Report: Channel Cloud Fire Cools More Than Expected

Channel organisations in the UK and Ireland are taking an increasingly measured approach to the cloud, with a focus on specific application areas rather than on the wholesale movement of business activity to a hosted or cloud environment, according to upcoming research from the Cloud Industry Forum (CIF).

CIF chairman Andy Burton said interim figures seem to show a more tempered outlook for the cloud but he warned that channel organisations may be taking an overly cautious approach. All will be revealed in greater detail when the study is published in full on 29 January during Cloud Expo Europe at London’s Olympia exhibition centre.

“This research is quite revealing about the levels of confidence and attitudes about the opportunity for cloud services as a viable business for the IT channel in the UK and Ireland,” he said. “On the one hand it shows healthy progression from hype and over-optimism that follows any new market trend toward a more healthy and tempered outlook. But arguably it shows a greater sense of caution than I would have expected at this stage.”

Shift toward SaaS

The study, based on responses from 150 senior decision makers across MSPs, technical VARs, and systems integrators, found that a steady proportion of organisations are offering cloud-based services – 63 percent in 2013, compared to 61 percent in 2010 – suggesting a moderate growth in confidence in cloud offerings.

At the same time, channel organisations’ emphasis appeared to shift toward software-as-a-service (SaaS) and away from infrastructure-as-a-service (IaaS), with those offering SaaS moved ahead to 81 percent from 79 percent, while those selling IaaS decreased from 51 percent to 29 percent.

Companies cited obstacles such as data security and privacy, poor internet connectivity at end-user sites, contractual expectations of customers, and data portability concerns as barriers to selling cloud services as part of their portfolios.

Cloud challenges

Within their own businesses, challenges faced by channel organisations around delivering cloud-based services included costs incurred to meet service-level agreements, heightened customer expectations around the cloud, the need for cloud-specific staff sales skills, and cultural change issues.

At the same time, 83 percent of respondents said they see revenues from cloud services growing over the next three years, while they on-premises revenues will remain static.

“Without doubt, the cloud is seen as essential and strategic by the majority of the channel,” Burton stated.

He said that while some businesses see the cloud as providing the majority of their income by 2015, most see it as a small but growing part of their income, with 68 percent saying they see 20 percent of their income from cloud services by 2015.