The IT channel is convinced of the Cloud opportunity

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Cloud services are seen to be important, and increasingly so, to the majority of the UK IT channel today, according to the latest research conducted by the Cloud Industry Forum.

The research, conducted in January and February this year, found that 73 per cent believed end users were now ready to embrace cloud services even though they were fairly evenly split on whether the current market messaging was over-hyped. In a further statement of confidence, 83 per cent of the participants rated cloud services as either equal to or better than on-premise solution (46 per cent specifically cited 'better than' on premise).

63 per cent are already active in the sale and/or support of cloud services (comprising a mix of SaaS, IaaS and PaaS solutions). On average 18 per cent of 2010 revenues for the IT channel were purported to have been generated from cloud-based services, and this figure is expected to increase to an average projected figure of 32.87 per cent by 2014.

Andy Burton, chairman of the Cloud Industry Forum, stated: "There has been a noticeable increase in speculation over the future of the IT channel as a direct result of end user adoption of cloud computing in recent months.  However, the findings of this research indicate that the IT channel is in fact evolving and embracing the cloud opportunity as a key part of its value proposition, intending to bring real value to its customer base in turn."

Three quarters (76 per cent) of IT channel partners selling cloud services also provide proactive advice and guidance on how to implement them within their wider IT capabilities and 48 per cent of them prefer to sell cloud services over on-premise and a further 40 per cent had no preference between the two models.

However, amidst all the positive feedback from the research, inconsistencies arose between the priorities of what end users were seeking in terms of cloud services and the maturity of what is being offered through the channel.  In addition, there was a tendency in IT channel organisations who are not participating in cloud services today to over-emphasize perceived issues that prevent adoption (such as is the cloud secure, or, does the cloud minimise the customers ability to maintain control) compared to the actual feedback received from end users who saw these as questions to be answered and not fundamental barriers..

Other Key findings include:
Of those offering cloud services 14 per cent purely resell third party branded services, while 22 per cent solely deliver their own solution/s. The majority (64 per cent) offer end users a mix of both models

Of those offering cloud services, 39 per cent operate their own data centre, 33 per cent manage their own infrastructure but using a co-location data centre partner, 11 per cent OEM a service from a third party white label provider and 17 per cent resell services on behalf of other providers

For those organisations not yet offering cloud services, 51 per cent intend to but are not ready, 19 per cent do not believe they have the skills to sell or manage cloud services and 30 per cent do not ever intend to offer them as they do not believe the market is tangible yet.

14 per cent of those companies not offering cloud services believe them to be a threat to their business whereas the majority (86 per cent) do not.

Where partners see cloud as a competitive threat, 36 per cent believe cloud competes with their primary offering, 27 per cent believe the cloud diminishes their relationship with their customers and 18 per cent do not believe there is a viable business model

Alex Hilton, Sales Director, Rise, stated:  "There is an apparent disconnect between the end user and the IT channel providing cloud services.  The channel should consider what solutions are required by their customers and how to overcome concerns of a service-led sale over an on-premise sale? The answer could lie (in the shorter term) in the development of white label self-service from the channel for Cloud solutions, with more complex applications such as business intelligence, remaining on premise."

Ian McEwan, VP EMEA, FrontRange stated: "The research highlights how a three-way relationship between customers, channel partners and vendors needs to evolve.  I understand the IT channel's desire to get involved in cloud solutions, and there is a strong market opportunity for them, but it also requires a change in mindset to accommodate the different type of solution and the customer expectations."

Ian Moyse, EMEA Channel Director, Webroot, added: "What stands out clearly from this research is that the IT channel is realising there is a place for them in the value chain of providing cloud solutions. What is also clear is that there is an opportunity for the IT channel to provide sound guidance, support and services to their customers, establishing an effective balance between on-premise and cloud based services."

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