compensation schemes, changing landscape of competitors, as well as the very real risks associated with changing the basis of earning revenue and generating cash flow. This is a radical change for many and it is essential to understand the wider business impact in order to proactively attempt to mitigate any negative risk during the transition. Of course, for most, this is not a wholesale overnight change but a gradual one, and the threat facing the Channel is the temptation to stick to the familiar way of doing business rather than embrace the opportunity for change.
A core belief of the authors based upon the research, and comparing it with the needs and expectations of the end users, is that the IT Channel is vital to the evolution and growth of the Cloud Services market in the UK and Ireland. Whether in educating the market on the opportunity that Cloud represents, managing the transition to the Cloud and/or delivering the on-going solutions, the Channel remains a key influencer, and provides the critical path to Cloud adoption.