Should you build your own cloud computing system or simply leverage a third party cloud service? The answer to that question depends on which managed service provider you ask.
Terremark, a managed service provider in Miami, built its own cloud in its own datacenters, notes Fredric Paul at bMighty.com. But I have to wonder: How many small MSPs could afford to build a similar data center and cloud service? And why not leverage such existing cloud services as:
- Amazon Simple Storage Service
- Amazon Elastic Compute Cloud
- Mosso, the cloud computing division of Rackspace
- Microsoft Azure Services
- JumpBox, and instant infrastructure service that allows MSPs and SaaS providers to launch open source applications in the Amazon.com cloud
My goal isn’t to “endorse” existing cloud services. Rather, to raise the point that the market will soon saturate with third-party, pre-built cloud systems that MSPs can evaluate and leverage for a monthly fee.
With all the third-party cloud services coming online, does it really pay for MSPs to build their own?
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Posted In: Software as a Service and Hardware as a Service
Tags: Amazon EC2 | Amazon Elastic Compute Cloud | Amazon S3 | Amazon Simple Storage Service | bMighty | JumpBox | Managed Service Provider | Miami | Microsoft Azure | Mosso | Racksapce | Terremark
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Joe,
We pondered this very question for some time and ultimately choose to build our own cloud.
The solutions you mentioned are very cost effective and require little to no upfront expense. I would recommend developing an offering with these providers if your looking to build a standardized offering.
We wanted to go the other direction, to have a cloud based platform within our control and completely customizable to an individual customers need. We feel this will provide us with an edge in the years to come as more of these cloud based offerings become commoditized.
We’d love to give you a demo to show you what the TechAssist ITAAS offering can do!
I hope your well!
Nick
Nick: I hope all is well. Thanks for your perspective. Yes, I owe you a call for a demo. I’ll be in touch this week.
To build or not to build…..good question. I’m in the camp of not trying to compete with the big boys for basic services that they can manage must better, and cheaper, than I can. We’ll wrap them up as line items in our IT Managed Service offering (TecCare) and provide some front line support.
This is an excellent question.
For a 2 yr old company (at least) with good credit, leasing the HW for the DC through my rotation program (which I’ve discussed on here before). I just did one of all HW (no software or services or anything) where they actually paid about 85% of the value of the computers and then got to return them so it traded at a discount to buying outright. Alot of my MSPs and IT Directors are really liking that feature.
Stu
Stu@southernlendingsolutions.com
My first thoughts on cloud were similar to what I know you’ve heard me say to those wanting to enter the MSP space… Build your offering first, find someone to provide as much of the backend as possible, then sell the hell out of it. Once you’ve reached some “critical mass”, you should then start looking into which parts you could bring in-house and drive out costs.
The thing about cloud, however, is that latency is the name of the game. The end-user experience needs to be the same or better than their local computing power and you can’t guarantee that when you’re using one of these outsourced providers. I think you need control over the engineering of the datacenter, the architecture, the storage arrays, the connectivity, etc. Otherwise you’ll end up being just another mediocre provider with a mediocre offering. This game is not for the faint of heart.
Cheers
– R
By the way, sorry… I forgot to apply for your MSP 100 thingy.
Joe -
One of our newest supporters in Portland wrote the following analogy, which I thought was really on point – not just for 6fusion, but for any centralized computing model (with massive scalability).
“I have an idea for an alternate way of providing electricity to power our buildings and all the electrical devices in them. Rather than connect to the electric utility, we will build our own little power plant. Since we know about how much power we need, we can “right size” the power plant. We will find some available space for the generator and the fuel (probably diesel) and pour a concrete pad and build a soundproof building to house the equipment. We will then buy the generator, contract with a fuel supplier to keep the tasks full, hire a full or part time engineer to maintain the equipment, make arrangements for a secondary source if the primary one fails and keep spare parts on hand for the inevitable. Once all this is accomplished, we will have our very own power supply for our building. Well, on second thought, maybe building our own power plant isn’t such a good idea.”
John: Actually, I think the original credit for that analogy stretches back to Nicholas Carr, author of the book The Big Switch. In the book, Carr describes how early industrial businesses had their own power plants within their buildings. But over time, those industrial businesses focused on their own core competencies and began to leverage the growing electric grids.
The book is a great read for anyone who wants to learn more about SaaS and IT trends.
True… Nick’s work has been a big influence on us, starting with the May 03 publication in HBR that started the whole thing for him. A must read for anyone looking at the idea of buying vs levarging shared infrastructure.
J
I agree. To build your own, independent infrastrcuture when there is so much shared capability available, is hard to justify. This industry is following the same pattern as electric power generation in the early 1900′s. People realized building small, independent power stations made no sense. As a result the power grid and shared infrastructure was born. This market will be no different.
We have had collocated services for over 5 years at Terremark (very nice facility by the way) providing collocated storage for our core customers (about 80 servers at one point). At the end of 2007 in an effort to reduce cost we started working with VMware and decided to purchase and install our own ESX infrastructure. After 1 year we have virtualized all 50 servers that were once collocated in 4 racks down to about 16u hosted on 5 Dual HP Quadcore servers and a SAN with about 20 Terrabytes of space. We have also sold about 60 new servers for a total of 110 servers (we sell servers on our cloud to replace physical servers on site of any function – if it can live accross a WAN – we replace the customer equipment with our cloud and create IPSEC VPN conections to a private VLAN residing on our end). Doing this enabled us to offer Microsoft SaaS which has been an amazing add-in to our offering because SaaS is not only about Exchange. Practically any microsoft product can be subscribed to. This model has been very successful for us. I wouldnt trade the amount of flexibility we have gained over our implementations for anything in the world. We also have gained the ability to offer customers Implemention at no cost just to start receiving the monthly fees.
We have also started a cookie cutter offering we call velum based on a Windows 2008 server, Office and Remote App, all licensed to the customer with full remote support for an extremely low monthly fee while still making a killing on services.
Check out Velum Demo Video here:
http://www.virtuworks.com/Services/Velum/index.aspx
Any one that wants to partner with us to use our cloud to offer services to there customers we are more than happy to help out.
Omar Armenteros
Virtuworks, Inc.