Small Business Servers: Here Today, Gone Tomorrow?
The vast majority of new small businesses have zero IT infrastructure and will never need to purchase a server, asserts Narinder Singh, chief marketing officer at Appirio. Is Singh right or is he a cloud evangelist who’s out of touch with the small business IT channel? Here’s the spin from The VAR Guy.
First, a little background. Singh stepped into the spotlight this morning at the Ingram Micro Cloud Summit in Dallas. During his presentation, Singh described how Appirio — a cloud solutions provider — is deploying customer solutions on Google Apps, Salesforce.com and Amazon.com. Even as Appirio pushed beyond the 200-employee mark, the company has not purchased or deployed any on-premises servers within its own business, Singh said.
Hmmm… Is Singh alone? At the same conference, Don Schleicher, VP of service providers at VMware Inc., said he doesn’t see startup companies buying on-premises servers. But in his presentation, Schleicher did mention that SMBs “may or may not have on-premises virtualization.”
Similar Experience
Speaking from personal experience, The VAR Guy works within a company with roughly 15 to 20 peers. There’s no on-premises network. No dedicated server. So our resident blogger believes some start-up businesses will largely avoid the need for on-premises options like Microsoft Small Business Server.
And let’s not forget, Microsoft killed its mid-market Windows server platform in March 2010, and the company also killed the Response Point small business phone system in 2009.
Our resident blogger also is hearing more from MSPs that leverage virtual, shared office space — essentially a business time share wherein executives can leverage corporate meeting rooms, phone systems and executive assistants who make a small company look big. In the virtual office setting, the lease holder provides the network to MSPs, VARs and small business owners who come and go based on their own meeting schedules.
Big Disconnect?
Still, it’s unfair to say that servers and networks won’t find an on-premises home in start-up companies and small businesses.
Indeed, there are plenty of examples of VARs that continue to sell products and infrastructure into small business settings. HPM Networks, for one, promotes HP solutions into small and midsize businesses. The company expects to generate 2010 revenues of about $200 million, up from $93 million in 2009 — with minimal managed services revenue involved.
Meanwhile, some server makers are adjusting their product lineups to address the managed services market. Lenovo, for one, in early 2010 unveiled its first server designed specifically for MSPs. And HP has developed two platforms — 48Upper and Insight Remote Support — to help VARs and MSPs remotely manage small and midsize business servers.
The Bottom Line
So back to the Appirio thesis, which claims most new small businesses will have zero need for on-premises servers. As The VAR Guy often says: One size rarely fits all. Plenty of small businesses will still buy and deploy on-premises hardware.
But Appirio has a point… There’s certainly a small business niche that will have no servers. In fact, that’s the case within The VAR Guy’s own company.
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How do you live without Active Directory and Group Policies?
good point one of the main issues with small business now days is PCI compliance and its a lot easier to just go lease space on a server else where than to try to jump the hoops of your own server any more
Mr. Singh is so right. Cloud computing is replacing the need for servers in SMB customer sites. Gartner is forecasting that 20 percent of all organizations will have no IT infrastructure to speak of by 2012. The traditional rack of servers in the closet at an SMB customer site is going away soon. Any VAR who thinks they can make a living by replacing these servers in the next round of server upgrades is in for a rude awakening. The SMB server market is dying. Maybe a few will keep an inexpensive NAS device around just so they have something to hug. Cloud computing is reshaping the IT landscape starting with the SMB market. Better for SMBs to put their dollars into multiple high speed Internet connections that can be load balanced and/or bonded.
Nicholas,
Having no servers onsite does not mean having no servers. I believe most small companies will have a combination of SaaS services for the common stuff and IaaS virtual servers to support their specialized applications. There is no reason you can’t put your Active Directory in the Cloud.
Kim
http://www.terrosatech.com
In my professional experience most small businesses look for the [big] customers. In a lot of these SMB-to-BIG CUSTOMER agreements relating to technology there is ALWAYS have some strange (and I do mean strange) clause stating where data can go and not go (or some variation).
The small bsuiness would then call up a tech firm asking for a server, a firewall, a this or a that. Security is alwasy an afterthought even in the cloud.
Most of the customers I serve do business with the government and have maybe 2-5 people. Once that contract comes in with the fine print they are scrambling for a server.
I guess some people (businesses) don’t want their data stored in China or even flowing out of a 30 mile radius. Oh well…I just hope there are more SMB solutions out that tackle the SMB security-crisis regardless of the physical hardware.
Nicholas@1: The VAR Guy’s team is up to about 15 members. No group policies or AD here… Not sure if there’s a tipping point when you’d need such capabilities…
Tim@2: Not sure if the SMB server market is suffering yet… But The VAR Guy thinks it will contract a bit within 2 to 3 years.
Fred@3: Is security really an afterthought in the cloud? Some folks argue that the cloud is like the airline industry… Extremely safe but suffering from big, big headlines when there’s a crash or breach.
-TVG
The cloud is where the SMB market will go for their IT services and in the course of doing that they will get rid of their servers and most of their IT infrastructure. Some of the reasons why they will do this are 1) the cloud is all opex and little or no capex, 2) the cloud provides easy access to the latest apps, 3) the cloud is low risk…if an app doesn’t fit then quit, 4)cloud security is probably better than what they could afford to do on-premises, 5) the Great Recession will continue for years to come.
This last reason is seldom mentioned in the trade press. The cloud gives SMBs a chance to move quickly, fine-tune their business strategies and hopefully stay in business for the long haul without having to bear the capital cost and expense of running a traditional IT environment.
Personally, I think the SMB server market will contract a lot more than a little over the next 2-3 years. As their servers become older or obsolete or just use too much electricity or need too much “care and feeding” by IT staff, they will be shutdown and “replaced” by moving to cloud-based IT services. Our economic decline is rapidly changing the economy and it requires a different approach to IT. Cloud computing is that new approach to doing IT and it will completely reshape the IT landscape over the next 10 years.
Tim: Thanks for the additional insights. The VAR Guy enjoys the chatter. And our resident blogger will offer this additional thought: Pure start-up companies — those starting with zero revenue and zero IT infrastructure — will look to the cloud first for applications and IT solutions. The VAR Guy speaks from first-hand experience. He participates in a 3-year-old company that started on the cloud and hasn’t purchased any servers yet…
-TVG