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11.20.2012

The writing on the wall is clear – there is a visible decline of on-premise hosting and a continuous increase in hosting software on the cloud. If current trends are maintained, the crossover will occur somewhere in 2014. In this year, there will be about equal instances of both on-premise and cloud based software deployment. Thereafter, the cloud will go ahead of on-premise hosting at an ever increasing rate. There is every possibility that the crossover may occur even before 2014 since SaaS is seeing an increasing rather than a linear growth trend.

If you are a cloud service provider, you have to help your customers make the transition.

It’s got to be hybrid for a while…

While the on-premise market may be shrinking, there are still very substantial investments in hardware and software that have gone into the current equipment. Much of this will still have residual life in 2014. Therefore, even though the SaaS model may appeal greatly, a mix of on-premise and cloud based systems will continue to stay for a few years to come. Any cloud service provider that wishes to lay a claim to the business opportunity that exists must find a way to help companies make the transition.

The key questions service providers have to ask are –

• How will the operational changes be accomplished?
• Are there any new offerings that could not have been made with the traditional model?
• Can the cloud vendor innovate and bring new capabilities to the market?
• Will the service provider help the customer make effective use of the cloud technology?

If the top few reasons for a move to the cloud are analyzed, then these are found to be–

• Reduction in IT infrastructure costs
• Reduction in capital expenditure
• Reduction in management and support costs
• Converting fixed costs to variable ones
• Improve business agility
• Improve IT system flexibility
• Improve service quality
• Simplify management
• Speed up implementation

Besides this, users also expect to get benefits such as global operations, obtain a single view of their organization and so on. The cloud service provider has to approach customers keeping in mind the top reasons for the migration and the additional benefits users seek.

Service providers themselves have to change their business model. In the good old days of up front software sales, vendors got their profits at the beginning of a sale. However, with a cloud model, the revenue comes over the years and hence managing a relationship with the client becomes critical. The low revenue per customer per month implies that a larger number of customers have to be registered for the business to make financial sense.

Customer loyalty is a direct function of perceived value. The customer will only make the transition to cloud services if he is confident about the quality of service. This is especially true due to the tight competition among providers; that is why GMO Cloud takes the quality of service it renders very seriously, not only in the core service that they provide but as well as forward thinking on what customers would want after. One example is the Setup Service where professional services ranging from preparations to troubleshooting are rendered.

Key areas of focus

Follow a hybrid approach – as mentioned earlier, existing software investments will mean that on-premise software will stay for some time. In such a situation, going hybrid is the best answer. The cloud vendor has to see where he can add value by moving some functions to the cloud. A case in point is disaster recovery. Even if the primary functions stay on-premise, the vendor can offer DR, back up and long term storage of data in the cloud. Over time, this base will tend to draw the software to the cloud as well.

Introduce additional functionality – While many customers may continue to hold on to their existing software investments, many small businesses cannot afford high end software. This functionality can be offered to small businesses in the cloud to enable them to use most functions at a fraction of the cost. Additional business can be tapped this way.

Manage licensing changes gently – many users of on-premise software have perpetual licenses. If these users are to migrate to the cloud, do not be in a hurry to change the licensing model for these users. Try and extend the licensing to the cloud so that the customer does not lose the incentive to migrate. The licensing model can be changed during the next upgrade cycle.

The key factor in helping your customers move from an on-premise model to a SaaS model is to make proposals that leverage the existing investment that the customer has already made. Add value over and above this so that the customer has the incentive to migrate.

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About the Guest Author:

Sanjay Srivastava has been active in computing infrastructure and has participated in major projects on cloud computing, networking, VoIP and in creation of applications running over distributed databases. Due to a military background, his focus has always been on stability and availability of infrastructure. Sanjay was the Director of Information Technology in a major enterprise and managed the transition from legacy software to fully networked operations using private cloud infrastructure. He now writes extensively on cloud computing and networking and is about to move to his farm in Central India where he plans to use cloud computing and modern technology to improve the lives of rural folk in India.

11.19.2012

Recession is not a surprising economic situation today. It is rather a common occurrence. The World Economy has witnessed some of the most gruelling forms of this phenomenon recently. Whether it is the Americas or Europe or Asia, recession has caused far spread concern in the business world and especially for IT enterprises. Owing to recession, companies have limited budgets for their expenses and the need to cut down significantly on IT operational costs is a growing headache and concern for managers.

A majority of IT expenses go towards infrastructure requirements like large scale storage involving servers, data centers, etc. IT managers and senior officials are working out strategies to cut down on infrastructure usage in order to directly reduce their spending spree on such essential entities.

As more data and information are generated, there is a need to have more storage and data management space. Adding physical servers or blade servers would provide the necessary space, but they have the huge problem of mounting operational costs, power consumption etc. Another approach that was tried out by organisations was application consolidation but it was also abandoned owing to several deep issues that pop up frequently owing to this such as resource crunch, conflicts, version incompatibility of databases, etc. As such, the need for a much more streamlined and efficient way to cut down on IT expenditure was mooted.

The most promising implementation in IT infrastructure that serves this purpose is the evolution of virtual data centers. It is most evident from the live example of Kronos – one of the pioneer names in the field of global workforce management solutions. The company was faced with increasing pressure from all sides owing to spiralling costs in its IT infrastructure. After going through detailed studies, they settled for the strategy to opt for virtualized data centers. The results were outstanding as power consumption went down by over 20 per cent and Kronos was able to shelf off nearly $1.2 Million in expenses, which they would have had to incur had they opted for more servers.

All it needs is to implement a wise virtualization strategy is to have a clear understanding of the shared storage needs as well as necessary management skills to avoid virtualization sprawls which normally occurs when virtualization goes unchecked. The benefits of moving to a virtual data center are many and these combine to lure more enterprises to leverage the features and advantages of data center virtualization. Some of the important benefits that can be associated with moving to a virtual data center are:

• Offers enterprises whether big or small with a dynamic platform for their operations that facilitates smooth transit of live applications from one physical server to another which, indeed is due to the virtualized environment present.
• Increased availability of key business applications for smooth functioning of important business models even in the event of a hardware failure.
• Existing infrastructure can be spruced up for better resource handling as well as load management across servers to provide optimum output with minimal consumption of resources.
• Backup and disaster recovery is made easier with readily available backup storage and software tools and this also prevents business operations from being disrupted owing to data center downtime, etc.
• Scalability of the data center infrastructure is possible to high levels without having to compromise on efficiency or having to face mounting costs and integration with existing network and storage infrastructure is easy as well.

These characteristics are attributed to the technology’s high availability features that improve the operations of a business. GMO Cloud offers this type of feature as it delivers faster access and lower latency from any location worldwide.

Thus the strategy of moving to a virtual data center paves way for greater flexibility in administration as well as reduction of IT expenditure. It is a clear cut solution for IT organizations as well as business enterprises to streamline their operations with minimal economic burdens which is crucial at this time of recession.

Be Part of Our Cloud Conversation

Our articles are written to provide you with tools and information to meet your IT and cloud solution needs. Join us on Facebook and Twitter.

About the Guest Author:

Mandira Srivastava is a fulltime freelance writer who specializes in technology, health and fitness, politics, and financial writing. Equipped with degree of mass communication and having worked for both private and corporate clients, I have experience meeting a wide range of writing requirements and styles.