Thursday, 23 June 2011

The Cloud is Cloudy with Outbreaks of Common Sense but Mainly Confusing

Olympia first thing, breakfast at El Mundo. West End prices and microwaved bacon like leather, tough on the teeth. It's a fortifying start to a day full of questions.

I am hoping to see vendors, hosting companies, resellers make sense of The Cloud. So far, it's a very confusing picture. First sense is that the Forum is small and not many players and punters alike. There is lots of talk about infrastructure to build your own hosting set up - which sounds expensive. Some are talking about co-hosting facilities to serve applications from. Again this seems expensive for resellers.

I make a beeline for Microsoft. They should know what they are talking about or at least that's what one of their senior directors tells me. Their stand is large in comparison to others and around the edge are several of their partners including the likes of Trustmarque, Dimension Data and more.

I first go to Core.GB and get a quick talk through MS 365 by a young Irish techie. You can get a 25 user beta trial which will probably last up until September. What MS 365 offers is a hosted solution for your email, calendar and, at minimum, web based Office Apps based on a SharePoint back end (I knew they would find a use for SharePoint in the end). So if you are a 10 person company you would pay a miserly £4/user/month and you can have your company domain hosted for email (even the website although that's really naff) and everyone gets a 'Lite' browser based version of Office which allows you to create and edit documents. Well you can edit documents so long as you have web access, of course, but documents are synchronised to the SharePoint back end. So you get a central document storage area which everyone has access to and sees - so no private document area.

The trouble is that Google do this for free.
This is the basic level and is very similar then to Google Apps in terms of capability. If you then pay £8/ user/ month extra, you can have the full versions of the MS Office Suite. I assume that you can then have your usual private document stash and the SharePoint back end for everyone to use. For the mathematics gurus this all then works out at £144/user/year. I didn't get to know how much storage space this gives you. Also, you can add, at further cost, an automated back up and data management facility.

So for a 10 person company this equates to £1440/annum for a full solution of MS Office, hosted in The Cloud. Don't tell anyone, but Core's young Irish demo person could not access the MS 365 portal for his company - a rather terminal looking screen came up which was very disconcerting for a punter like I.

This all sounds decent value for a fully hosted, maintained and supported solution. Companies like Core and Trustmarque, clustered around the MS stand offered the same. The added value service over just going to MS is that they might do the email migration from your current provider and set up the SharePoint back end to your liking, plus then do first line support. What margins the reseller makes, goodness knows. And where was the Distributor in all this and why should they have a slice of the action, you may ask? Credit risk management, as the solution is bought from MS? As I have said before, the beauty of The Cloud is that if you don't pay, you don't get. Resellers or MS who are not paid in any month have the option to simply switch off the service and effectively cripple the non-paying users' company.

You have to worry about Distribution in this simplified world. For the user, there are still many questions which remain unanswered by Microsoft. There is a lack of clarity on upgrades, some one year fudge was mentioned which I didn't understand. Disk space allocation - what do you get, how can you flex it and how do you manage data that spirals out of control? Interoperability between applications? There should be answers to all this ready as this is what SMEs need from The Cloud. Peace of mind at a set monthly cost that only grows in line with their requirements.
To be clear, The Cloud is NOT about just sticking current applications on a co-hosted site and then charging in a different way. The real Cloud is about having an entire solution provided - the whole service is not just about being robust it is about scalability and usability. Answers need to be ready.

OK, nirvana time. Who can serve my Office applications and backend accounting from one source, manage it for me and send me a single monthly bill? Let's lob in CRM and mobility for good measure.

Back on the MS stand and this time I get to meet 2 companies. First is Program Framework who know their MS 365 - "You get all this and guess what the price is?" I ruin the lady's day as I already know. For some reason they glibly say it's all incredibly cheap but no one I have met has done a cost of ownership analysis over a 5 year period and floored me with the comparison toi buying the normal licences. So I pose the question - can I get 365 and CRM? Ah yes, you can get the CRM via our partner over here ConsultCRM. Here I am told by a very professional guy that MS Dynamics fully hosted is £22.75/user/month and will go up to £29.50 after June so buy early while the cakes are hot. I can't seem to buy MS 365 and Dynamics from the same company let alone get it on the same contract. And as for back office functions like accounting, perish the thought.

I mention NetSuite and the man shivers as all his comparisons are for (again it's point products in a world where SMEs want solutions) and say I can get back office and CRM in one solution, one price. The man is floored. There is no answer. I am slightly floored too as I am not sure if I was right. What was disconcerting was that he didn't know if I was right or not.
There is a huge ignorance about the main players who already have credence and market share in The Cloud. There is an automatic assumption that MS will come in and change the world. Is this true or is there an opportunity for companies like and NetSuite to clean up and take advantage?

Again, where are the Distributors? Not a single stand from a Distributor at the event. Arrogance? Hubris? Ignorance? Who knows?

There you go, I'm not so daft. NetSuite - accounting, CRM and eCommerce in one solution in The Cloud ( starts $2/user/month but is better at $15/user/month rising to $65/user/month and territory management etc goes much higher up to $250/user per month. It's hard to compare like for like but in my opinion for an SME's needs would suffice at $15/user/month while MS Dynamics will be £29.50/user/month. Both offer decent MS Office integration. Go figure. Stop Press* - I did my free trial sign up to Dynamics and imported my text file from Act. Nightmare - complete khazi. Did the same for last yera, worked first time and looked great. Dynamics looks naff, you have to be honest.

It appears that MS is putting a finger in the air on pricing and is trying to charge SMEs enterprise-grade pricing. It really is a poorly thought through strategy, based on poor research. Current Cloud players have worked out how to get SMEs bought in at a sensible price and take away the fear factors. Microsoft have much to learn in this market.

In search of answers it suddenly struck me that it is who is not here that is more significant than who is. After all, there are only so many hosted centres, infrastructures, security identifiers and mail traffic optimisers that you can buy. Where are the Distributors? No one here. Not one. Where is NetSuite,, Taleo, and more? Where is VMware or EMC, Oracle (OK, they have a cubbyhole meeting room if you look hard)? Where is the largest of them all - Google? This, clearly, is not an end user solutions event.

So a quick chat with a friendly MS Consultant and you get honesty if total confusion at the end of it. Office 365 does not communicate with MS Dynamics hosted version. Oops, that wasn't clear before. MS is looking at a PBX system in partnership with BT offering the Lync service which can route calls. But where does this leave the recent acquisition of Skype which has got a strong following in consumer but is creeping into the corporate market place? Can't Skype build in a virtual PBX facility on top of its other features? Where is RingCentral or BT at this show? On the wandering phone front for SMEs, Vodafone offer a virtual PBX based on mobility, but wouldn't it be better if this is fitted into real office applications too? Where was RIM?

It strikes me that some of the big players either don't think The Cloud is a serious proposition or that they they don't have a solution that they can articulate? It seems the buzz of this show is backbone facilities which if you are a reseller will scare the hell out of you in terms of investment and management. Maybe the REAL Cloud application providers have moved on as Marc Benioff suggests. Maybe The Cloud is really passé after all.

There was an absence of Social Media sites like LinkedIn or Facebook. The Cloud embraces it all and there seemed to be key elements missing at this Forum.

So where does this leave the market and the channel? As I have said before there is room for a player to come from left field. It's not about simple aggregation - it's about providing best in class end to end solutions that work, on one bill. Microsoft is putting just a toe in the water, the story is rubbish for SMEs and the resellers have no idea how to articulate the proposition. If anything, they seem to augment the status quo. There is no leadership by Distributors and each vendor is waiting for the other to deliver some kind of strength of proposition. It's a waiting game with some posturing. Little leadership.

To be frank, I thought Microsoft's strategy was based on the status quo with amortised pricing. Where was the real value proposition? Where was the enthusiasm? Where was the research and the competitive positioning? Where was the end to end strategy for solution provision to SMEs?
Oh for and NetSuite at this show to illustrate how to deliver Cloud solutions in a world class form. Be off with you, purveyors of Private Clouds, hosting facilities and analytical tools. Users want solutions. Think of The Cloud as the telecom cloud - no one worries how calls get to phones they just want applications, robustness, security and sensible billing and costing with scalability. Come on someone, just do it. The time is right.

A Funny Turn

"Not in my lifetime," said a very tall man from a large Building Society who wished to remain anonymous but whose branches are nation wide. He was answering my question: was he planning to use The Cloud to host any of his core business applications? However, his company is already using The Cloud in varieties of ways, not least in many of the third party facilities they may have such as Clearing Systems, internet banking portals, feeds to IFAs and their networks etc. They might even look at communications, in terms of video conferencing or PBX. He confessed they may look at the concept of Private Cloud and the idea of getting some back end scalability. But when I indicated that all these networking, infrastructure and optimising companies were looking for him to part with vast sums of cash, he laughed. "Not in my lifetime," he said. That was bad news for some - he was younger than me for sure.

It augments the view that much of this forum is missing the point. Already The Cloud is becoming synonymous with parting with vast sums of cash, incredible complexity, management and data issues, security, archiving issues and much more. It must be scaring the heck out of companies. Particularly SMEs. Big boys tackle such issues daily and throw vast sums at it, this is just a different question in a different space. To some extent I was failing to see the compelling advantage to a large company in utilising The Cloud such was the complexity of offerings and issues to consider and prices. It was as if the vendors were vying to present a combined business case against The Cloud.

But SMEs are being glossed over, yet this has to be the easiest of sells. Scalability without critical mass is crucial for SMEs with smoothed costs - Cloud based solutions present the perfect solution. Yet whenever I mention I am a 10 man company (which is a gross exaggeration) their eyes gloss over an they can't wait to get shot of me. That's because their selling model doesn't account for SMEs. The same for Distributors and the same for vendors. Therein lies the rub. Cue Apple, Google and Amazon - fill your boots, chaps. Volume, monthly, high margin transactions? We'll have some of that.

The gap in the market is for serving SMEs with gold plated solutions with one bill, one support line - everything working, robust and secure. Who cares what back ends all that in all honesty. That's why we call it The Cloud.

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