Australia's managed service providers wrangle cloud vendors

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This article appeared in the May 2016 issue of CRN magazine.

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Australia's managed service providers wrangle cloud vendors
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As customer organisations increasingly consume IT services via cloud models, some managed services providers are making the transition from managing kit to managing vendors on behalf of their customers. This is less about servers and switches, and more about SLAs. It’s about consumption, not capital expenditure. 

CRN spoke to organisations that have been through this change themselves and watched it happen among their customers, to uncover the secrets of success.

Perhaps the best example of the modern cloud wrangler is Telstra, which has developed a “multi-cloud strategy”, which includes myriad infrastructure-as--a-service options, including Cisco, VMware, IBM SoftLayer and most recently, a partnership with Amazon Web Services, along with the telco’s own CSX platform, based on EMC and Cisco hardware. The carrier is now looking to scale its multi-cloud offering via its own channel of IT providers. 

Smaller providers are also evolving. It takes time to make the transition to a cloud- and services-focused business, as Allan King, managing director of Buttonwood Cloud Services, found. “It hasn’t been easy.”

King was running a successful systems integrator business, Canberra-headquartered Infront, but three-and-a-half years ago he set out to learn what it would take to change his business. “The challenge we faced was the realisation that 50 percent of the workloads we built for were going to move to cloud.” 

King stepped out of the day-to-day running of the business to work out what needed to be done: “I went offline for six months to learn cloud.”

After his boot camp in cloud, King and his lead staff developer scanned the market for the tools they would need to give customers a handle on, and access to, this complexity. “At the end of 10 months, we realised we had to build it ourselves,” King says.

A couple of years ago Sydney-based Klikon Solutions – now rebranded as AC3 – responded to the trend by reimagining itself as an independent “multi-sourcing services integrator” for governments buyers, Klikon managing director Simon Xistouris told CRN in November 2014. 

Xistouris says the move is in response to client demand. “More and more customers are taking advantage of using software, applications and infrastructure in the cloud, and this is great.” 

But using multiple providers, and managing these relationships, can create a lot of complexity for customers who are used to running things themselves in-house. Xistouris has found that “those customers who understand the complexity realise that a better model is to aggregate these relationships into a single broker”.

Managing chaos

“There are several differences between an MSP in a public cloud world and a traditional MSP,” says Mark Randall, director of sales and marketing at Bulletproof, once a hosting company that is now one of Amazon Web Services’ largest Australian partners. “The biggest difference between the two is the dynamic nature of the cloud environment versus the traditional, static VMware-based environments.”

A dynamic environment means there are more things to control, and at different levels of granularity. While turning services off when they’re not needed can provide great savings, it can also create enormous complexity for customers.

“We had one client with 29 internal projects, each with its own cost centre and budget,” says Buttonwood’s King. “When they went to cloud, their first foray resulted in a bill with 450,000 line items.”

In such a dynamic environment, mapping individual service components back to an enterprise customer’s project cost centres can be a major challenge. This then creates governance and risk issues that need to be managed. Different customers usually have different levels of governance maturity.

“One end of the maturity level is ‘fully managed’ and the other end is ‘fully enabled’,” says AC3’s Xistouris. “Customers that are ‘fully enabled’ want to use the platform and manage the systems – servers, switches, etc – themselves. More mature customers want to be ‘fully managed’ so they can focus on SLAs, governance, risk, compliance, and so on.”

Talking about business outcomes and service levels is vastly different to talking about servers, storage and speeds and feeds. Some customers care about how the service is provided; others don’t. Moheb Moses, director at Channel Dynamics, likes to compare these two kinds of services to puppy dogs and battery hens. “A puppy dog brand is where you want the service and you care about the brand. A battery hen is where you want the service but you don’t care about the brand.”

If your customer cares about the underlying components of the service, then your conversation will be about both technology and the business outcomes and service levels. For customers who are focused more on the outcome, technical knowledge is not as valuable as an understanding of business.

Rare skills

“It can be a very straightforward, very simple engagement,” says Andrew Burke, chief technology officer at solutions provider Empired. “We’re talking about, ‘We’re going to provide you with this outcome at this service level’ as opposed to a conventional IT conversation that invariably ends up with, ‘What kind of servers is this going to run on?’ or some sort of minutiae.

“Governance and contract management is becoming more important than having someone in-house who knows how to patch servers,” says Empired’s Burke. “It’s now not so much about ‑IT, it’s about ‘what does this give to the business?’ ” Cloud service design is quite new, relatively speaking, and the skills required are fairly rare in IT-focused companies. 

The broad knowledge of how it’s done hasn’t diffused throughout the industry yet. As more organisations become familiar with how to design services and manage risk in this consumption-based world, more and more people with the relevant skills and experience will be available to hire and they will help others to learn, diffusing these skills through the industry.

“While the IT department is still very much a required thing from a control perspective, what we’re seeing is people who want change, who want to react to a new market, or they want a new application or something that will give them a competitive edge,” Burke says.

AC3’s Xistouris adds: “We’re seeing more non-IT people involved in our conversations. In the past, our key contacts would always be technical staff requesting specifications on behalf of the business people. Now we are seeing the application and/or system owners having these conversations. They are leaving the technical stuff to us, while defining the system business requirements we need to satisfy.”

If you want to move to a services-based business, you’ll need to hire more non-IT people because people with both deep technical skills and business skills are hard to come by. If you are lucky enough to find some, be prepared to pay them top dollar.

Next: Be the buyer’s agent, not the seller’s

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