As a consultant/business partner, I'm always looking out for new opportunities and analyzing market trends. Cloud computing -- the notion that you can use computing power in the data center rather than purchasing your own hardware and software and doing it all in-house -- has captured a lot of imaginations.
The question we're going to ask in this article is, "as a vendor or service provider, is selling services through the cloud a good business?"
Cloud vs. In-House
Cloud computing has become an additional service offering from system integrators. However, most integrators make their money from implementation and service maintenance. With cloud computing, they will be passing part of their work to data centers to manage.
One way to handle cloud computing involves taking a blended approach. As a business partner in a system integrator, we will try to encourage our customers to adopt cloud computing, while having an on-premise system for faster connections for the users. This would give us a balance of the pros and cons provided by cloud computing and in-house servers.
The following table lists the pros and cons of cloud vs. in-house computing from a system integrator's point of view, and it suggests ways we can blend the two in our businesses:
Having a balance of both cloud and in-house services, system integrators benefit from:
1. Normal working hours. If the on-premise system goes down, it fails over to the cloud. Technicians can attend to issues the next business day, instead of having to deal with support calls after working hours.
2. Stable recurring business. Moving to the cloud means recurring business, but since you are outsourcing most of the maintenance work, it won't be as profitable. With an on-premise solution for the customer, it translates to additional implementation and maintenance fees.
3. Reliable system. Having a mix of cloud and on-premise services means that if the Internet connection goes down, users will not be as dramatically affected. If either the cloud or the on-premise system goes down, the application will still not be affected. This means less support costs. However customers will still need to subscribe to your maintenance contract.
As for the customers, a mixed approach is beneficial in terms of:
1. Scalability. If the customer requires additional processing, a cloud solution may provide a strategy to dynamically scale the system.
2. High availability + fast connection. Having the application in the cloud provides high availability, yet having the same application on-premise provides a fast connection.
3. Cost-cutting measures. For large enterprises, decreasing the amount of on-premise servers and hosting more assets in the cloud is usually more economical. This is due to the resource sharing and efficient power usage of a cloud solution.
At this point you might be asking, "won't it increase cost and complexity to have on-premise and cloud computing at the same time?" From my experience, a mixed solution will only save money if your customer is a mid-to-large organization. Using both on-premise and cloud computing will be over budget for most, if not all, smaller businesses.
Your Service is your profit
Service here means customer service. Relieving in-house staff of most of the technical burden, an account manager is needed to maintain the existing customers.
Let me break down why:
1. System maintenance is outsourced to the cloud. The cloud provider will have its own team of technical experts, with Service Level Agreements (SLA) to follow. Ensuring system availability is expensive – doing it in-house will bump up the operational cost.
2. Maintain your customers. Having minimal to no control over the product that you sell, the only way to ensure customer satisfaction is to listen to the customer. By losing a customer, you are losing a recurring business.
3. Marketing business. If the business focuses only on selling other companies' products through cloud computing, this direction will change the business into a marketing centric business: The success of the business is based on marketing.
With the business moving toward a marketing servicing role instead of a technical servicing role, an account manager will be needed to maintain the good relationship with the customers.
Going 100 percent cloud will have an impact on the business as a vendor/IT service provider, while sticking to 100 percent on-premise implementation will mean hiding in your safe zone. As businesses compete, we need to be innovative in terms of service offering, while maintaining best IT practices for our customers.