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Fresh Thinking on IT Operations for 100,000 Industry Executives

IT resellers operate in two key market segments left to them by the large IT vendors:

  • The mid-market (firms of up to 1000 staff) for general IT systems and platforms
  • Tight vertical markets where the reseller has a great deal of skill and capability often supported by intellectual property

In both these areas customers and resellers are migrating to the cloud at an increasing rate. Austrian business analytics specialists Pitagora Information Management GmbH have found that their products and services are now best suited to a cloud delivery model rather than by selling physical hardware. Dr Stefan Illwitzer, a partner in the firm discusses the benefits in an insightful YouTube video. He sees the key advantage of the cloud as being cost and capacity elasticity as well as availability and cost transparency.

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  1. Its been a few years since I was in a channel partner for a vendor but all of what is here holds true. The business that I was in has suffered a significant drop in revenues and the competitors are all running after low margin business. Some have come out with specific managed service offerings to maintain a profitable business, while others are developing niche offerings to maintain a customer base. And there are the few that still have a niche market focus to live off.

    In truth, its just a return to the early nineties when vendors were doing direct business before the advent of the open systems growth, but now it looks a little more permanent. Firms like IBM are chasing profits in deals while the Oracle’s are revenue focused, and that is a case of swings and roundabouts as the industry cycles continue.

    The interesting space is storage which has never had so many vendors in my knowledge – kind of like the late eighties when there were a plethora of server brands – who could forget Memorex, ICL, Prime, DG, Tandem and the myriad of so many others that were consumed over time.

    My guess is that the future of the VAR landscape is going to change and not develop. While a few will resell cloud solutions for the vendors, most of the re-sellers in that area will be new businesses and the traditional old hands will consolidate, be consumed, or just fade away.

    I can see that the real future is partly going to be made up of engineered systems (like the Oracle offerings) which will be driven by research labs where the lines of differentiation between vendors at the “standard compute” level evaporates so the 1000 person company is buying even more comoditised offerings – before they hit the cloud in time anyway.

    Even the higher end of the high end, the HPC space, is moving forward quickly. It used to take months to implement a GPFS or such environment in a University R&D center, now it can be done in hours using preconfigured stacks from any number of vendors – its almost at the point where building a data center infrastructure in two years time seems as difficult as it is now to try and get your iPhone to last a whole day on one charge.

  2. Fantastic comment Alan! 

    The cloud space is moving fast. The reality behind what it truly costs to run the license seats for long term cloud services is astronomical when compared to upfront costs associated to efficient IT hardware deployment. As associated hardware costs become less expensive and equipment configuration more intuitive it all comes down to ongoing costs related to power consumption and software management. SDN (Software Defined Networks) is the next phase of massive virtualization and you will eventually be able to get the value of 100 routers through the purchase price of what used to be the price of 1.

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