Day One at the Parallels Summit 2014: SMB Cloud Insights, Reseller Role in Cloud Environment

I am pleased to share the Day One news with you all. I will begin by covering the Parallels SMB Cloud Insights Report findings for 2014, then I’ll move on to highlights from the two panels I was able to attend today, one of which was on SMB Cloud Computing trends, and the other was the Future of Cloud.

The big story out of the Parallels Summit today is of course the release of the company’s SMB Cloud Insights report findings for 2014. This study, which has just completed its fourth year, is the result of over 12,000 SMB interviews across 14 countries. This year’s report showed a significant increase in the cloud opportunity for SMBs. The SMB market is expected to continue this growth, with a predicted 26% CAGR increase up to $125 billion by 2016.

“Parallels SMB Cloud Insights research continues to play a central role in providing actionable market intelligence to our partner ecosystem,” said Birger Steen, CEO, Parallels. “SMBs are becoming more sophisticated in their use of IT and also demanding best of breed solutions. Parallels software is proven to enable service providers to make the cloud work for businesses.”

Going a bit deeper into this study, the main area of growth was in the Communication and Collaboration sector, which saw a 37% CAGR increase. Also, Birger Steen, CEO, Parallels said this morning that the average split has gone from 50/50 cloud/onprem in 2009 to 55/45 cloud/onprem, and that the environment is really changing, particularly as it relates to applications for business. The full report is available via the Parallels Partner Portal at the site: http://www.parallels.com/SMBreport

I will move on to the panels, where the guest speakers shared some interesting predictions about SMB Cloud, as well as key factors and impediments for cloud services overall. On the SMB side, the panel consisted of Chris Primesberger of eWeek, Simon Lee-Smith of Telefónica Digital, Martin Capurro of CenturyLink Technology Solutions , Jarrod Barnes of AT&T and J.T. Smith, President of ViUX Systems, Inc. This panel covered the top needs their SMB customers have when purchasing cloud solutions, as well as the growing importance of Security.

Overall, the panelists all shared that customers, primarily SMB customers, are not as interested in the how it works, or the technology, but are rather using the cloud as a means to gain access to the business applications they need. In addition, they want to focus on their industry (plumbing, floral arrangements, etc.) and they don’t want to have to worry about their services not working. Simon Lee-Smith said that service providers should be a helpful guide for customers, and try not to push additional services on them.

Next up on this panel was the question of security, which all panelists said that they saw varying degrees of new security needs from their customers. J.T. Smith mentioned that his organization had increased legal fees due to the Edward Snowden case, because his customers wanted him to re-write the language around where their data would be stored. Jarrod of AT&T explained that many of his customers are more and more concerned about PCI and HIPAA compliance; while Simon Lee-Smith, who has organizations primarily in Europe and Latin America, said that his company has seen a steep increase in the amount of security needed for his German clients. In fact, he said that all data from German organizations is not allowed to leave the country’s geographical borders.

Here are the top predictions and impediments to Cloud in 2014, as discussed by the second panel:

Predictions:

• Rise of Cloud Brokers, pending the development of a good marketing approach.
• Change in the Cloud Ecosystem, particularly as it relates to resellers.
  • Here, the panelists were in disagreement, with a couple saying that there was no place for resellers, and others saying that resellers (IT Pros) DO still have a place, but they will need to work on bundling services to make money from Cloud.
• SMBs continue to struggle on the new Cloud model.

Impediments:

• Awareness and Education, and staying active on keeping customers up to date with changes.
• SMB budgets, which are tight: Panelist Hakim of KPN said that service providers need to focus not on “how much this costs,” but rather “how much this solution will save you” when trying to sell to customers.
• Customer trust.
• SMB IT Pro Resellers: Panelist Steve Zimba of Mural explained that the current IT Pro environment is highly fragmented, and often moves with the status quo. This, he feels, is an impediment to the adoption of cloud, as these pros are telling their customers to stay with the status quo as well. He and the rest of the panel believe that the IT Pro role will NOT go away, so much as evolve into a partner role with CSPs. This will still allow MSPs and VARs to add value, as well as maintain their status as a single point of contact for their clients across a variety of vendor solutions.

What does this mean for you? Well, like many industries globally, SMB IT Pros will begin to adapt to fit into new revenue streams and new technologies. Do not panic, however. There is a good opportunity in the Cloud, now and in the future, the trick to making money is just different from that of the traditional reseller model. Check back in tomorrow for more on this subject!