Surviving the cloud computing boom

Cloud computing launches in Australia are coming thick and fast. Already, more than 30 companies position themselves as offering hosted cloud services, and the number is rising quickly.

The rapid acceleration in the cloud provider market looks very much like meanwhile one other boom in the Australian Internet market: the VoIP (Voice over Internet Protocol) boom afterwards around 2006, when the number of providers rose very rapidly from fewer than 70 to around 300.

That boom rode in some cases on the back of short-lived wholesale relationships in which retail partners - little more than sales agencies with trailing commissions - signed up to flog low-margin VoIP services. They and their clients fell victim to wholesalers who showed little regard either for the health of their partners or the quality, and ultimately longevity, of the services provided to retail clients.

The same model is likely to emerge in the cloud computing market: not every wholesaler pitching a "white box" cloud service will know or care about the support they provide to partners or clients.

Yet even though the cloud model is often pitched as a threat to Australia's reseller and systems integrator channel, it's as well an possibility. As cloud computing reaches downwards to the SME, and once it reaches "non-IT" SMEs who don't know how to establish, manage or integrate services on their own, there will be a market for services over the top of cloud computing.

The other end

From the other end, there will as well be demand for "feet on the street" from cloud providers. Their expertise in establishing infrastructure, configuring software, billing, and integrating services with networks - these skills are unlikely to be matched by providers' understanding of the needs of small retail or services businesses.

The risk to the channel is a given, says Darren Covington, head of strategy and sales at Bitcloud, which launched last year. During it's impossible to "see through" opaque business models of wholesale cloud providers, he identified the following broad categories of risk to channels:

Brian Walshe, general manager for Microsoft solutions in Australia at Dimension Data, says SIs as well need to be willing to work through the business risks they're taking:

The problem is

The problem is, clearly, that it's particularly difficult for the outsider to prove the location of the service. Chy Chuawiwat, CEO of VirtualOffis, says "You can look at network tools to find out where things are now the registered IP address may not be the operational IP address."

Those SLAs, he said, should cover as much of the service as possible, since service availability and responsiveness stretches all the way from the data centre out to the customer's network connection.

Business-class service

"Cloud computing needs a business-class service," Neatnica said, with "low network contention, good quality of service, and the ability to provide information upstream through to the network core."

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