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Velocity introduces its hybrid cloud business

Kirsten Doyle
By Kirsten Doyle, ITWeb contributor.
Johannesburg, 19 Sept 2017

The way customers are procuring IT is changing rapidly. Microsoft Azure data centres being located in South Africa will have a large effect on how customers decide to deploy their workloads.

So says Jonathan Kropf, founder and director Hybrid Cloud at Velocity, a technology supply, services and cloud computing company, speaking of the reasons Velocity decided to open a hybrid cloud business.

According to him, latency is no longer an issue, so discussions are already happening around the right place for workloads to be deployed. "When server infrastructure is up for replacement, the like-for-like replacement approach is being re-thought."

The channel

Speaking of how the hybrid cloud business will affect the channel, he says: "We will certainly be giving the channel some headaches over stronghold accounts. We will also likely move up the customer tiers and into the lower end of the enterprise accounts, while still maintaining the flexibility to service the mid-market corporate customer as we have been for the last 10 years."

He says Velocity sold its cloud business to Tarsus Technology Group a few years ago and currently has a thriving hardware infrastructure supply business. "We firmly believe that giving customers choice in how they deploy workloads and where they deploy them is a key differentiator moving forward. We have found that companies have been approaching our customers with an 'either/or' approach."

Kropf believes it is no longer 'either/or', it is now 'and'. "Hybrid cloud is the new reality. Some applications and workloads may still need to be primarily located on-premises, but many services are suited for the cloud."

An example of this shift, and where deploying a workload where it makes sense, is e-mail. "The number of customers that are not wanting to run their own exchange servers anymore due to the hardware, support and license cost is astounding. Solutions like Microsoft Exchange Online offer a simple solution with more benefits, such as bigger mailboxes and scalable per user pricing than running on-premises," he explains.

Growing the business

In terms of how he plans to grow the business organically, he says Velocity has a base of over 400 customers that it deals with in any given quarter. "Our opportunity to return to these customers with any new solutions is immense. As an example, we have launched a Talent Recruitment business to help place skills with our customers who are battling to find permanent staff. It's a value add for our customers and a revenue generator for us. It is also all incremental revenue as we have never previously been in that space."

Another simple example of solution for a quick additional service that can be revisited with existing customers, Kropf says, is IT asset disposal. "We sell over R100 million a year in hardware. The majority of that is replacing older hardware. Where are the old machines going? Are they being disposed of correctly and do they comply with the relevant legislature around protection of the information that resided on them? We have a solution for this. It helps our customers, but delivers extra value for us as well from a revenue perspective."

In addition, he says Velocity is currently evaluating two opportunities to purchase services companies that will add to its cloud migration, hybrid cloud architecture and managed services components of the business. "The goal is not to buy out larger organisations, but to acquire niche skills in areas where we see massive growth. Companies in the 10-50 employee range with little customer overlap are on our target list. There have been rumours of one of the large listed organisations acquiring us to move into the mid-market corporate. This is certainly untrue at this stage. While we have been approached a few times over the last year or so, we are the acquirers right now."

Three-year plan

Looking forward, he says Velocity has a three-year plan. "We have a mantra internally amongst the management of "300 in three, meaning R300 million in revenue in three years. That revenue is to be split two thirds to the traditional infrastructure supply and the balance on cloud, services and consulting. Although the revenue split may be skewed to infrastructure, the earnings will be the opposite of this. Our aim is to do this without increasing the staff on the same growth ratio. Using good people to drive systems and automation to deliver a better service to our customers is key."

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