Sunday, January 30, 2011

Datacenter virtualization vs. the cloud

I got a press release this morning from VMware that was touting the adoption of of vSphere as the virtualization technology of choice for the SMB user. Included in the press release, as usual,  were a few brief customer stories and the expected quotes from VMware executives and their business partners. The purpose of the release, I’m sure, was to raise my awareness of the success of vSphere in the SMB space, but what it actually achieved was to simply make me say “Wow. This really does seem to justify the adoption of cloud services by the SMB rather than investing in their own servers and virtualization.”
VMware lead with the concerns of a 175 employee business that had an outage that caused the loss of email and document management services for a few hours. These would seem to be two services that are leading the way in cloud-based SaaS delivery. Granted, the business at hand is a law firm, and their needs to be a rather serious look at the security and privacy controls in data being handled by a cloud service.
The SMB market is the sweet spot for the cloud services provider. There is that point where service flexibility becomes important but is continually a frustration because the cost of in-house IT. The cost benefit analysis also becomes somewhat complex; it relatively easy to factor the cost of utilizing SaaS versus hiring a large IT staff, but there is always the point where the monthly cost of the service exceeds the upfront costs of implementing a similar solution internally.
This is where the often un-factored in benefit of a SaaS provider can really shine.  Most providers are going to realize that they need to maximize their competitive advantage by staying at the edge of technology; they will be the first to rollout the newest apps, be aggressive about testing and certifying new versions before deployment, and due to the size of their infrastructures, have the ear of the software developers when potential problems need to be fixed or product improvements implemented.
The value of this can be hard to show on a spreadsheet, but consider even this simple point; software vendors react much more quickly to the concerns of a customer with 10,000 seats than they do to a customer with 100 seats. And the SaaS provider is that large scale customer who demands, and gets, the quick response and support from the vendors of the software that they deploy.