The VAR vs. the Cloud; Challenges for the Enterprise
As more companies, government agencies and educational institutions move to the cloud, OEM equipment sales through VARs to these organizations are bound to be affected.
What's Happening in the IT Market?
As more companies, government agencies and educational institutions move to the cloud, OEM equipment sales through VARs to these organizations are bound to be affected. The OEMs may sell equipment to the cloud providers, but the VARs and resellers to enterprises will probably lose business to the cloud.
The enterprise will be challenged. Should the IT and communications functions stay in-house or reside in the cloud? Is a balanced, hybrid solution best? The CIO's job will change and the IT staff may be significantly reduced if cloud services are selected.
The VARs may not all survive. VARs will need to adjust their business models. In any case, the cloud will influence the future of VARs and their customers, the enterprise.
The Many Forms of Cloud Services
Cloud computing is not a technology. It is a form of outsourcing for part or all of the equipment and software that is used by an enterprise. In a public-cloud model, the servers, applications and operational staff are all located at a remote site and managed by a third party organization. It is common that the cloud provider uses virtualization in their server farm supporting multiple enterprises. The user accesses the cloud and its services via the Internet or other IP network. The services are offered in a variety of forms and are usually pay-as-you-go.
* IaaS--Infrastructure as a Service providers offer one or more servers operating on a network which includes data storage and systems software for use by the customer. The IaaS is designed to replace an enterprise datacenter. The Amazon Elastic Compute Cloud (EC2) and Verizon Business are only two of many examples.
* PaaS--Platform as a Service adds the maintenance of operating systems, server hardware, load balancing and varying compute capacity to the IaaS model. The customer runs their existing applications and can develop new applications with this service model. Microsoft's Azure and Salesforce.com are examples of PaaS.
* SaaS--Software as a Service provides all the functionality of user applications accessible through a Web browser. This eliminates the common concerns of IT such as application development, service backup, storage and archiving of data. Google's Gmail and apps is an example.
* CaaS--A special case of SaaS is called Communications as a Service, Unified Communications as a Service, Hosted PBX or Virtual PBX. CaaS/UCaaS places hard and/or softphones at the customer's location accessing the CaaS/UCaaS through the Internet. It also provides local and long distance service and connection to the PSTN. There are about 210 CaaS/UCaaS providers offering services in North America.
The Traditional Roles of the VAR and Reseller
An IT Value-Added Reseller (VAR) is a business that adds features and/or services to hardware and then resells it to enterprises as an integrated solution that is delivered turnkey to the enterprise. An IT VAR usually bundles software with the supplied hardware. The added value commonly includes professional services such as implementing the solution, integrating the solution with the enterprises' existing environment, customization, consulting, training and supporting managed services.
A reseller is a business that purchases products with the intention of reselling them rather than using them. Selling devices such as telephones, PCs, test equipment, other forms of electronics is common. The reseller does not add any value to the product.
A different type of reseller buys used and surplus IT equipment, refurbishes the equipment and then sells and may maintain the equipment. This business does not add any value to the products sold.