Cloud ‘recipes’ to drive distribution

A half decade back, ‘cloud’ loomed as a dark menace over the channel community: large cloud vendors would either sidestep the ‘trusted advisor’ in favour of a direct relationship with the end customer, or channel members would fall prey to a desperate ‘survival of the fittest’ selection that would winnow out all but the few with pockets deep enough to build significant IT infrastructure and sufficient vision to develop unique value add. This extreme concentration of the market has not come to pass – if channel members have had to adapt to new models for the sale of IT products, cloud services have come to represent a new source of opportunity for many players, while IT vendors have come to recognize the need for multiple distribution paths.

But this does not mean that the journey has been without Darwinian overtones. To understand more about the precise nature of the challenges faced by channel members looking to fine tune cloud their cloud strategies, it’s helpful to consider recent Techaisle research findings. In surveys aimed at identifying the obstacles to channel cloud scale, Techaisle has found intriguing differences between the challenges channel partners currently face and the issues they identified a year ago. For example, in the previous channel survey, many of the top challenges associated with selling cloud solutions focused on customer readiness: “our SMB customers want cloud based services only for simple applications” (top issue); “our SMB customers are still experimenting with cloud-based services but are unwilling to pay for them” (fifth of ten); and “our SMB customers are unwilling to eliminate their in-house IT infrastructure until they develop sufficient trust in cloud services” (third on the list). Techaisle findings for the current year outlined in the figure below underscore a significant market shift.

Techaisle cloud channel chart
Click to view image.

If channel members identified external market conditions as the key barrier to building cloud business a year ago, current issues may be characterized (as Techaisle report author Michael O’Neil does) by use of the Walt Kelly line (from the Pogo comic strip) “we have met the enemy, and he is us.” Four of the top five challenges – “lack of in-house expertise,” “do not have financial resources,” “lack of knowledge about cloud computing” and “do not know how to implement [cloud solutions]” – relate to internal issues as do two others, “do not understand the [cloud] business model” and “offering cloud-based services will necessitate elimination of jobs at our company.” In other words, the primary channel concerns have shifted from customer adoption readiness to the ability of individual providers to ramp up cloud capabilities.

But cloud markets have matured over the last few years in more than one sense. Cloud channel ecosystem specialists have evolved to help address the kinds of skills and resource gaps identified by respondents to Techaisle’s survey. A good example of this can be found in ThinkOn Inc., a Toronto-based wholesale provider of IaaS resources which advertises a “made-in-Canada virtual data centre” offering unlimited infrastructure and virtually any combination of computer network and storage “with every byte stored and transmitted here in Canada.” In addition to support for customers with data storage residency requirements through operations in SunGard, Cologix and TeraGo Networks Toronto and Vancouver facilities, ThinkOn differentiates itself in what has become an increasingly crowded IaaS market space through deep cloud expertise: prior to founding ThinkOn, CEO Craig McLellan spent 10 years in the US building and moving cloud-based data centres, mostly recently as the CTO of the Colorado-based Drawing on this experience, McLellan was able to build his Canadian IaaS infrastructure with multiple storage arrays to scale out, an approach he believes is more effective in limiting failure domains and improving availability (ThinkOn offers four 9s), than would be the case through scale up with fewer, very large arrays. Similarly, the company runs its infrastructure on blade servers alone, delivering rapid communication between cloud nodes and ensuring adequate compute capacity for enterprise customers that ThinkOn partner/clients typically support.

ThinkOn is also 100 percent wholesale, selling infrastructure only through the channel. According to McLellan, this model means two things. Unlike its competition, the company does not have to sell against the many sales professionals in the channel that have or will ultimately have to adopt cloud: “the channel partners that we have already brought on board are all references for us because of our commitment to supporting the channel,” he added. Secondly, ThinkOn has been able to draw on long term industry experience to build the kinds of workload specific solutions that can be more readily plugged into channel programs. “What we have noticed over the last eighteen months,” McLellan explained, “is that while people want to buy cloud economics, they don’t really want to buy cloud. They want to buy a solution to a problem… such as disaster recovery-as-a-service for application hosting which is much more tangible to a customer than the generic cloud.” But rather than work with a specific software vendor on development of this type of solution, McLellan’s team has devised capabilities to support all of the backup vendors: “every VAR in the country has their preference for software products – it may be Microsoft, CommVault or Veeam that is part of their channel strategy – and rather than try to displace those… we have built capabilities that allow our partners to continue to work with the software vendor they already know.” In contrast, then, to other IaaS suppliers, who may provide generic compute and storage resources, ThinkOn’s strategy is designed to solve an end user problem, but in a way that is more manageable for the partner, and which has engaged the software providers.

Craig McLellan, CEO, ThinkOn Inc.
Craig McLellan, CEO, ThinkOn Inc.

McLellan believes ThinkOn ability to deliver workload specific infrastructure that accommodates various software titles is a substantial and sustainable differentiator for the company, which has been building out “recipes” or “Lego block” products for a number of different areas. The ThinkOn service catalogue consists of seven service bundles, including three compute blocks (two bare metal options and a virtual compute unit), as well as high performance, archival and object storage and networking services, that channel partners can use to build reference architectures for 20 or so solutions, based on different software offerings. Taking this one step further, ThinkOn has built recipes for specific types of services: examples include a recipe for Veeam disaster recovery-as-a-service that partners may apply to existing ThinkOn products, as well as instructions for building CommVault, Unitrends Backup, Symantec solutions. Over time, McLellan intends to build additional recipes, ThinkOn intellectual property that will be used to support the partner community.

A recent service innovation introduced at the end of December is TOMA, a system designed to provide high-speed, secure connections for the migration of large data stores. “TOMA can accommodate up to 40 TB over a 10G iSCSi connection in less than 10 hours,” McLellan explained, and do so at a price that would be affordable to the mid-sized enterprise space that company solutions are designed to address. For ThinkOn, pricing is another important value proposition that addresses a key concern identified in Techaisle channel research and elsewhere. Company pricing is based on benchmarking against the cost for a basket of services provided by Amazon (weighted by 60%), Azure (20%) and Rackspace (20%) with a true-up for exchange rates on the Canadian dollar to produce a retail price. Channel partners are given a 20 – 25 percent margin on top of this: as McLellan explained, they can sell in Canada at their retail price, remain competitive with the big US providers, and not have to deal with risk associate with currency fluctuation.

ThinkOn pricing, OPEX models for IaaS and workload or application specific reference architectures that ease solution deployment for partners go a long way to addressing channel concern over financial, skills and implementation challenges noted above. But positioning within the cloud ecosystem is also key to ThinkOn growth: as McLellan pointed out “Because we don’t sell direct, partners don’t have to feel threatened when we start strategizing about an account and developing a recipe, and we don’t feel threatened when they start sharing a recipe with their customer. They know the customer can’t call us and say ‘can we buy that from you instead.’”



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