Smart customers squeeze cloud comrades
How can a local service provider hope to compete with Amazon, Rackspace or any one of a number of advanced cloud providers around the world? Local vendor representatives say they're doing well by concentrating on things that overseas Web sites cannot do: local touch, focused delivery and learning from the mistakes of others. For Richard Vester, director of cloud services at EOH, he's seeing success from the basics.
"The biggest reason we're starting to get it right is we're reducing the cost and changing the dynamic of how traditional services have always been delivered out of data centres."
Christelle Hicklin, customer experience manager at Mimecast, says her company is successful because it was always focused on the cloud.
"We're getting it right because we built something from the ground up for cloud. We haven't taken something and adapted it; it was engineered from the beginning to be scalable and cost-effective. And it's locally-based, for local customers."
Johannes Kanis, server and tools business group lead for Microsoft SA's marketing and operations division, says freedom of choice has helped Microsoft's customers.
"Customers want to go to the cloud on their own terms, at their own pace. So what we're doing is offering them an end-to-end solution, private cloud locally and then Azure and Office 365 via overseas data centres."
And the fact that we lag global trends somewhat is actually an advantage, says Barry Hatfield, business development manager for cloud services at IS.
"As a country, we've been able to learn from some of the mistakes made by the global pioneers. So our initial offerings have been the equivalent of a version two. We've been able to see the pain points where local customers have been using global competitors and when we launch, it's minus the pain points."
Some vendors are ramping up their capabilities based on customer demand.
"Partners don't really want to engage in infrastructure as a service because their clients are requesting test beds to see what cloud can offer them," says Johann Els, open source specialise at Suse. "A lot of clients are looking at their financials to see whether they're going to go the cloud or the capex route."
Deon Scheepers, regional business development manager for Africa at Interactive Intelligence, says the company is getting it right all over the world except in South Africa.
"We specialise in new-style applications and call centre services, so our challenge in South Africa and Africa is that as soon as you throw in multimedia, it becomes too expensive. We're watching the market, but in Africa, it's a wait-and-see approach."
Lourens Swanepoel, director of technology infrastructure at Avanade, also says his company is getting it more right globally than locally. "But it's a bit premature to judge how well we're doing against the public cloud services like Azure and Amazon. I think our ability to compete effectively will come from optimising our own platform internally and leveraging public cloud with it."
There's a new urgency for any provider even remotely connected with cloud services, and it's being pushed by customers who are used to consumer-based cloud services and want the same thing for their businesses. JJ Milner, MD of Global Micro, says customer maturity has brought accountability to vendors.
"If you look at what we sold as subscription services and bureau services, we knew what we were selling. The difference now is that customers know what they want. When an end-user comes to you and wants services, mail, backup or security and they want to pay for it on a monthly basis, they understand what it means. They want it to scale up and down at will and they want the same certainty of provision as a Hotmail account without worrying whether it will work or not. Cloud is now a level of accountability for the user experience that customers hold you to. You can't fake things anymore."
Ockert Cameron, cloud architect at Dell SA, agrees.
"We're not successful because the technology is new; we're successful because our customers really understand what they need."
Sean Wainer, country manager for Citrix SA, concurs.
All of us know there's little to no margin left in internal IT.
"Success is driven by demand, and at the moment, demand is not coming from IT but from users. That's a big change."
Scott Orton says the effect of consumer services cannot be underestimated.
"Cloud is definitely being driven by customers and they will force the industry to go there. They ask, if Facebook or Gmail can do something, why can't their business do it?"
Stefan Jacobs, senior cloud architect at Cybernest, believes it's about services.
"It's all about the services and not the definitions of cloud that we throw around. I want to be able to plug in and get a service anywhere. I want to be able to access systems and financial services no matter where I am."
It's about perspective.
That means considerable change is on the cards for some traditional businesses. Jan Dry, chief of technology consulting at Datacentrix, says the customer conversations are different.
"We have a traditional outsourcing, hosting and managed services business and the conversation we have with those customers is very different from the one we have with a cloud customer. Firstly, managed services contracts are long-running and lumpy and talk about technology three years from now. That doesn't happen in a cloud conversation. It's purely about services delivered to any device."
Dry says the reason for cloud success is the enormous push by the leading vendors.
"I think there are several things contributing to the success of cloud services, but one of them is that the major vendors have invested a huge amount in them over the past few years. Also, we all understand at a better level what customers want and how we can make things work for them."
Craig Albertson, head of cloud services at Accenture SA, agrees.
"Talking to a large enterprise is a very different conversation. At the moment, the cost of moving to cloud for a large organisation outweighs the like-for-like utility model. If they do an internal cost exercise and compare it to cloud, then yes, there's an operational difference. But the cost of getting there is preventing that transition. The interesting thing is that all of us involved in outsourcing know there is little or no margin left to be squeezed out of internal IT. So the executives are being forced to look at ways of getting better delivery and better economies of scale. And that means they will be forced to go cloud eventually."
Local customers also tend to bring expectations of overseas service levels with them, notes Chris Lucier, managed services leader for MEA at IBM South Africa.
"I think the South African market is more advanced because of what it has seen outside of South Africa. They're coming in with smarter requirements and the customers know what they want: they don't care about the technology, they just want to be given what they ask for."
Mark Smissen, GM of Symantec SA, says the cost is also a major factor.
"It's been coming for a long time. The barrier to entry for customers is very low. The cost is much lower than it was five to 10 years ago, or even last week. A SaaS model that used to cost R25 000 now costs R500, and it opens up a lot of avenues that weren't there in the past."
That's good for SMEs, says Fabio Taddei, architect: services at Fujitsu.
So what's next? Mimecast's Hicklin predicts even more sophistication.
"As customers become more sophisticated, they want more value and that pushes us as vendors. They don't want some dusty archive sitting in the cloud somewhere. Rather, they want value out of it: how can they access it; how do their users access it; what data do they really have? That is the next step for us."