Although delivery of IT infrastructure via the cloud has the potential to provide substantial cost savings, several popular misconceptions are preventing wider adoption of cloud-based IT outsourcing and hybrid clouds, according to a recent webinar from Everest Group.
For MSPs and cloud integrators, cloud-based IT outsourcing can offer predictable costs but it also introduces a potentially disruptive business model. But especially in the case of MSPs serving SMBs, who are more prone to shy away from transitional projects that appear costly, time-consuming or difficult, getting past misplaced client apprehension about the cloud poses a challenge.
Using information from the Everest Group webinar, here’s a look at the opportunities and misperceptions facing hybrid cloud services.
Hybrid Cloud Services Can Be 1/3 Cheaper
By using a hybrid model of cloud-based IT outsourcing, customers can save 30% or more of the cost associated with traditional infrastructure delivery Everest claimed. Hybrid cloud computing maximizes savings by letting users maintain their “base” computing hours in a private, dedicated cloud, shifting base workloads to low-usage “valleys” whenever possible and then shifting peak workloads to on-demand public clouds with a pay-as-you-go model. This eliminates spend on unused peak capacity.
Combating Three Cloud Misconceptions
Although its popularity is growing, especially among larger enterprises, the cloud has not yet become the standard platform for IT outsourcing. Everest Group identifies three key perceived constraints that are unnecessarily preventing wider adoption of cloud-based IT outsourcing:
incentive alignment with existing IT outsourcing vendor(s); and market immaturity.
In terms of perceived contractual constraints, many IT outsourcing customers assume their contracts limit services that can be outsourced to other providers. In addition, IT outsourcing customers often believe their workloads don’t meet the revenue minimums of cloud-based providers. These concerns may be especially prevalent among SMBs, who do not usually negotiate contracts from a position of strength and have smaller workloads.
In reality, Everest Group says most IT outsourcing contracts do not have exclusivity clauses and that the demand of most users will exceed the revenue floor of a cloud-based service contract.
Another perceived constraint to wider adoption of cloud-based IT outsourcing is an assumption that existing vendors can easily and quickly migrate their services to the cloud. However, Everest Group finds that many traditional IT service vendors face a 30% to 40% revenue hit on client cloud migration, and that there are significant gaps in cloud delivery platforms and skillsets among these vendors.
For SMBs, there is even less likelihood an existing vendor will want to migrate them to the cloud, considering the smaller revenue they represent. This gives SMBs and even greater incentive to turn their cloud-based IT outsourcing over to an MSP specializing in the SMB arena.
Furthermore, despite a widespread view of the cloud services market as being immature, Everest Group analysis shows cloud solutions are currently being used across a variety of enterprise use cases, including core areas such as transactional applications.
By educating their SMB clients on the substantial cost savings a cloud transition can provide and revealing the fallacies behind common assumptions about cloud-based IT services, MSPs can earn a profit while helping SMBs save money. What better way to do business?