Level of cloud adoption in the channel reflects IT reality

Posted by Mike Vizard on Jun 20, 2017 12:10:31 PM

cloud adoption.jpegA new “State of the Cloud” report based on a survey of 142 channel partners published by Gorilla Corp., a provider of sales and marketing services for the channel, finds that 65 percent of respondents provide hosted and managed cloud services. In addition, a full 70 percent report they manage and support cloud services.

While that may suggest the channel is aggressively transitioning to the cloud, the survey, conducted in collaboration with Kairos Strategic Consulting, also finds that only 38 percent have more than 50 percent of the services they provide delivered via the cloud. More telling yet, 71 percent say they expect to be selling on-premises IT hardware and software indefinitely. In fact, only 42 percent report they are working with more than four cloud vendors.

Of course, defining who is a cloud vendors these days is a bit of challenge. Just about every vendor that sells a product deployed on-premises has added extensions to the cloud. The IT market today consists of multiple clouds that are slowly being woven together to create something that functions much like a hybrid cloud computing fabric. Inevitably, there will be multiple hybrid cloud computing fabrics that organizations will ask MSPs to stitch together in a way that makes them simpler to invoke.

Keeping cloud adoption in context

Right now, however, most customers are not all that far down the cloud computing path. The Gorilla survey finds there’s reasonably wide adoption of clouds in vertical industries such as education, healthcare, and media. But the survey suggests that adoption of cloud computing among manufacturers and government agencies is not especially high. Therefore, it should not come as much of a surprise that the IT channel is taking its time about transitioning to the cloud.

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In general, cloud computing represents the emergence of a new delivery model that managed service providers can’t ignore. But MSPs also need to keep the cloud in context. Billions of dollars are being allocated to cloud services at double-digit growth rates, but the on-premises IT market is valued in the range of $3 trillion. A single-digit growth rate on a base of $3 trillion represents a massive amount of money.

It’s also important to note that the way on-premises IT is being acquired is changing. Some customers still prefer to finance IT as a capital expense. But those that prefer to treat IT as an operational expense can now pay for on-premises IT monthly in much the same way they pay for cloud services. The only real difference these days is that it’s still much faster to invoke a cloud service than it is to deploy IT infrastructure locally.

Preparing for a hybrid cloud future

However, there are going to be thousands of customers that for reasons related to performance, compliance, security, and total cost of ownership will still eschew public clouds for many classes of workloads. In many cases, the application workloads that are in the cloud are viewed by the organization that deployed them as an extension of existing enterprise applications. For example, most of the enterprise resource planning (ERP) applications continue to run on-premises, while ancillary applications involving human resources or travel management run in the cloud.

For the foreseeable future, IT environments will consist of a broad mix of on-premises and cloud-based solutions. There may even come a day when no one cares where an application needs to run. But they will always care about who has the expertise required to keep those applications up and running. Viewed in that light, MSPs are becoming nothing short of indispensable.

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Topics: IT Services Trends

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