We all float down here
IT Millionaires Club
By James Warren, Auckland | Thursday, August 30 2012
For those of you who have read (or, let’s be honest, seen the movie) It by Stephen King, the phrase “we all float down here” is one that can pull deep in the buried recesses of your childhood and make you shiver with a special kind of dread. For those of you that are resellers who have carved out your business profitability or your personal sales goals based on the thirty year model of hardware, licences and project/on-going support services, the idea of your customers moving to the cloud might fill you with that same feeling. The truth is, it’s not the same kind of business when it all floats up there, but we have time right? It’s not like whole industries can evolve that quickly, that would be like the music industry going digital almost overnight or GPS units being superseded by a simple cell phone.
While there are many examples to pick from, for most of my career I have worked in organisations built on the back of Microsoft licensing. The Microsoft ecosystem has been described as one of the few elephants in our industry that is kept alive by the ticks that live off them. Businesses that belong to Microsoft's partner network use its internal licensing to support their own technology infrastructure and call on Microsoft technical support team to deliver to powerful prospects.
If you have held organisational decision-making sessions to ask the question 'what do we do when the industry changes?' I just wanted to let you know: it just happened.
As an industry we are currently in an analogue of the consolidation of the telecommunications industry. We will look back and view on-premise servers and the engineers supporting them as a conceptual equals to the switch-board operators of the past.
In an effort to not only survive this inevitable revolution but also continue to lead in it, over the last few weeks Microsoft has been outlining its coming product sets including Windows Server, Office and of course Windows 8. While in the Microsoft product range Small Business Server may have hardly had an impact on its bottom line, based on my experience the distribution in New Zealand may have been top-heavy. As of the next server release cycle (apart from down grade licensing) Small Business Server is also no longer available, replaced by two options Windows Server Foundations (limited to 15 users) and Essentials (limited to 25 users) that hand of the more intense server roles like Exchange and SharePoint to the cloud.
The introduction of these licence models shifts the profitability matrix of any organisation with a reasonable number of clients using Small Business Server today. It will be very difficult to make additional margins on licensing if your clients can go online and see the pricing models themselves. You are no longer protected by a distributor holding onto this information and looking out for their own margins that can be adjusted depending on your relationship. We are moving to an environment where end users can, and in cases I am aware of, have already invested in the existing products delivered this way. These days Office 365 (which will soon include Office 2013), Dynamics CRM and Microsoft Intune, can be purchased by end users without any input from their trusted reseller.
The difference between a 1986 Stephen King horror story and the cloud is that there are no bad guys in this story. The goal that I have always worked towards - improving the delivery, speed and efficiency of data - is finally taking an overdue step forward, and we as resellers always have to find the value add for our clients. It’s time to make sure your clients have a great internet connection.