Amazon Web Services: The Big MSP Disconnect
Talk about two extremes: Yesterday, Canonical CEO Mark Shuttleworth (the guy behind Ubuntu Linux) said Amazon Web Services has emerged as a de facto cloud standard until open, vendor-neutral cloud standards can be developed. Yet only three percent of MSPs leverage Amazon’s cloud, according to our ongoing MSPmentor 100 survey. What’s behind the disconnect? Here are some thoughts.
Admittedly, I’ve taken some heat in recent months from a few readers who think I spend too much time focused on Amazon Web Services, Amazon Elastic Compute Cloud (EC2) and Amazon Simple Storage Service (S3). But I’m sticking to my guns because I think leading-edge VARs and MSPs are building bridges between on-premise systems and cloud services — particularly Amazon’s web services. Two examples include Levementum and OpenBI, two integrators that have been launching customer applications in Amazon’s cloud throughout 2009.
Also of note: MSP software providers — from Nimsoft to Vembu — are either integrating with Amazon’s cloud or monitoring services in that cloud. (If you’re doing integration work, too, feel free to post a comment.)
Do MSPs Care About Amazon?
Still, we’re early in the cloud game. A key indicator: Only 2.6 percent of MSPmentor 100 survey participants say they’re leveraging Amazon’s cloud. The survey, which runs through Dec. 11, 2009, will allow us to spot and track the world’s 100 most progressive managed service providers. And the Amazon figure could certainly rise or fall since the survey is ongoing.
But who’s right:
- An outspoken Linux guru (Mark Shuttleworth) and a blogger (me), who think Amazon is a cloud that MSPs can’t afford to ignore?
- Leading MSPs, 97.4 of which says they have yet to touch or leverage Amazon’s cloud services in any way.
I’m a pretty stubborn guy. I still think Amazon and competing big-vendor clouds can’t be ignored. But readers also remind me that up-and-coming cloud efforts (such as 6Fusion and Channel Cloud) deserve equal time on MSPmentor.
We’ll try our best to offer up that equal time. But I can’t imagine ignoring Amazon… …
Follow MSPmentor via RSS; Facebook; Identi.ca; and Twitter. And sign up for our Enewsletter; Webcasts and Resource Center. Plus, check out more MSP voices at www.MSPtweet.com.
Looking at the most popular services offered by your top 100 MSPs from last year, there is not much play for Amazon in the services provided.
**Most Popular Managed Services Offered:
Remote administration: 95%
Help desk: 93.6%
Managed security: 81.8%
Managed storage: 66%
Hosted/SaaS email: 57.9%
Hardware as a service (HaaS): 53.2%
VoIP/IP telephony: 43.7%
Hosted/SaaS SharePoint: 29.3%
Unified communications: 29.1%
Managed print services: 28.4%
Hosted/SaaS CRM: 18.4%
Video surveillance: 17.3%
**taken from The MSPmentor 100 2008-2009 Edition
However, if we were to consider VMware vSphere as another cloud services enabler or cloud operating system, I think you would find that more than half your MSPs have experience using it. I think that is too early for most of the small to medium sized enterprises to consider moving their services to Amazon or for most MSPs to consider hosting their (running fine at home) services there. It just seems too soon for me.
Benbree: Thanks for pointing out the all-important virtualization angle. I’ll be sure to keep that in mind as we continue to track cloud and SaaS opportunities/challenges for MSPs.
-jp
I am in the process of developing a new MSP in Europe. We have decided to use Amazon EC2 to get up and running quickly and without large startup costs. I am not sure if this will be an interim solution, moving to a colocation facility with our own servers at somepoint, or if it will be our permanent setup.
I agree with you that the Amazon cloud products are extremely powerful and cannot be ignored by the MSP community. That being said, I think that the thing keeping many smaller businesses from giving it a try is the unknown of how cloud services will/can integrate with their current infrastructure.
The great MSPs will figure this out, provide their customers with a great service and become even greater MSPs.
Integration with the cloud is the barrier. Without specific skills or knowledge/experience even the great MSP’s will need to figure out how to leverage the cloud in a way that is profitable and supportable. Many great MSP’s rely on the supportability and stability of off the shelf software so this move to the cloud feels messy, I think. Also the cloud still isn’t a friend to compliance sensitive businesses with tight budgets.
my 2 cents.
Tom: Thanks for the update. Please let us know how your Amazon efforts evolve.
Brendan: I wonder if it makes sense for MSPs to assign one employee who can basically test/virtualize applications in the Amazon cloud or another cloud. Lots of folks claim you can now virtualize Small Business Server and other Microsoft apps up on a public cloud. The only way MSPs are going to learn how the systems work is to actually try them and see the strengths/weaknesses first-hand.
While on-premise options may remain a VAR’s bread-and-butter during the day, I recommend burning the midnight oil to test many of these services for future revenue opportunities…
I agree that without resources assigned few MSPs are going to make the switch on their own.
The compliance issue will become front of mind for many MSPs especially any with a vertical focus on businesses that have to be PCI compliant.
Seems like a great opportunity for a “Cloud Enablement” business. They’dmuch like the SaaS enablers out now, but with a more custom focus.
The issue I have with S3 and its siblings is picking the usage numbers to properly estimate what the services will cost.
Joe –
I’ve blogged about this SO many times on http://www.6fusion.wordpress.com, but I’ll say it again here in three succinct points:
1) Amazon an other related clouds are not geared for the enterprise. They are geared for web application developers and hobbyists looking for cheap startup costs and have nothing serious to migrate. Period.
2) The difference between someone that thinks they know cloud and someone that has actually SOLD cloud is the ability to answer the question: What does it cost? Ahmen, Richard Zuckerman. Thats why we created Profiler for our MSP partners. Been there, done that and cracked the nut.
3) Cloud is not about selling software subscriptions. Anyone that tells you they are in the cloud business and they try to sell you a software subscription (even vmware, folks), is not a cloud vendor. They are someone that can read a newspaper and realize cloud is all the buzz.
Here’s the pepsi challenge for MSPs: Pick three cloud vendors and ask each one what THEY are going to do for your business to help you grow your managed service practice, integrate with your billing models and help you launch new hosted products.
Develop a partnership with the vendor that is willing to put some skin in the game for you….
John: Let me know if any MSPs take the Pepsi, er, cloud challenge. And keep us posted as MSPs take a closer look at 6fusion.
-jp
One of the most popular MSP offering is managed storage and it works on Amazon S3 pretty well. There are plenty of data backup platforms available for MSPs and I think it is up to ISV to close the gap between what Amazon offers as IaaS and what MSP can use to offer services to their customers.
Thanks for the mention, Joe,
Yes, we’re dovetailing with some of the popular cloud platforms out there. We work with Amazon, Nirvanix, Parascale amp; Caringo and will soon be on Azure too (and perhaps on Mosso – sorry, they’re now called the Rackspace cloud). And we’ve done some work with 6Fusion (above) too.
In our experience…
A lot of MSPs are interested/curious about using the cloud – in our use case, for providing online backup services. During their initial evaluation, many of them even fire up a few AMIs amp; some storage on Amazon – and have reported good results. However, only a subset of them (at this time) actually go ahead with running their backup business off the cloud. Why? I think there are a few reasons…
a) The unpredictability of the cost model. While calculable, it is still unpredictable since it cannot be pre-determined. John raised this in his comment and tools like his ‘Profiler’ seek to address exactly this issue.
b) They never wanted to, anyway: many people evaluating the cloud are doing so driven more by curiosity than business metrics. Once they’ve checked it out, they simply revert to what they’re more comfortable and familiar with – a hosted server.
c) Related to the business metrics point in our business context: A person starting an online backup business with just a few customers probably won’t see savings ‘to write home about’ at his scale of operation. As he scales up, and needs to cluster or load balance backup servers, or provision them on the fly, the benefits begin to accrue.
d) Expertise. Not all MSPs may have (or think they have)the requisite technical expertise. Though this barrier is progressively reducing, we have had smaller service providers comment that an Amazon deployment will probably be difficult for them to handle.
Anyway, we’re seeing increasing interest amp; curiosity – if that’s any barometer of future adoption. And we even created a video parody on the whole cloud hype. If you’d like an introduction to cloud computing amp; storage in a ‘rap song format’, please check it out at:
http://blogs.vembu.com/2009/10/cloud-cloud-maybe/
(shameless plug, albeit, some entertainment)
Lux
Lux: Thanks for the deeper analysis. Shameless plugs like above are welcome when you take the time to share comprehensive thoughts that education readers 😉
Readers: An update … Amazon has cut its cloud prices.
Joe –
I am sitting at Georgia Tech right now (cloudcamp Atlanta), which started with an expert panel general session. One of the big questions from the audience was cloud sla.
After a lot of wrangling with the audience, the panel yielded the answer to your blog post:
They concluded “if your expectation is to receive anything more than 3 nines availability, you shouldn’t use clouds like amazon and google.”
This is one of the most lucid conclusions I’ve heard in a long time…
John: That’s actually a pretty interesting anecdote. I hadn’t heard of CloudCamp Atlanta but will check it out.
Joe –
To close the loop on sla and availability I think it’s really important that MSP’s (especially on behalf of their customers) look under the hood of the cloud SLA. It’s not enough to ‘assume’ all SLAs are created equal.
I *think* it was Alan Macdonald who, during our presentations a couple weeks ago in Scottsdale, made a point of sorting the fine print of Gogrid’s “10,000%” SLA. A lot of the cloud SLA’s are smoke and mirrors and very few of them will extend to the network. I find this strange since the network is probably THE biggest component of cloud. I mean without it all of this is pretty much a non-starter, right?
John: I’d offer a longer comment/reply but I’m busy reviewing a few hosting provider SLAs. No joke. As we continue to expand our own business we’re speaking with hosting providers that virtualize everything for us and scale up/down at a moment’s notice during traffic spikes. I live and breathe site availability every day… but it certainly requires some education as we navigate this stuff.