Cloud Computing in the Channel

Everywhere you go these days someone is talking up the merits of cloud computing. But upon closer examination it becomes pretty clear that cloud computing is pretty much little more than a variation of the traditional hosted computing model.

Instead of paying for a dedicated set of servers to run an application, the cloud computing model allows customers to dynamically scale their hardware requirements to match the needs of the application. If capacity demand rises, additional server and storage resources will automatically be provisioned.

Customers like this model because they don’t have to pay for hardware resources they are not using. In particular, the model is attractive for running relatively mundane activities such as providing disaster recovery services and for supporting new applications when the customer is not sure how strategic they will actually will become. In the latter case, it allows the customer to experiment with a new application while limiting their hardware expense in case the application fails to live up to expectations. On the other side of that same equation, if the application succeeds beyond their imagination, they can easily scale up the hardware needed to support it.

The ability to deliver this level of IT flexibility is increasingly going to be a requirement for all solution providers. The question that many of them will have to decide is whether they want to build this capability themselves or resell the cloud computing services of other companies. Already, we’ve seen startup companies flush with venture capital money rush into this space. Some of the better known startups in this space include Skytap, CohesiveFT and 3tera. But at the same time traditional hosting companies such as IBM and Terremark have seized on the opportunity alongside Amazon, Google and Dell, and the odds are better than good that in the wake of its merger with EDS we’ll see Hewlett-Packard in this space as well. In fact, executives at Terremark are reporting that they’ve already received a number of overtures from solution providers in the channel about reselling their cloud computing services.

The implications of cloud computing models for solution providers are immense. On the downside, cloud computing models threaten managed services models. The whole idea of cloud computing is to move the compute resources into a hosted environment as opposed to managing them remotely on the client’s site. The good news is that the cost of managing compute resource locally inside a data center managed by the solution provider is a lot lower than trying to manage resources located on the client’s site.

The second major issue is the opportunity that will arise as a federated cloud computing model develops. There is no way that most customers are going to have all their compute needs serviced by a single cloud. This creates an opportunity for solution providers to serve as the general contractor of a set of cloud computing services that are actually federated across multiple sources. How solution providers develop a profitable business model around those services will prove to be the ultimate challenge.

It’s important to remember that not all compute resources are going to be delivered via a cloud computing model. What we will ultimately see is a blended computing model where resources are dynamically integrated across the on-premise assets of the customer and the cloud. Managing the interactions among all those different computing models is what in the end will create new opportunities for solution providers.

But one thing is for certain. In these uncertain economic times, interest in cloud computing is going to be on the rise and that means solution providers need to start crafting a strategy today if they want to stay relevant in 2009.