When virtualisation first popped up on the horizon it was a foreign vessel, an unknown quantity for many, expensive and confined to the upper echelons of large enterprises. Now it has become a common sight on our shores and the once ‘foreign’ technology has proved itself. It is no longer a high-end, specialist technology but a business ‘must’ for many with complex IT environments, and you now have the opportunity to sell its benefits to the small business market
Microsoft’s Tovia Va’aelua, Windows Server Marketing Manager, explains that you should not look at virtualisation as a technology, but rather as a capability and a function. It is about creating what he calls a “dynamic infrastructure”; a system that is self-aware and self-healing, thanks to the way virtual machines can ‘fl oat’ over the host layer and allocate resources as they are needed.
Virtualisation can provide consolidation and cost efficiencies while preparing a business for growth. It can even extend the life of your hardware. IBM’s Jaron Burbidge, Territory Manager, Blade Centre and System X, says by using a virtual environment “businesses can look to reduce capital expenditure by up to 50%, reduce operational expenditure by up to 60% and reduce power and cooling costs by up to 60%”.
The small business
Money, money, money
Until recently virtualisation has been inaccessible for small businesses of 20 employees or fewer, priced at “$3000 a pop” (Microsoft), but as virtualisation becomes increasingly commoditised, its price point has also dropped. Microsoft’s Va’aelua says: “I make no bones about the fact that there are some vendors out there that will have to revisit their pricing structure and the conversation they’ve been having with partners [...] The responsibility now is falling back on vendors to really sharpen our pencils on what sort of price we are putting on our products [for server virtualisation]”. And as vendors address these prices, with some virtualisation capabilities already being reely incorporated into server platforms or made available to download, the opportunity for selling into small businesses becomes a real money-spinner.
The small end of town
With these changes in mind, all those interviewed by The Channel agree that virtualisation is perfect for the small business landscape. Indeed Scott Morris, Director of Partner Sales for NetApp, says the Australia and New Zealand market has one of the highest rates of adoption of virtualisation, with industry analysts noting a more than 40% reduction in shipments in x86 products, “which is a high indicator that virtualisation is running high in business acceptance”.
These adoption rates and the complexity of many small businesses show clearly that virtualisation is not something confined to the large end of the market. Despite this, Va’aelua of Microsoft says “there are still some partners out there that, for whatever reason, aren’t jumping on to the virtualisation bandwagon”. But, he explains, virtualisation isn’t an industry and therefore it shouldn’t be something we shy away from. “It’s a capability that each of our partners should be aware of so they can actually provide it to their customers, because if they are not providing it, someone else will.”
Fred King, Director of the Partner Organisation for Australia and New Zealand for VMware, sees virtualisation as a major business opportunity for partners. “If you look at the average end user, they probably wouldn’t look at virtualising their own environment, so there really are the partner skills and IT skills required.”
But it’s free
Virtualisation capabilities may already be free on some servers or to download, but that does not mean you should write them off as non-revenue generating. As King has already pointed out, how many small businesses, for example, would know how to make the transition to a virtualised environment themselves? Unless, like you, they work in the IT sector, the answer is very few. And how many actually already have the virtualisation capabilities in their server just lying dormant, awaiting ignition? A fair proportion.
As Microsoft’s Va’aelua says, “The software shouldn’t always be the part the partners should be concentrating on; it’s their differentiator, it’s their people and their services.” The free software provided still requires your people’s services for implementation, and despite how IT-savvy your clients may be, there is always going to be some point when they need to ask for help – and with small businesses this is likely to be sooner rather than later.
Jeff Healey, BladeSystem Business Manager for HP South Pacifi c adds: “It comes down towhat you are trying to do with the software, and certain virtualisation software is free, but the ones that really derive greater levels of business benefit are generally the paid for versions that they [resellers] can make margin on.” He also warns that the cost of the software needs to be balanced against the cost of running it with the appropriate service level agreements and training in place and this, he says, is “where a lot of the opportunity” lies for resellers.
King of VMware agrees, saying that the real revenue generating prospect is in helping small businesses manage their environment better. Clients can use the free download to achieve a basic level of virtualisation, then resellers can sell extra product and services.
How to make money out of it
As Microsoft’s Va’aelua says, virtualisation is a capability, and there are great opportunities for you to ‘hang’ your services off it. For example, you can sell services to your customers to help them go from a physical to a virtual environment, including everything from installation to training to configuration, as well as the physical hardware, including services and storage.
Software and more
NetApp’s Morris reiterates that the software is not the only component required for a successful virtualisation strategy. As Microsoft’s Va’aelua has already mentioned, your people are what make you different from your competition – you hired them because you saw great potential in them and that is what you must remember. He says that although the price of virtualisation management software is falling, you can either reduce your margin on your people or on your software. He recommends you provide software at a third or half its previous price and maintain the margin on your differentiating factor – your services.
NetApp’s Morris says you should be in a position to consult, design, build and put into production the systems that small businesses want to use. These functions are not generally in the free download. Position yourself as the trusted IT advisor so you can take an IT-centric approach to make sure the environment is best aligned to take full advantage of virtualisation and consolidation.
Some of you may be able to provide ongoing services to assist in the day-today management and running of these environments; for example providing health checks, routine maintenance tasks, defining best practices and process mapping to ensure that the environment is always running at its best. Morris adds: “Tools and integration of security and management will be paramount in the SMB market.” Part of this management can include ensuring that you’ve got the service contracts in place and that your clients’ applications are supported in a virtualised configuration.
Backup and DR
HP’s Healey sees other opportunities to sellvirtualisation into a small business. “Instead of looking at virtualisation from a consolidation point of view, it may be an opportunity to look at their disaster recovery scenario, have a look at using virtualisation for test and development.” By optimising the use of your clients’ hardware, you can offer them extra capabilities at a fraction of the cost of the enterprise version.
Healey warns, however, that there is a “flip side” to virtualisation. “You are putting all your eggs into one basket,” he says, so make sure your clients have the appropriate service levels in place to mitigate that risk. This will also conveniently lead the conversation to discussions about backup and disaster recovery, which as King from VMware mentions, can be provided “for less than a couple of thousand dollars” using virtualisation as the vehicle.
For service-provider type resellers, King suggests there is an opportunity to use virtualisation in the data centre. “This whole thing about Software as a Service becomes key as well,” he says. He has noticed that, until now, the bigger resellers and systems integrators have struggled to find the business model to offer services to the small business market because of cost efficiencies. He thinks that this could be the answer: hosting virtual instances and charging for them on a monthly basis.
Making the sale
In these tight economic times, projects that promote consolidation and cost efficiency and that can make the cliché ‘do more with less’ come true, are at least carefully considered by clients. Nonetheless, you are still going to have to make a very good argument to make the sale.
Understand the business
HP’s Healey says: “I would recommend taking the approach of discussing what’s challenging in their business first and foremost and not taking the approach of leading towards selling some virtualisation – it’s certainly one of the things that will help them eventually, but it may not be their biggest business challenge; they really need to start at that business layer first.”
Va’aelua of Microsoft suggests you do this by asking to see the three- or five-year business plan. “Sometimes you’ll find they don’t want to get bigger,” he explains, showing that you can never make assumptions about your clients’ needs. To avoid coming a cropper, IBM’s Burbidge says to “ask qualifying questions”: ‘How many racks and towers do you have?’, ‘What are your pain points with regards to management?’, ‘Would you welcome a cost effectiveway to support workloads?’.
You should also take advantage of the tools available, such as total-cost-of-ownership calculators and vendor support. Virtualisation sizing guides can also help you to solve the sometimes tricky task of selecting what to consolidate, where to put it, and how to configure your customers’ systems.
To teach or to learn
According to those interviewed by The Channel, it is not your job to teach your clients about virtualisation; rather you should talk to them about some of the business objectives they want to achieve and see if virtualisation is the right fit for them. If it is, then explain the outcomes and benefits, not the technology. It’s about communicating the “appropriate level” of information for that particular customer.
NetApp’s Morris also says there needs to be a mind-shift by many small business owners who say that they are not able to spend the time to embrace such changes in the current economy. Once that mind-shift is made, the changes it brings can lead to significant future savings.
Of course, just because you are not explaining the ins and outs of the technology to your clients, doesn’t mean you shouldn’t be extremely well versed in it yourselves. “We’ve found that the partners that go out and learn how to position and sell, actually sell a lot more than those that don’t,” says VMware’s King, talking about training and certification.
A tidy solution
In today’s economic environment for many small businesses, the best approach to getting ahead in these challenging times is to optimise the IT Infrastructure and create a simplified yet dynamic IT environment.
As IBM’s Burbidge puts it: “Virtualisation offers small businesses an extremely cost-effective option for transforming IT into a simpler, more powerful computing infrastructure, which will have distinct competitive and productivity gains.” So get aboard with virtualisation, and get small businesses shipshape and Bristol fashion, while saving them money in the long term and helping them set sail for productivity and future growth