Buy or Build? How IT Services Firms Can Partner for Cloud Success

Hosting InfrastructureIT services companies – from managed service providers to pure consultants – often face a difficult decision whether to “buy or build” hosting infrastructure to meet client requirements. As the cloud market matures and providers expand their options for partners, services companies now have better options for working with infrastructure that is already there rather starting from scratch. Nevertheless, let’s consider both sides of the fence and look at where it makes sense to buy and build a cloud service.

When buying into the cloud is better

There are many good reasons for IT service providers to engage with an existing cloud provider, including:

  • No data center or hardware infrastructure investments. This might seem obvious, but many IT companies invest in cloud infrastructure only to find the return is less than anticipated. The procurement and management requirements of all the components necessary for a scalable cloud are easily underestimated and require specialist skills.
  • Avoid high maintenance costs. In addition to the capital investments, running a cloud requires ongoing maintenance costs often not anticipated during the build stage. And as a cloud partner you get access to better rates and healthy margins usually associated with equipment reselling, but often overlooked in the cloud.

  • Faster time-to-market. Beyond the infrastructure costs for IT services firms, time is money too. Buying cloud services enables you to deliver services faster, without the capacity planning overhead.
  • Keep up with industry trends. As more services move online it is increasingly prudent to host client applications “near” other cloud services. Cloud providers have low-latency, high-speed interconnects between data centers and other cloud services. This networking capability is another specialist skill which is often overlooked when building a cloud.
  • Support is available on-demand. To build an effective cloud you also need to build up support capabilities. Buying into the cloud gives you access to technical specialists who can diagnose and fix problems on-demand. Managing an infrastructure support team is often an unnecessary overhead for IT services firms.
  • Many opportunities to add value. When you buy into the cloud you can exploit the large (and growing) number of value-adding opportunities. Cloud providers have services like CDNs and security monitoring which IT services firms can adapt to client needs. It’s worth noting these cloud-based value-added services are generally recurring, which helps build up an MSP business model. And adding value to the cloud does not require the associated infrastructure investments, so the barrier to entry is low.

When it’s better to build your own

For most IT services firms, buying into the cloud is a more economical option than building your own. There are some circumstances, however, when building your own cloud is the better option. Here are some examples:

  • Total control. As with anything you purchase outright and manage, you don’t have to give up any control over how it’s used. For better or worse, you could stand up a separate cloud for each client application requirement. One thing to keep in mind here is the need to carefully check vendors’ usage and support terms. When you “buy” IT equipment you might not have as much control over it as you might expect.
  • Client requirements. A small minority of clients might not engage due to their requirements for infrastructure ownership. This might be for regulatory or compliance reasons, or it could simply be a case of company policy. In order to meet a client requirement it can be better to build a cloud than pass on the opportunity.
  • Security concerns. The security of public clouds is often the source of much contention among service firms and end-customers alike. While it’s true if you build your own cloud you can tightly control the location of the equipment and the network access to it, today’s public clouds have a multitude of security provisions built in as well. Build your own cloud when security is paramount, but beware of catastrophic failures (for example, flooding) which can happen with self-managed equipment in server rooms.
  • Avoiding vendor lock-in. Avoiding lock-in for your clients is another reason to build a cloud. Unfortunately some of the well-known public clouds are not standards-based and make it almost impossible to migrate from one cloud to another. Managing your own equipment can mitigate this risk for clients.


Table 1: The benefits of buying and building a cloud for IT services providers.

 

Buy Build
No capital costs Total control
No data center or hardware maintenance Meet client requirements for infrastructure ownership
Faster time-to-market and project completion Meet compliance requirements for infrastructure location
Many options to add value Custom security
Existing support Avoid cloud lock-in

 

Hybrid cloud is ideal for services firms

With benefits for IT services firms on both sides of the buy or build argument, a hybrid cloud strategy is ideal for the partner channel, which services diverse client requirements. The journey to cloud does not need to be all or nothing and there is a range of infrastructure options – from VPS to bare metal – which can be used in conjunction with existing on-premises private clouds. If a client has on-premise infrastructure and is in need of a DR solution, the reseller can step in and use a cloud service for much faster project completion than deploying hardware and software.

Get the support you need

Support offered by cloud providers can extend well beyond technical troubleshooting. For example, we offer support for services firms with enablement, training, development and marketing. To avoid getting caught up in a cloud skills shortage, buy services from a partner with mature support capabilities. We have engineers that consult and implement infrastructure with companies new to the cloud and enable partners to get the features they need to generate more business. If you are spending a significant amount of resources managing infrastructure, it is a prudent business decision to adapt to change and direct those resources towards managing APIs and cloud components, a choice that will save you in the long term.

The “right answer” to the buy versus build argument really depends on the use case. What is a benefit with one approach might be a drawback with the other. Get support during the transition and production phases of your cloud journey and the benefits will quickly extend to your end customers.

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