With Australia leading the global adoption rate for virtualisation, tomorrow's IT organisation will spend a lot less time building and maintaining technology assets and a lot more time orchestrating services and enabling the business to consume them effectively in its operations, decisions, and innovations. This roundtable discussed trends in virtualisation and the walk towards Cloud computing, and how resellers can help customers benefit from the next wave of technological advance.
Jennifer O'Brien (JO): There has been a lot of market transition in terms of virtualisation. Where are the market opportunities as we transition to solution selling?
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Allan King, Infront Systems (AK): For us it's more around IT transformation. That is taking the next step up the stack, away from standard hypervisor virtualisation, and looking at a more holistic, private Cloud strategy to enable customers to be more flexible and to automate where possible.
We define it as an 'above the line' and 'below the line' engagement. Below the line is the traditional hardware, datacentre, SI integration play. Above the line is where it becomes challenging because you step out of the technology stack and into more of a procedural, operational play, which means that you've got to engage the customer in change. That's very, very difficult because customers generally don't like change or are not adopting that change as readily as we, the industry, would like. What we're doing is persisting, constant messaging, and making sure that we continue to align our message with our key partners and vendors.
JO: Are you finding the conversations changing, and the people you're targeting are no longer the IT people but more the CIOs?
AK: It's a broader conversation across the entire organisation. Obviously, with the CIO from a visionary perspective, but even as you move more towards converged infrastructure, you're no longer talking in silos, so trying to corral, and get a single message and a single focus from an organisation doesn't always play to the politics, but what we're seeing now in the last three to six months is industry's message is resonating. People are now saying they're interested and willing, and it's now just taking them on the 'journey' to try and execute on what the vision is. For us, it's virtualise, consolidate and automate.
JO: What is the target market and where are partners looking for opportunities?
Matthew Barry, Data#3 (MB): Our target market would be, in today's challenging environment, absolutely everywhere. The opportunities that we're going after are mostly chasing private Cloud and the management of datacentre infrastructure. We're probably also having a hard push on VDI, virtual desktop, bring your own device (BYOD), and mobility. Our approach is multilayered, in that we're trying to talk to everybody within the organisation at different levels. In testing times, it's back to basics in this industry. Have a plan. Stick to the plan. And the most important thing is, if you're going to invest the time in going after an opportunity, then you've got to give it 100 per cent. If you're not giving it 100 per cent, you're probably wasting money.
JO: How has the conversation changed for resellers in talking to customers about virtualisation?
Andrew Thomas, Thomas Duryea (AT): We're continuing to talk to customers around virtualisation and maturing their approach, trying to bring them as close as we can to 100 per cent virtualised. Then we start to try to educate them on how to consume IT as a service. And in doing that, we try to guide the conversation towards areas of their internal infrastructure that they can start to migrate from what was once a CAPEX spend to an OPEX, and where they can use or leverage their virtualisation layer to connect into very specific services that would be Cloud services, or areas such as Backup-as-a-Service (BaaS) or disaster recovery (DR) as a service or a specific need around DEV test for large scale rollout or a project that they're doing internally.
David Lavan, Amcom (DL): Where we're looking in the market is absolutely everywhere, as well. But it's important not to overlook your own customer base. We're going back through and talking to all of our existing customers about what we're doing in the Cloud and IT-as-a-Service space. And it's still an education process for a lot of them. And it does involve educating through the different levels of a business. We find ourselves having discussions, quite often, with the finance teams and the CFO because it clearly changes the way they're spending money.
JO: Are there still issues with security when talking about virtualisation?
DL:There's still, certainly, a lot of hesitation around security when you're talking about Cloud services. We can cover it, often, in a number of different ways by offering other services with Cloud. We've got a security consulting practice that we can send in, and speak to customers for reassurance. Then, on the flipside, if it's an issue, we can look at offering dedicated infrastructure as a service for a customer where it moves a lot of those security concerns.
JO: Industry research shows that Australia is one of the most virtualised countries in the world. Why is that the case and where are the opportunities out there?
John Donovan, VMware (JD): You see Australia often held up as the poster child to virtualisation globally. What drives the industry locally is agility. Everyone wants to be able to do more with their infrastructure, and it's about cost control. We don't have huge budgets in IT spend to be able to do what we want to do, so we've got to be smarter about doing it. New Zealand and Australia, in particular, have been very good at that.
The challenge we have now is the migration through to a services-led relationship with IT, rather than the historical IT control, dictating terms and conditions and usage and devices. It becomes much more of a business transformation discussion. And that's, in many cases, a new area for a lot of us in the industry -- lifting those conversations beyond the IT level, through to the boardroom, and getting into those boardroom discussions. With that, we're also positing that there is going be a change in the consumption models, which is challenging.
We often throw out that there is this wonderful benefit of moving to Cloud services, and that is shifting from CAPEX to OPEX models. On paper it sounds great, and from an accounting 101 perspective, is certainly desirable, but what we haven't managed particularly well is helping the partner community and, in many cases, the customers migrate to that sort of flexible model as well. Even in our own industry, the bulk of our sales organisations, in most cases, are compensated around perpetual delivery, perpetual license delivery or hardware delivery. So if we posit this flexible, agile OPEX-based annuity model through to the customers as being beneficial, which it is, you also need to reflect that in a way that we manage our own sales teams, in many cases. And that's still one of the hurdles that we haven't properly overcome the way we should.
JO: How much do partners have to lift the game and offer solution selling to customers?
Nathan Vandenberg, Dimension Data (NV): There are lots of similarities that resellers are all going through, similar processes, and certainly, that shift to solution selling is a true one. We're finding we have to look at the more complete picture starting particularly from the business layer, that business process layer, and working downwards through the stack. Traditionally, as IT people, we've worked from the bottom upwards through the stack.
When we talk about things like automation and orchestration and business value and payback, show back, we need to start at that business process layer and that application layer, and then, work down through the stack, and set up the right architectures that support that, rather than move from the bottom up. And then try to build these architectures on top, which has historically, proven to fail. But you can't just walk up to a customer, and have that process layer discussion. We've tended to find where we've got most traction is by those customers we've had a longer relationship with, so those that are five years, 10 years.
We've known them, and transacted with them through traditional things like the routing, the switching, and the licensing. And we've got that trust. We've got the relationship, and we've got a bit of a proven track record as well. So then we're able to have that conversation. It's a change, and it's a change for our architects and our engineers and the whole business.
JO: And a change for the sales people, right across the board.
NV: Yes, we're having to, at different stages of transition, in the industry, support the sales people at certain times, as they catch up and learn. You just can't expect sales people to, tomorrow, be solution selling sales people, across the full stacks, where they used to just be really good routing and switching people or good server people.
JO: What is the next technology wave that will affect virtualisation?
Andrew Foot, EMC (AF): Virtualisation has a been a great platform for the Cloud discussion, but no matter whether you're calling on public sector, enterprise or midmarket, the discussion points todayare largely around two things. They're Cloud and application, and application has driven Cloud. What we're seeing is application has become king. We've found that business owners of applications have become the decision-makers that drive IT. They've become the decision-makers to decide the workloads or applications that they move to the Cloud. We've seen the take up of Cloud on the back of the great work that they've done with virtualisation. It's come at us as a tidal wave over the last 12 months. Places like public sector, in pockets of state and federal government, where we've thought issues like data sovereignty, security were going to be massive issues, we've seen the commodity Cloud providers do a great job at targeting with the basic Infrastructure-as-a-Service messaging into public sector. We're starting to see the adoption of the move to the Cloud, even by core parts of the government.
In fact, in the Victorian government, we've seen Cenetex as the shared services provider become the broker for Cloud services across the core Victorian government. We're seeing that trend in other governments across the country. In enterprise, and parts of commercial, it's no longer just the base Cloud offerings at the infrastructure level. They've moved up a stack. They're coming to market for Documentation-as-a-Service, for Archiving-as-a-Service. Critical applications that are important to their business is what we're starting to see a lot more of. That's the next wave, and it's application-need that has driven it, as well as budget. There's been a real shift from the need to retire a CAPEX budget, to a motivation to now manage both CAPEX and OPEX, and see ongoing savings, year on year, with OPEX budgets. So that's allowed people to start to have different financing, but also, the Cloud discussion.
JO: What stage are we at in terms of virtualisation adoption and the shift towards Cloud?
AF: Virtualisation set up Australia and New Zealand well. And while there's parts of virtualisation that are still very important, and we're starting to get down to the network virtualisation piece, we're on a real wave around the Cloud at the moment, and it's no longer everybody talking about the term and getting their head around what the term is. Everyone has built out their go-to-market strategy around it, and whether you're a channel partner, an integrator, a telecommunications carrier or a customer -- be it midmarket, enterprise or public sector -- you're all having the discussion. It's just at different levels. Some are having it at an infrastructure as a service level. Some are having it at a platform level.
Brett Harris, EMC (BH): Everybody is trying to etch out their little place, or big place, in some instances. The more traditional system integration or reseller organisations, they're pretty much, in most instances, developing some sort of strategy beyond virtualisation around Cloud, whether it's private or some sort of enterprise class public Cloud. Every part of the industry is fine-tuning strategy, and it's not just limited to the resellers and telcos. It's also the distributors. They're realising that their traditional customer is changing, so if they still want to be part of the action, they need to change their model as well.
Cam Wayland, Channel Dynamics (CW): Everybody knows we're leading the world in terms of the trends of virtualisation. The trend now is about solution selling and going back to basics -- and it's the transition period that has the greatest challenge for every organisation. How resellers and customers move from the CAPEX to OPEX is the trick. The smarter resellers are thinking more about the business outcome that they can help their customers achieve, rather than just saying 'You need Cloud or virtualisation and it goes from CAPEX to OPEX'. It means you can do more with less in terms of less operating costs. You can do things that, potentially, you hadn't thought possible thanks to virtualisation. Things like backup and DR and BC as a service is now possible now that the customer is virtualised. The smarter resellers are starting to invest in areas where they can differentiate, and being the trusted advisors, where they become a valuable business resource for their customer.
The customer then engages them in conversation, and asks 'Where should we go to achieve this business result?' And that's a challenge for the sales people. It's a different conversation from being a technology-driven conversation to being a business-led conversation.
Richard Higgins, Cisco Systems (RH): There is the partner piece. There is the customer piece. There is a linkage between the two obviously. We get a lot of people through the door, who have virtualised without any real thought of business process or mapping that virtualisation to process without a high-level of orchestration in place. A lot of our customers are in a bit of a tangled mess. When we look at the adoption of things like public Cloud, I can see that the adoption and interest rate in public Cloud has actually dropped around 15 to 20 points year-over-year. That tells us that a lot of customers are more interested in building out a private-type solution, with the capability of a public Cloud, but not really adopting the full public hybrid mentality straightaway. There is also a trend towards selective outsourcing, and having things like software as a service, and taking away the pain points around DR.
We can often get ahead of ourselves, in some instances, around what's happening in the marketplace, but the ethos is really around the customers. It's a slower process than what we think. From a partner standpoint, it's taking hold of selective services that they can offer to the customer, and then have a value-add component to not only offer the solution sell, but then ensuring the longevity of that relationship with the customer, by selectively outsourcing those components, which are relevant to their business.
Roadblocks to Cloud adoption
Roundtable attendees discussed market challenges in selling virtualisation and Cloud computing to a broad customer base.
Infront's Allan King said maturity of technology is the biggest hurdle.
"We're still in a major hype curve. What we're seeing is outsource 2.0, colocation 2.0. Cloud and the Cloud offerings are the blending of private and public, into a hybrid strategy, yet the technologies, the standards, the ability to implement a transparent, seamless strategy is not within reach of most customers, unless they go proprietary. Until we see the blending of the capability and the ability to execute across the board, it will have a play, just not the big play that everybody hypes."
Amcom practice lead, David Lavan, agreed, saying the move to Cloud is tricky and complex for many customers.
"Making that move is very difficult for a lot of customers. There is the virtual desktop trend coming and going. But I think we'll start to see organisations moving towards a dynamic datacentre, and being able to uncouple their workload from the datacentre and that flexibility of being able to move easily in and out of Cloud environments. There is technology out there that allows us to do it, but I don't think we're there yet."
Data#3 national sales manager, EMC, Matthew Barry said another major roadblock to Cloud and virtualisation adoption is the lack of knowledge surrounding the cost of services and the associated business benefits.
"Australian customers have embraced virtualisation wholeheartedly and quickly, but yet, it still has an immaturity to it. When you go out, and try and have the conversation, with the right people, about outsourcing certain services or Cloud or infrastructure as a service, I'm yet to walk through the door, and find someone, who actually understands what they're paying for that service internally. We've been developing services around helping customers understand the services that they have and the cost of that service for them doing it internally because if they don't have that knowledge, how are you going to convince them to move?"