A Whitepaper for IT Solution Providers, Developers & Resellers

How to Make Rain (& Profits) from Growth in the Cloud

An Independent analysis published on behalf of Verio.

White Paper

How to Make Rain (& Profits) from Growth in the Cloud

Executive Overview
Few innovations have captured the attention of the technology industry or the imagination of the broader business community faster than Cloud Computing. Despite its confusing nature, Cloud Computing has quickly evolved from a murky concept to the platform of choice for many businesses in the span of a couple of years. THINKstrategies watched the forces which have shaped the evolution of Cloud Computing for the past decade and is convinced that this is not just another overhyped technology fad doomed to failure. Instead, early adopters of this new generation of webbased, on-demand services have reaped rapid and measurable benefits from todays Cloud services. These services have enabled them to quickly migrate to more powerful computing platforms and host more useful business applications without the upfront expense or deployment challenges of on-premise systems and software. The reduced costs and quicker deployment cycles have translated into faster time-to-value and greater profitability. As a result, organizations of all sizes are seeking more Cloud-based services that will help them save money and gain flexibility while meeting their business needs. In fact, Gartner predicts worldwide Software-as-a-Service (SaaS) revenue will reach $14.5 billion by the end of 2012, a 17.9 percent increase from 2011. Gartner expects SaaS-based 1 delivery will reach $22.1 billion in 2015. This means exploding business opportunities for IT solution providers that want to capitalize on this unprecedented technology wave. In this paper we will discuss how smart independent software developers (ISVs), managed service providers (MSPs) and value-added resellers (VARs) can take advantage of this opportunity to make money reselling Cloud infrastructure and services. We will also show how Cloud solutions can help you save time and money in reduced support and migration. Most importantly, well show you ways to gain a competitive advantage in the software and technology marketplace by partnering with a leading Cloud provider, such as Verio. As we will discuss, the key is partnering with a proven provider of Cloud solutions that has a well-structured reseller program coupled with the right support systems to ensure the success of the IT solution provider.

Ways to Make Cloud Work for Your Business

Putting aside all the industry jargon, solution providers are attracted to Cloud services because of the faster time to value, ease of use, and greater economies of scale. They are also seeking simple, straightforward services to address their day-to-day operational needs. While there are a variety of applications that are well suited for Cloud hosting, here are examples of the most common:
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Files for storage purposes Web apps like blogs, CMS, or Web 2.0 sites CRM and collaboration applications Messaging and collaboration solutions Ecommerce solutions (E-tail, shopping carts) Rich media solutions Custom or semi-custom applications Reliable and scalable shared or VPS hosting for resale

Gartner, Inc. Press Release dated March 27, 2012.

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White Paper

How to Make Rain (& Profits) from Growth in the Cloud

Identifying the Right Cloud Computing for You

The market typically defines Cloud as IT service delivery from a remote location. This includes a multi-tenant delivery model that can be accessed over the Internet or an intranet. In the case of Cloud, virtual machines are provisioned on a collection of hardware. This delivers faster speed and, more efficient and greater economies of scale. No matter how you define it, Cloud services are a big market opportunity. According to a recent report published by market research firm In-Stat, businesses in the United States will spend more than $13 billion on cloud computing and managed hosting services by 2014, more than four times the $3 billion spent on 2 these services today. Cloud computing is one of those technology terms that means different things to different people. As an IT solution provider you may already have a grasp of what the Cloud is, but well start by identifying key terms. With these definitions you can start to conceptualize opportunities for your business in the Cloud. Then well discuss possible ways that you can leverage Cloud to provide solutions to your end-users.

Defining Cloud
The U.S. National Institute of Standards and Technology (NIST) published a working paper which compiles definitions and key components of Cloud Computing from a variety of sources. NIST defines Cloud Computing as: A model for enabling convenient, on-demand network access to a shared pool of configurable computing resources (e.g., networks, servers, storage, applications, and services) that can be rapidly provisioned and released with 3 minimal management effort or service provider interaction. Figure 1 provides a graphical depiction of the key characteristics, and service and deployment models for Cloud Computing identified by NIST. Figure 1 The NIST Cloud Computing Taxonomy

US Business Spending by Size of Business and Vertical, 20092014: Cloud Computing and Managed Hosting Services, In-Stat report. 3 U.S. National Institute of Standards and Technology (NIST) Cloud Computing Working Paper, 2010.
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How to Make Rain (& Profits) from Growth in the Cloud

Solution Models for Cloud-based Services

As the NIST taxonomy suggests, the Cloud market can be divided into three segments: Software-as-a-Service (SaaS): Web-based business applications are offered on a payas-you-go basis. These software applications can be provided directly by a Cloud provider, or solution providers themselves can develop software applications and market them to end-customers using this model. Solution providers get the flexibility to offer the same installation to multiple customers instead of paying for one server and software installation each time. Theres no need to build partitions and complex installations. Whether there are five or 500 customers, the software installation stays the same and more users can simply be added. End-users and customers skip paying the high cost for software licensing. Platform-as-a-Service (PaaS): These are online programming environments which provide software development languages and tools supported by a vendor. This type of environment is typically used by developers who want to create a software application to market to end-user customers. This is the perfect fit for solution providers who want to develop applications and require the tools and a familiar environmentto help them along the way. Examples include Amazon, Google App Engine, Force.com. Infrastructure-as-a-Service (IaaS): This delivers processing, storage, networks, and other fundamental computing resources offered on an on-demand basis. Infrastructure is typically a raw server that can be set up to meet a solution providers needs. Common uses include providing storage, hosting websites, applications and SaaS solutions for resale to end-user customers. IaaS can also be used as a development and testing environment, or the raw infrastructure and resources can be resold to support the needs of clients.

Eliminate Migration Hassles and Improve Customer Loyalty

The growing acceptance of Cloud alternatives to traditional on-premise software and systems creates exciting, new business opportunities for IT solution providers, developers, and VARs. The rapid rise in demand for Cloud-based solutions is attracting a proliferation of new providers to the market. This Cloud Rush provides more choices and is thereby resetting customer expectations in the marketplace. As price wars and competition become more prevalent, finding ways to retain customers and increase loyalty are more important than ever. By adding Cloud solutions, IT solution providers can expand into new markets with flexible solutions that can help offset the decline in conventional, on-premise hardware and software sales and support. More importantly, they can offer more cost-effective solutions and expand their product offering which provides greater stickiness for their customers. In fact, IDC expects revenue from Cloud services to grow 150% by 2013.
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IDC report, Worldwide IT Cloud Services Revenue.

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White Paper

How to Make Rain (& Profits) from Growth in the Cloud

What Kinds of Customers Are a Good Fit for Cloud Solutions?

THINKstrategies believes that the organizations with the following characteristics are good candidates for Cloud solutions: Limited internal IT or software development skills. Fluctuating or unpredictable business computing demands. Need increased resources for part of the year or on a cyclical basis. (Seasonal bursts in business) Expect to grow quickly in the near term. Use custom applications that require more resources.

Pricing Model Considerations

Offering Cloud-based solutions gives providers an opportunity to choose from several different billing scenarios. Pricing variables include what solutions are being offered, the types of customers targeted, and whether any additional services will be layered on to the actual cost of the Cloud infrastructure. The following are examples of how cloud fees could invoiced: Average Usage Pricing - Estimate your customers average usage and bill that amount each month. Include any overage charges from the previous month in the current months billing cycle. One Price Given Normal Usage Range - Set ceilings for minimum and maximum usage. Bill the customer for the maximum amount each month. Either keep the difference for yourself or true up/ refund unused resources the following month. Bill for Actual Usage - Use monthly bill for usage to back-bill the customer their exact usage amount at the end of each month at whatever rate you set. Hybrid Pricing Models - Take a deposit for the 1st month of usage based on the average between Min/max, and then start billing actual amounts.

Save Time and Money with Cloud Solutions

By selecting the right Cloud service provider as a strategic partner you can: Significantly reduce day-to-day operating costs. Skip the hassle of migrating, downgrading and upgrading from product to product as customer needs change. Accelerate time to market with new services and solutions. Ensure the scalability and reliability of their operations. Improve customer loyalty and meet growing demand. Capitalize on the growth potential of this expanding market. Replace aging hardware with limited capital investment.

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White Paper

How to Make Rain (& Profits) from Growth in the Cloud

Key Criteria for Evaluating and Selecting a Cloud Partner

The proliferation of Cloud service providers offers plenty of choices but also many potential pitfalls for IT solution providers, developers and VARs. Many of the Cloud providers may depend on hidden costs or fees to generate additional revenue from their partners. Therefore, THINKstrategies believes that it is essential for IT solution providers, developers and VARs to carefully consider which Cloud provider to partner with. Here are some of the most important criteria you should consider when evaluating a Cloud provider: Financial strength and proven track record of performance Has the Cloud provider been in business at least 10 years or longer? Are they financially stable, will they be around for the long-term? How does the Cloud provider protect your interests? Do they protect your reputation by offering reliable, stable infrastructure? Do they help remove risks and exorbitant or unexpected costs associated with Cloud? Products and service offerings Does the company provide the range of services you need to expand your business model and support your application and architecture requirements? Technical support Does the company provide direct access to technical support and sales engineers that can help you build the architecture environment you will need? Will you have access to certified and highly trained IT experts to answer your questions 24x7x365? Service Level Agreements (SLAs) What are the specific service level agreements you will receive, how will service levels be measured and how will you be compensated if there is a breach? Technology Does the provider offer flexible scaling, high performance and reliability? Do they own and operate their own datacenters? Do they do proactive monitoring of their servers to avoid problems before they occur, does the company monitor and guarantee network performance? Global presence Does the company have global datacenters and sales offices? In what countries? Does the company own and operate its own global IP network?

Most importantly, is the Cloud provider partner-centric with programs and pricing specifically aimed at helping ISVs, MSPs and VARs successfully capitalize on todays extraordinary market opportunities.

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White Paper

How to Make Rain (& Profits) from Growth in the Cloud

This independent analysis was published on behalf of Verio.

About Verio
Verio is a recognized leader in the Cloud hosting services marketplace. Its Cloud offering delivers an easy way to meet fluctuating demand by turning virtual machines up or down. Free inbound and outbound bandwidth and free advanced networking tools like load balancer and firewall are also included. For more information on this partner exclusive offering, visit: www.viaverio.com/cloud-hosting/. Verio is the leading provider in delivering online business solutions to SMBs worldwide. Distributed through its global network of Service Provider and viaVerio channel partners, Verio's solutions provide Cloud, web hosting, application hosting and SaaS that enables SMBs to drive online success. Verio is a subsidiary of NTT Communications and supports its operations with their highly reliable and scalable Global Tier-1 IP Network. Through this network, Verio provides partners and customers with access to business solutions in more than 120 datacenters worldwide. For more information, join us on Twitter @Verio, Facebook Verio or www.viaverio.com.
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About THINKstrategies, Inc.

THINKstrategies is the only strategic consulting services company formed specifically to help our clients better understand and capitalize on the business implications of the transformation of the technology industry from a product-centric to a services-driven business model. The companys mission is to help our clients reTHINK their corporate strategies, and refocus their limited resources to achieve their business objectives. THINKstrategies has also founded the Cloud Computing Showplace (www.cloudshowplace.com), an easyto-use, online directory and resource center of SaaS, PaaS and IaaS solutions worldwide, organized into over 90 Application, Industry, Service and Enabling Technology categories. The Showplace also includes information and insights regarding industry best practices. For more information regarding our unique services, visit www.thinkstrategies.com, or contact us at info@thinkstrategies.com.

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