Selling to the datacentre

Keeping the datacentre supplied with hardware isn't what it used to be. Margins have been under pressure since virtualisation became the de-facto way of deploying applications but there's now an even larger problem for the channel: the number of datacentres is shrinking rapidly. "We're seeing more and more customers leveraging Azure and Amazon overseas than locally because of cost constraints," says Louis Kardim, commercial director at Turrito Networks.

Jonathan Kropf, CEO of Tarsus Cloud on Demand, says now that the rand-dollar exchange rate is tanking, those overseas cost benefits aren't there any more. "Customers are looking seriously at a datacentre in South Africa and saying that it's going to cost less. There used to be a lot of single-purpose servers in the mid-market and they didn't necessarily virtualise. Now the mid-market is going straight to the cloud. The big cloud providers have much more efficiency than anyone can do for themselves. The workloads aren't dropping but they are moving."

Ian Jansen van Rensburg, senior systems engineering manager at VMware South Africa says there was a local slowdown in datacentre purchasing. "In 2015 a lot of companies took stock, particularly financial companies, and have been asking where they want to be; where they want to take their infrastructure.’ Do they put half on a public cloud and half on a private cloud?’ I think it's no longer ‘if’ but ‘when’. They just need to get over the next hurdle of deciding whether to build a hybrid model or mainly public model."

Gary de Menezes, country manager for NetApp says that the dominant factor at the moment, and particularly for the channel, is that customers are unsure about their traditional 25-year old storage model. "They know it's not going to scale to their requirements over the next three years. We've become very good at managing structured data but the way we've done unstructured data before is not good enough now. We're throwing hard drives at the problem but data storage will have to make way for data management. The solution needs to be media agnostic. Flash is not the be-all or end all – it's just part of it."

Sunny Desai, professional services manager at Aptronics, agrees that virtualisation and storage will drive uptake. "There was a huge demand for virtualisation and consolidation to get efficiency but what we've found is that a lot of customers don't have the maturity to move workloads into the cloud. Customers are looking for more efficiency in the datacentre: how do they manage data and workloads better?"

Certainly, more companies are pushing their hardware says Sven Blom, sales manager at Teraco. "We change zettabytes into megawatts. That's what you do when you put in cloud infrastructure. And we're seeing our power load per cabinet increasing all the time, so much so that it's a 20% increase year-on-year."

Changing trends

Along with more sweating of datacentre assets, there's been a consolidation of the number of datacentres says Desai. "A lot of customers are looking to move their datacentres into a hosted environment," he says. "They don't want to own complex infrastructure any more, especially the larger datacentres."

Teraco's Blom says this is part of a wider international trend. "What you're finding in the US and Europe, when companies are buying companies with datacentres, they're asking whether the datacentre is an asset or not. It may be that the datacentre will be worthless in a few years’ time." He says this is also reflected in the local market. "We're finding service providers moving away from running their own datacentres.

Within the past year, five service provider datacentres have shut down and moved to Teraco. And there's a big shift in the enterprise space as well. The enterprise is quite risk averse because it has an operation to run – it isn't going to just flip something over into the cloud. So a migration away from the capex of the datacentre makes sense because you have to virtualise. So the first thing they do is get rid of the capex and move to a specialised datacentre."

Jardim says load shedding has also contributed. "I think load shedding has affected the datacentre market in a big way. Companies don't want to deal with generators and backup power so they outsource it because it isn't a core component of their business."

And there's the more general trend of consuming IT as a service, notes Kropf. "Cost is not the first reason potential customers come to us. It's more from a competitive perspective: how to wrap something into a service and be more agile. The whole way IT is being consumed these days is changing. For example very few people today realise that an iPhone costs R20 500 because it's consumed on a monthly contract basis."

Where the channel can profit

With fewer datacentres and less equipment, where are the opportunities? NetApp's De Menezes says that data privacy compliance is one. "Agility is definitely driving cloud adoption. Business demands agility and IT can't give it. In the local market, there's definitely a consolidation of datacentres. But this country sits with a unique problem in that PoPI compliance is a heavy requirement. If a company here takes its data and gives it to a provider in Europe, if it's not PoPI-compliant on this side, then that provider can't give it back to you. So how do we balance becoming compliant with cloud adoption? There's an opportunity for local providers to provide that service."

Blom says it's how to distill complexity. "The opportunity for the channel is to take complexity and make it work. Systems integrators and developers of complicated solutions will be the ones that win the race."

Desai agrees. "Complexity is going to drive the new way of IT. The world is changing to be software defined. The biggest issue we have is how to skill up engineers to cope with it. "

De Menezes agrees that the biggest deficiency is skills. "Instead of caring about what your network is doing or where your operating systems are, you need to care about what your data is doing. And that's a different set of skills."

VMware's Jansen van Rensburg says the skills in the channel of the future will have to include storage, security, network and compute combined instead of just focused on one of them. Teraco's Blom says he can already see two different approaches playing out. "The channel's challenge is to decide whether to go with the old way, that is to do everything and own everything, or to do more partnerships. We see small startups in our datacentre that have no legacy, they connect with their partners easily and they get to market with good products really quickly," says Blom. That means the channel could position itself to provide the agility and flexibility that startups with no legacy enjoy. "The cloud providers are going to dictate the future," says Desai. "That's guaranteed. What's happening now is that customers don't want to sit with this pain any more so they're coming to us and asking us to take it away.

Products such as VMware, Puppet and Chef and driving things behind the scenes, but there aren't skills at customers to take care of them.” And there's new opportunity from more mobility.

Says Van Rensburg: "We've seen a big uptake in business mobility. We all have smart devices and need to access data and applications from them. Those devices are moving into cars, onto TVs and many other platforms. The technology in the backend needs to keep up with what's going in the mobile market."

NetApp's De Menezes points out that Bosch has made a public statement that by the end of 2017, every single device it manufactures will be IP-enabled. "If you think about what it manufactures, there will be an explosion of data from areas we haven't even considered yet. The channel partners today are sitting at a crossroads: how do they make money in the future? There are traditional vendors, non-traditional vendors and cloud providers. So partners will have to look at how they have to own customer data."