SDI – The implications for the Channel

“Change is inevitable. Change is constant.” Benjamin Disraeli

“Change is inevitable. Except from a vending machine.” Anon

Change is unavoidable and yet, despite our best efforts, predicting the future seems impossible. If we could, then, as Del Boy puts it, “this time next year, Rodders, we’ll be millionaires.”

In business, getting your predictions right can be the difference between thriving and barely surviving. Taking big risks by investing in new technologies or paradigms has the potential for great rewards but also disaster. It’s why most of the market likes to follow the trends – “what everyone else is doing” seems like the safer option.

Having worked with the Channel for many years, I have seen this play out in the strategies adopted by IT resellers. Invest too early and you risk jumping on the wrong bandwagon; just as you build your skills and resources in one area, customers start ploughing budget into something completely different. Better to wait and see which way the market moves before making those decisions.

For many years, core business for the Channel has been IT infrastructure. The GSIs focus on the applications, the Channel sells the “plumbing” and associated services. Despite what we said about change, this has been remarkably consistent for a number of years: initially mainframe and Big Iron, superseded by client/server and then with added virtualisation. Today, the “bread and butter” revenue stream for the Channel is still Wintel architecture plus VMware.

Many are now predicting a paradigm shift in this IT infrastructure market. Public Cloud is having a major impact on those revenue streams as customers choose to give someone else the headache of providing the compute capacity. The Channel are building migration and management services around this but replacing that core infrastructure revenue will not be easy.

In addition, a further change is occurring and one that presents even more of a challenge. As organisations seek to gain competitive advantage through software (clever applications that automate business processes or make life easier for customers), development is taking a more critical role in the business strategy. And the software developers are not using traditional methodologies, requiring virtual machines sat on Wintel servers. Their Agile approach requires a more flexible underpinning and this is being provided by Open Source solutions.

Just look at the landscape: Linux is becoming the default OS for application development as it is highly flexible and instantly available; containers are preferred to VMs, using projects like Docker and Kubernetes; platforms such as Cloud Foundry are becoming the standard for building apps. And this is just the tip of the iceberg; there are countless other Open Source projects being used by the development community.

These choices will have an impact on that traditional IT Infrastructure spend and yet it won’t be the usual decision makers involved. In other words, the people to whom the Channel have been selling for twenty plus years will not be in the driving seat any more as the developers dictate what infrastructure they need. The CFO will still need to do the numbers: do we outsource this to AWS or Azure or do we build in-house? Here a clear trend is emerging: we are seeing many organisations pull back from putting it all in the Public Cloud as, at scale, the cost metrics don’t quite work.  If I need a car for a couple of weeks, I’ll rent one; if I need it for five years, I’ll buy it.

The problem for the Channel at this point is to monetise this trend. If developers are simply downloading open source code, where is the revenue stream? Rather than jump wholesale into this new and commercially challenging world, the Channel is continuing to focus on providing the best possible pricing and service for traditional infrastructure solutions. This is understandable but the savvy Channel players are already gearing themselves up for the paradigm shift. If you’re not talking to the new players in the Software Defined Infrastructure world, whether it be the software developers themselves or the Open Source companies they are working with, then your competition are probably ahead of you.

To find out more about the impact that Open Source is having on your business, please contact jeff.kirkpatrick@suse.com. Alternatively, attend one of the SUSE Expert Days: https://www.suse.com/events/

Jeff is the UK Alliances Manager for SUSE UK.