Monitising the cloud

With analysts predicting a 25% annual growth of cloud computing services between 2013 and 2017, there is every indication that it is the bandwagon the Middle East’s channel community should be jumping on.

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Monitising the cloud Glen Ogden, Regional Sales Director, Middle East, A10 Networks.
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By  Piers Ford Published  January 27, 2014

With analysts predicting a 25% annual growth of cloud computing services between 2013 and 2017, there is every indication that it is the bandwagon the Middle East’s channel community should be jumping on. One of the biggest challenges for distributors and resellers entering the cloud arena is adapting to new revenue models. Out go traditional margin measurements and in comes a greater reliance on regular, recurring service billing and proactive software bundling.

The rise of the cloud services market is unstoppable. That’s the unanimous view from the analysts’ corner, with everyone from Gartner to IDC forecasting rapid growth for the foreseeable future. According to IDC, global spending on public cloud services will increase annually by almost 25% - five times faster than the IT industry as a whole - between now and 2017, when it will reach $107bn.

Gartner predicts that by 2016, most new IT spending will be cloud-based. Last year, the analyst valued the public cloud services market in the Middle East and North Africa (MENA) at $462.3m, with enterprise SaaS strategies driving the adoption of cloud office suites and ERP implementations.

The big picture for channel players moving into cloud services could hardly be more appealing. But it is also deceptively simple. The reality of the potential cloud market, while full of possibilities, is complex, and resellers need to decide which elements in the supply chain play to their strengths.

There are also lingering concerns about cloud security and the readiness of some regional infrastructures to provide the levels of latency and resilience that are necessary for the quality of service expected by application-hungry customers.

“According to the well-known research firms, the Middle East is somewhat trailing behind in terms of overall cloud adoption and numbers of cloud service providers,” said Pierre Olivier Descoteaux, general manager, vendor acquisition and cloud computing at VAD Ingram Micro Services. “However, the potential for cloud growth in this region is expected to be spectacular due to the number of SMBs, the importance that technology plays here and the cost saving benefit that cloud proposes.

“Ingram Micro recognises two different types of reseller that will play in the adoption and growth of the cloud computing industry in the Middle East: Cloud Service Providers (CSPs) that wish to build their own cloud infrastructure and offer cloud solutions themselves, as multi-tenancy platforms; and Cloud Service Brokers (CSBs) who wish to deploy an already packaged and hosted solution with little capital expenditure.”

Descoteaux said it is early days for both types but in recent months, easily-deployed office solutions have started to take off in a big way. Conversations with brokers are getting deeper and he has noted a growing interest among them to understand the industry better and seize a promising opportunity.

While private cloud solutions help to address wider security concerns, they are more likely to be provided by CSPs with the resources to invest in their own infrastructure. For resellers, the main focus will stay on the public cloud as a delivery platform for applications and service bundles, and some commentators think this will act as a drag on the market – particularly in countries with their own local challenges.

“There are a number of potential barriers to accelerating public loud services in the Middle East,” said Glen Ogden, regional sales director, Middle East at A10 Networks. “Connectivity costs tend to be high, and there may be concerns over data security and sovereignty. As cloud services and connectivity become more competitively priced and trusted, the lure of applications such as and Google Apps will mean that organisations might move to cloud regardless, even if just for a slice of their IT function.

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