Managing the cloud

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While clients still aren’t banging down the doors of companies who offer managed services to ask about the possibilities of the cloud, there is, according to several experts, growing interest in the potential it represents.

Dell’s Liam O’Reilly, director of application services in Ireland, said that slowly but surely, “customers and outsourcers alike are increasingly aware of the prevalence of the cloud though and it has garnered a lot of interest in terms of the potential it has”.

“I think when customers are coming to outsource a project,” continued O’Reilly, “an IT managed service or a business function – part of the discussion and solution design is incorporating the cloud into the conversation to see how we can leverage the cloud as there’s a lot of options there.”

Mark Cawley, managed IT principal, eircom, claimed that thus far “the impact of cloud computing on outsourcing and managed services has been minimal”. Cawley said that what we do know is the real impact of the cloud will depend greatly on the “nature of the organisation, their risk profile, the architectures they have in place and the type of service being sought”.

“For example,” he continued, “cloud infrastructure services are geared toward x86 architectures so organisations with legacy applications or systems will continue to gain efficiencies through traditional managed services.

“These same companies however realise the benefits that can be realised by the software as a service (SaaS) model. This has been very well received by our customers offering economies of scale and therefore a TCO (total cost of ownership) that just can’t be realised with in-house systems.”

PRIVATE CLOUD MODEL
Caveo Information System’s Brian See is, to put it mildly, not overly enthusiastic about the impact of the cloud in regards to managed services thus far. While many expected the cloud to be the big theme of outsourcing for 2010, CTO See said at the minute it’s still just a “talking point”.

Elaborating on his point, See said he believed the reasons for this can be contributed to the “low numbers of innovative services and clarity about the services already available that customers would have the confidence to strategically move to cloud services”. Continued See, “The large corporations would have better understanding and would have resource to research cloud options better but I am not sure if the cloud option would see a great uptake from large corporations.

“This reservation to move to the cloud for large corporations may be contributed to loss of control – and that confidence with the security of data confidentiality managed outside of the organisation.”

That issue of trust when handing over control was mentioned by IBM’s managed services sales manager Michael Ryan, who noted that, “since the economic downturn, organisations are obviously looking at their costs have certainly said that there is a benefit in looking at managed services, then it’s a question of those managed services companies to make a business case.

“From our perspective, you have to demonstrate a high level of capability, that you’re a partner not a vendor and that you’ve enough capabilities to be there for the long haul. I think with the careful nature of companies these days, they will want to at you and say can ‘you be the partner for us for our managed services’. They want that trust.”

‘TAGGED ON’
Datapac’s director of sales and marketing, Jimmy Kehoe made the point that many managed security providers have been using SaaS for a while now and that while today they are still using much the same model “it just has the word ‘cloud’ tagged onto it”. Kehoe would add that his company has seen a “huge demand” in cloud related offerings from its clients over the past 12 months.

Some of the offerings gaining traction at the minute, he continued, are services like cloud based back-up, SaaS (specifically e-mail and CRM), and more recently infrastructure as a service (IaaS). Kehoe added, “It’s interesting to note that Microsoft Ireland recently said that Irish firms are number one worldwide for adopting cloud applications. More than 10,000 units of Microsoft Business Productivity Online Suite (BPOS) have been bought by Irish-based organisations.”

Trilogy Technologies’ MD Edel Creely, weighed in on what customers want by saying that, “in looking for cloud-related services, clients are looking at ‘point’ solutions which can be packaged and delivered as a single solution such as e-mail management or online backup as well as exploring the fully managed option.”

With the amount of cloud-based solutions and services being brought to market at present, Creely noted that managed services providers will need to ensure that “they have undertaken a suitable risk assessment” of cloud vendors to ensure that the practices of the cloud vendor are in line with industry best practice for data protection and information security.

SILVER BULLET
Adding to the slight theme of cynicism that some of our experts have regarding the cloud’s impact Version 1’s Justin Keatinge, managing director, said that the cloud is by no means “a silver bullet” when it comes to outsourcing business functions. As more and more people begin to use cloud services of one type or another, technical environments will become more rather than less complicated, he maintained though.

“What will emerge,” said Keatinge, “is a hybrid of on-site and cloud deployed systems and within the cloud systems will be a mix of services from different vendors all of which can be incorporated and accommodated within an existing or new managed service.”

Elsewhere, Strencom’s CEO Tim Murphy revealed that the potential of the cloud is certainly getting through to some people, saying that he recently heard a story of a company CEO that told his chief technical officer that he if wants to purchase any new hardware that he must “draw up a business case on why they cannot use the cloud” instead of buying new hardware. “The CTO cringed at the thought of this, but duly did what was asked. The CTO now claims that this has transformed their business,” beamed Murphy.

Budgetary concerns of course were the key to many industry leaders predicting, this time last year, that the cloud would be the focus of client attention when it comes to outsourcing and managed services. With this in mind, Integrity Solutions MD Eoin Goulding was quick to note that the options available in today’s market certainly give the client the opportunity to move to an “outsourcing model”, something which in the past would have been “difficult” budget wise.

FULL IT FUNCTIONS
Goulding would add that his company has found a lot of customers leaning towards an entirely managed security offering. Clients, he said, are increasingly recognising that a competent managed security provider (MSP) has the potential to deliver “more than anything” the organisation can achieve on their own.

“MSPs can take control of full IT functions, mitigate all risks and threats and provide real time results and reports. This massively frees up company resources and also improves system performance,” he added.

On a similar note to Goulding, PFH professional services manager, Jason Boyle claimed that disaster recovery is one area clients are taking advantage of the cloud. “Instead of putting major investment into a DR infrastructure, we’ve seen people putting that investment into an operational cost on something like the Amazon Elastic Compute Cloud (EC2).”

Elsewhere, Mamut’s Luke Buckley, country manager for Ireland, commented that one cloud-based concept – “our online back-up system” – is proving very intriguing to potential clients. He added, “It’s very simple to understand; instead of putting things on a memory stick and taking it out of the office you can have a little service running in the background that will back up the data you select at a schedule you choose. It’s easy and, vitally, it’s scalable.”

MONEY
Moving away from the cloud for one moment, ComputerScope asked several industry experts about the expected ‘boom’ that was to benefit those who offer managed services in the wake of the nation’s financial meltdown. As companies examine their finances and realise what business functions should be outsourced, those who offer such services were set to benefit greatly weren’t they?

OKI’s Martin Deignan, director of sales and marketing, told us that it’s “certainly” the case that companies who specialise in outsourcing and managed services have benefited from the nation’s financial woes. Taking his company’s own speciality -managed print services – as an example, he said that if professionally carried out, such services can offer customers substantial cost savings over the term of a contract plus “clear productivity benefits”, enabling companies to concentrate on their core activities.

Coming from the same business sphere, Xerox Ireland’s global services business manager, David Pentony would comment that outsourcing now accounts for “more than 40% of our business in Ireland” and globally Xerox receives 50% of its revenues from outsourced services.

John Kennedy, sales and marketing director with HiberniaEvros also agreed by saying at a time when cost is a huge driver, companies are looking very closely at managed print services. “Surveys have shown that up to 90% of companies either have no idea of the true cost of printing, or significantly underestimate it,” Kennedy noted.

Brian Hurley of HP said that there has certainly been an upturn in those looking towards outsourcing and managed services in the past 12 months, offering the evidence of a larger team focused on this area in-house at HP and a “great deal” of client interest.

“Certainly in the last year we’ve seen a lot more interest in managed services offerings. People are looking at non-core operations and, to be fair, they’re looking at areas that previously would never have been considered for outsourcing previously. There are a lot of companies looking top to bottom.”

Add to all these testimonials, the words of technical director with Data Solutions, Francis O’Haire, who neatly summed up the topic by saying that “more of our own partners – who would be the IT resellers around Ireland – are certainly investing a lot more in the ability to deliver managed services that’s an indication that there’s a demand there.” He continued, “They’re flying the flag and backing themselves to deliver a larger amount f managed services. The mere fact that they’re investing at this time is a good indication that they’re seeing it as an area of growth.”

FUTURE CLOUD
As for the future, can the cloud make a more viable impact in outsourcing and managed services the next year to 18 months? Threatscape’s MD Dermot Williams believes so; commenting that many of the first generation of cloud services have focused on relocating various services which previously resided on servers and in data centres to the cloud.

“I believe the next wave may see the increasing virtualisation and cloud delivery of entire desktop environments. If this comes about, the IT departments in many organisations could see large parts of their traditional function (such as managing infrastructure) disappear as their role gets recast to a more limited one of supporting applications or entire desktops delivered from elsewhere.”

Niall Barry, operations director with Barlan Technologies commented that application development centred on the mobile market and integration into back end systems will be one of the big areas in the near future.

“The cost of building an application and rolling out to multiple mobile platforms is expensive and for the foreseeable future there will be plenty to choose from. To have a much thinner client and cloud environment to smartly manage and distribute content is a more cost effective proposition,” he added.

Communications was the area that Damovo’s MD Mary Bradshaw concentrated on too when she weighed up just where the cloud will make an impact in managed services. “Communications in the cloud will grow steadily over the coming 18 months. We expect to see more clients moving their voice, e-mail, office-based applications and messaging services to a single cloud provider. However it is important to stress that progression to a cloud strategy takes planning and time.”

She continued, “There are still associated CapEx and OpEx costs with a cloud strategy. Business processes need to be examined in detail and the cost benefits examined when building the business case. For SMEs, deploying cloud computing is relatively easy because they don’t have the legacy IT infrastructure that larger companies have. It is far more difficult for larger enterprises. For them a partial cloudy strategy may give the best return.”

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