Everyone loves being in control – but at what cost? Build your own data centre and you’ll establish an important point of difference from your rivals. But you’ll also have to manage a large capex bill, significant ongoing costs and potential distraction from your core operations. A shrewd investment could turbocharge your business; a wrong move could leave it drowning in red ink.
Case Study #1: Agilyx & Avnet
White-label distie cloud
Agilyx is a white-label provider of ERP software by European vendor Unit4, and has been in Australia for 15 years. Dealing mostly with large enterprises for their core financial functions, Agilyx would traditionally provide on-site solutions at customer facilities. In 2013, Agilyx started moving to more of a software-as-a-service (SaaS) model, partnering with Avnet as a hosting provider.
“We are a software and consulting company,” says Agilyx CEO John Catarinich. “We’re not interested in building our own data centre facilities.”
Back in 2013, public clouds like AWS weren’t a viable option for Agilyx, largely due to the lack of in-country facilities at the time. For Agilyx customers, financial systems are the beating heart of the business and they prefer to keep them close by, hence the traditionally on-site deployments. Moving to a hosting provider like Avnet meant Agilyx could reap the benefits of having someone else manage the infrastructure for them, but still provide the reliability and security assurances that Agilyx customers demand.
“We’re dealing with government and top 200 companies,” explains Catarinich. The combination of large enterprise and mission-critical systems means trust and safety loom large when decisions about who to partner with are made. While the as-a-service model is useful, these are not month-to-month deals. When you’re signing up a payroll for thousands of people for three to five years, a degree of caution is both prudent and expected.
Agilyx does white-label the Avnet service, but it isn’t completely opaque to customers. Avnet uses Fujitsu’s data centres to host all of Agilyx’s systems locally, and Agilyx is happy to make this clear to its customers.
“Our customers are aware of who we partner with for data centres,” says Catarinich. “Some of our customers want to know about details like audit-ability, site visits, and similar levels of assurance. We have agreements with Avnet to provide that for our customers.”
This level of vertical integration is one of the reasons why Agilyx uses Avnet, as the large public cloud vendors tend not to provide the same degree of flexibility and customisation of their services. “Our North American customers tell us that they prefer not to deal with those very large providers because they’re relatively difficult to deal with,” says Catarinich.
The type of service Agilyx provides means bringing on new customers is often more about business transformation than it is about the hosting of technology. “More and more often, these are not technical decisions,” says Catarinich. Instead, technical staff are relegated to looking at details like the security of the solution, while the finance and operations groups look to use the as-a-service model as a fast way to get moving on organisational change.
Case Study #2: GCOMM
Back in 2001, there were no commercial data centres on the Gold Coast, so national telecommunications provider GCOMM decided to build one. GCOMM saw a substantial market opportunity in what was then its home base and decided to invest.
“We invested a lot in that infrastructure, building out the environment, and putting our network operations centre (NOC) and IT team upstairs,” says director of business development Matthew Thompson. “The facility also meant carriers could terminate services locally on the Gold Coast.”
The investment worked well for GCOMM, which is no longer a regional player, but operates throughout Australia. However, the competitive landscape today is very different to that of 2001. It’s unlikely that GCOMM would decide to build its own facility today.
As global providers such as Equinix have entered the Australian market and built substantial amounts of data centre capacity, the Gold Coast facility has become more of a niche data centre. “There are a lot of ongoing capital costs associated with a data centre for upgrades and maintenance,” says Thompson. “The reinvestment into data centres is significant.”
Instead of investing in its own network of data centres, GCOMM chose to interconnect into facilities operated by dedicated data centre providers. “We put a lot of infrastructure into the major data centres of Equinix, NextDC and so on, and we use those for our core network,” says technical director Craig Deutsher.
Today, the GCOMM network connects into 10 facilities across Australia. “It allows us to focus on being a national provider of connectivity,” says Deutsher, “and means we can connect into major compute environments like Amazon AWS and Microsoft Azure.”
Partnering means GCOMM can take advantage of a range of services provided by other suppliers to provide options for its own customers. “It’s too expensive for us to invest in building all of those other services ourselves,” says Thompson. “Using partners enables us to concentrate on what we do, which is IT managed services, support and migration to cloud.”
While GCOMM would probably not consider building a brand new data centre of its own today, the fact that they have one does provide certain advantages. “It gives our customers choice,” says Deutsher. “A customer may not want to go into one of the major data centres for some of their workloads. We can help them locate services in the right data centre for their needs, and connect them together with our network.”
“It gives us a lot of control and flexibility over the types of services that we can provide to customers,” he says. “A core part of our values as a service provider is managing relationships with suppliers on behalf of our customers.”
It’s this relationship management that provides the core of any managed service provider. It relieves the customer of the burden of becoming an expert in all of the underlying services, much like how using an accountant relieves you of the burden of knowing the intricacies of Australian tax law.
Case Study #3: Harris Tech & Hosted Network
Channel-only hosting play
Harris Technology built a new cloud service offering by white-labelling a service from Hosted Network. The cloud offering is part of the rebirth of Harris after the brand was spun out of Officeworks in 2015.
“Cloud is an area that HT has been keen to enter for some time,” says Harris Technology CEO Garrison Huang.
The cloud service is based on VMware technologies, including VMware Horizon for desktop-as-a-service and vSphere for infrastructure-as-a-service. Underpinning the VDI infrastructure is SolidFire (now NetApp) all-flash storage.
This partnership means the offering will be co-branded as “Powered by Hosted Network”. Given Harris Technologies’ reseller roots, showing the underlying brand of the white-label service is consistent with its past approach.
Hosted Network managing director Ben Town sees the partnership as a good fit for Harris. “HT Cloud aligns well with [Harris Technology’s] existing product portfolio,” he says, “and is a natural growth path for them that meets the demand for their client base.”
Hosted Network will support Harris Technology’s efforts with a go-to-market plan, and will provide ongoing sales and technical product training to Harris to help them identify cloud opportunities.
“Our customers are tech-savvy so they want to remain agile, improve productivity and staff happiness, and can see that the future of modern business is in the cloud,” says Huang. “Our partnership with Hosted Network will empower them to do just that.”
Case Study #4: Moncrieff & VersaStack
Reseller builds its own cloud
Moncrieff have bucked the trend of other providers in this feature, and have built out their own private cloud using a vendor reference architecture as its core.
The Moncrieff Private Cloud is built on VersaStack, a reference architecture from Cisco and IBM. It is composed of Cisco UCS and Nexus switches, with IBM storage. The platform is hosted in NextDC’s Malaga data centre with connectivity provided by Vocus, and the hosting location is a key part of the decision to build a private cloud.
Western Australia’s relative isolation makes WA “a little bit unique,” according to Moncrieff managing director Matthew Moncrieff. The major public clouds are all hosted in data centres in Sydney and Melbourne, so the simple physics of a country the size of Australia means latency can become a problem. “There needs to be compute and storage close to where people are working,” says Moncrieff.
However, Moncrieff is keen to point out that the Moncrieff model is very much a hybrid one. With regard to public or private cloud, “We’re not saying it’s all or nothing,” he insists. Instead, Moncrieff aims to provide customers with viable options to suit their requirements, and to assist them in evaluating those so that they can make good decisions in support of their businesses.
Aimed largely at small to medium enterprises based in WA, Moncrieff sees this advisory function as an important part of his overall service. “We need to have the flexibility to match the customer’s risk profile,” he says. Not every client wants to run all of their systems in the cloud, or all of them on-site, and Moncrieff wants to sell the services to match.
Small to medium business customers still want to move to an operational model where their infrastructure is managed and maintained by someone else with appropriate expertise - the role of the MSP is to help them do that, and match the technology to the need.
Case Study #5: Powernet & partner
From DIY to white-label
Powernet’s story is an intriguing one of what happens when a new service is too successful.
Three years ago, Powernet was a professional services organisation with a 22-year history of success. As part of a continued evolution of the business, Powernet decided to offer a managed cloud service to its existing customers. Powernet’s previous experience meant it had the skills in-house to build its own VMware-based multi-tenant cloud offering, so it decided to build one and start selling.
The initial footprint was funded out of the working capital of the business, and sized for a three- to four-year horizon of growth. “We learnt pretty quickly that it wasn’t going to be enough,” says Powernet director and head of service delivery Daniel Williams. After commissioning the service, it took a mere six months to hit capacity augmentation thresholds, a massive success that, ironically, caused headaches for the business. Powernet invested once again in the infrastructure to support the growth, and within 12 months, hit capacity thresholds yet again.
Rather than continue to throw increasing amounts of capital into infrastructure to support the service, Powernet started to look into other ways to solve the problem. The success of the platform had led Powernet to add additional services on top of the main cloud hosting offering - backup and recovery, hosted Exchange – and the commodity service of simple virtual machine hosting wasn’t where Powernet felt its real value lay.
Powernet looked for a white-label partner to supply the underpinnings of their service so that it wouldn’t need to continually invest its own capital into what was not really core to the business anymore. Powernet was very clear on what it needed, and soon found a supplier in the same data centre – the NextDC M1 facility.
“We ended up getting the equivalent of one full-time employee back,” says Williams, “because we weren’t having to spend all of this time maintaining the system.” That time could be more productively spent serving Powernet’s customers and building new offerings to support higher-level functions.
Powernet also partnered with Datto to provide data protection services, and with another provider for hosted Exchange. This composable, white-label approach to its supply chain meant Powernet could continue to provide services its customers knew and loved, without having to manage all of the technology components themselves.
“Every time we’ve re-evaluated what we’re doing, it’s brought us closer to our core business and doing what we’re best at,” says Williams. “We build complete solutions for our customers from best-of-breed components. That’s what they value from us as trusted partners.”