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Thought Leaders in Cloud Computing: Chris Gatch, CTO of Cbeyond (Part 2)

Posted on Tuesday, Sep 25th 2012

Sramana Mitra: And what does it cost?

Chris Gatch: It’s going to vary. A cloud data center can start at about $350 for a private center, which includes a completely segmented network environment, a logically separate firewall, about half a terabyte of storage, and a modest level of computing resources. It can scale to much larger numbers depending on what kind of cloud infrastructure the client needs. On the hosted telephony side, for a total cloud phone system, like most hosted PBX offers that are in the market, the price probably settles around $25 a user. That’s not counting international usage. If it’s a distributed virtual company with international locations, that figure could change considerably.

SM: How much more does it cost?

CG: It’s only going to vary based on long-distance international usage. So, there’s not anything that different from somebody having a phone in India and a person having a phone in the United States if they’re just talking to each other. But if the company operates internationally and U.S. callers are making lots of calls to customers in India, for example, these customers are off the user’s direct PBX. Then you can incur international telephony usage fees. That’s common outside of something like Skype or those types of community services where you’re just talking among people in that network. It’s pretty common in the industry.

SM: How does the landscape look to you in terms of the evolution of the small-business workflow and work environment? Where does it hit limits such that your type of service becomes important?

CG: When you talk about tools like Google Docs and Google Drive, for an office worker or knowledge worker in a company that’s predominantly a consulting firm or professional services where there’s not necessarily a line-of-business software but they’re providing some kind of knowledge service, and their computing requirements are traditional collaboration tools and word processing tools, you can do an effective job as a new company using SaaS-based solutions to satisfy your needs and not have to buy any infrastructure, be it virtual or dedicated and on site. Then we get into other types of companies that have line-of-business software that is required to run them: a medical office where you need a patient management system, an electronic medical records system, a restaurant that needs a point-of-sale system, or a shipping company that needs a warehouse inventory management system. Most of those packages are not SaaS based today, and they require users to have a dedicated environments to operate those solutions. In the U.S., I’ve seen research that says there are probably 2,000 software ISVs providing more than 5,000 line-of-business applications that are used by small businesses.

Where we find our sweet spot is in providing what would normally be physical infrastructure that would reside in a small business’s computer room and allow the business owner to host those same applications that normally run the business, but do it in the cloud. That can include the Microsoft Office suite, by way of an example. But once you get into companies that are distributed virtual companies that consist primarily of knowledge workers, and they don’t have these line-of-business applications, other solutions like Google Docs start to present themselves and become good alternatives. This is especially true for international distributed virtual companies.

SM: It sounds like you are competing with the public cloud with a private cloud solution for small businesses. Is that a correct characterization of what you’re doing?

CG: Yes. I would say that our total cloud data center product is like a private cloud, but normally when you hear people say private cloud, they mean that it’s infrastructure owned by the small business on which a provider is managing a cloud for them. In our case, we’re removing the requirement for the small business to have hardware to run applications. There are many applications for which there are SaaS alternatives, in which case we provide, for most of our clients, high-quality network connections with quality of service and symmetric bandwidth that helps add to that experience.

In some cases, we’re providing our own public cloud services like hosted Exchange. You have to break the market down. We commonly hear platform as a service, infrastructure as a service and software as a service. There’s a big market for all of those. Some applications are great SaaS offerings, but many of our customers have traditional line-of-business applications for which there are not SaaS alternatives, and they need infrastructure to run them on. Today, that infrastructure is in their computer rooms, and there’s great value that they can get by moving that infrastructure into the cloud. It’s just another slice of the market.

This segment is part 2 in the series : Thought Leaders in Cloud Computing: Chris Gatch, CTO of Cbeyond
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