Why Traditional IT Companies May Never Catch Up to Those Born in the Cloud – and What This Means for VARS
Traditional IT companies may currently dominate in some areas. But in many important ways they may never catch up to those companies “born in the cloud.”
I have a unique perspective on these two worlds as I worked at IBM for many years. I was in Worldwide Sales Management, so I had visibility into global IT trends.
In the 2012-2013 timeframe, I noticed we were losing a lot of IT management, monitoring and assurance deals to companies like ServiceNow, New Relic, Splunk, Microsoft, and others. All of these “born in the cloud” companies were offering SaaS-based solutions to solve complex enterprise problems.
At first these SaaS-based IT infrastructure management companies were managing traditional on-premise servers and networks. But as more and more companies moved their infrastructure into the cloud, they were positioned to manage that as well. At IBM, we were not. All of a sudden we were trying to sell complex, expensive IT management solutions for stuff running in this “cloud” called Amazon Web Services (AWS). And then Softlayer, Rackspace, and Microsoft Azure popped up. I started thinking, “There must be something here, but what is it? And who’s going to manage and optimize this infrastructure?”
After a few years sitting on the SaaS side of the table, I now know the answer. Many meetings and discussions with large Fortune 100 enterprises have taught me several very salient lessons about the cloud:
- Public cloud is here to stay. For example, see Capital One or McDonald’s keynotes at recent AWS re:Invent conferences.
- Enterprises are NOT using “traditional” IT tools to build, test, run and manage infrastructure and applications in the cloud.
- The cloud is a H[KS1] UGE utility, which means companies now focus on cost control. Since it’s an OpEx model rather than a CapEx model they want to continually optimize spend.
- Agility and innovation drive public cloud adoption. But as cloud maturity grows so does the need for optimization – governance, cost control, and analytics.
So where does this leave the traditional companies like Oracle, HPE and IBM? How are they involved in the migration to and lifecycle management of cloud-based applications? Well, from what I have seen they are on the outside looking in.
That said, one company that gets it seems to be Microsoft. This is true both in terms of providing cloud infrastructure (Azure) but also being progressive enough to license its technologies for even the smallest of companies to adopt and grow using its applications.
To put a bow on this point, I was at a recent meeting where a Fortune 25 company was talking to me about their migration into the cloud. Here are the tools they are using:
- Clouds – AWS / Azure
- Migration – service partner
- Monitoring – DataDog
- Service Desk and CMDB – ServiceNow
- Application Management – NewRelic
- Log analytics – Splunk
- Pipeline automation – Jenkins
- Cost control (yes, that’s a category now) – ParkMyCloud
Not a single traditional IT tool on the list!
Opportunities for VARS and resellers
The opportunities here for VARs and resellers are obvious. To take just one example, everyone’s talking about using the cloud to save money and make their lives simpler. Of course, if someone has automated a certain element of their IT in the cloud, the consensus is that they’ve saved money and made their processes a bit easier. They can spend more time on core projects within the business.
However, an issue that we’re seeing now is that once companies migrate to the cloud, costs are spiraling out of control. An end user may think initially that they’re getting a good deal. However, because they are not managing their infrastructure correctly, based on capacity planning or things like running servers at full capacity that really should be sitting idle, costs are growing rapidly.
This changes the conversations resellers are having with their potential customers.
For an example, take VARs that have been focused on providing solutions for cloud migration. A technical person would have to spend a day to figure out how much money someone was going to save by moving from on-site to Azure, or Azure to AWS or vice versa.
Now with cost optimization technologies, they have access to partnerships with cloud-based companies. These partners can open conversations with existing cloud users. By simply using a platform for post-migration cost optimization, they can get to the savings figure in a matter of minutes. It’s a bit of a no-brainer for VARs and it certainly can serve as a door-opener for much more business.