Insight CEO: Microsoft Cloud Relationship Taking Off, AWS Slower To Launch

Insight Enterprises is seeing fast growth in its Microsoft Azure and Office 365 practices, but has encountered roadblocks in growing its Amazon Web Services businesses, the company CEO said Monday.

"Clients are definitely leaning toward Microsoft when it comes to cloud," Insight CEO Ken Lamneck said at the Raymond James Technology Investors Conference. "You'd be at a disadvantage if you were a solution provider in our space, and you don't have a meaningful relationship with Microsoft."

The Tempe, Ariz.-based company, No. 13 on the CRN 2015 Solution Provider 500, is Microsoft's largest partner globally, Lamneck said at the conference in New York, and has enabled clients to provision Azure through its online platform. Lamneck praised the Redmond, Wash.-based vendor for developing Office 365 and Azure to a point where clients are interested in rapidly scaling up consumption.

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"We're very fortunate that we've really got Microsoft," Lamneck said. "We're definitely seeing clients move toward Infrastructure-as-a-Service [IaaS] looking at the Azure platform."

Insight's relationship with Amazon Web Services, on the other hand, isn't significant and exists primarily at this point as a convenience for clients, according to Lamneck.

"AWS isn't as partner-friendly as all of us would like right now," Lamneck said. "We think they will get there when they start to realize that this is a big world, and they're going to have a difficult time trying to cover this themselves."

AWS declined to comment on the record for this story.

Lamneck said he is optimistic that the vendor will start recognizing the value of partners such as Insight in providing support and services to smaller accounts that consume AWS.

"[AWS] can't possibly have the staff in place to really be able to provide that service level and comfort going forward," Lamneck said.

The solution provider has service offerings in areas such as security and data migration that it can provide to public cloud clients in a menu-based fashion, Lamneck said, as well as teams of people doing services work.

"When you starting talking about the cloud, you've got to have a services footprint that supports it," Lamneck said. "It's not just going and clicking on a website, buying and provisioning the cloud."

At this juncture, Lamneck said, Insight is devoting most of its energy to training its internal sales force on how to sell Azure and IBM SoftLayer. Some of Insight's large, national solution provider peers do not even have a relationship with AWS.

Insight's public cloud presence, though, is dwarfed by its private cloud offerings, where the solution provider has an established practice around selling converged infrastructure to clients.

"It's early days on the public cloud," said Helen Johnson, senior vice president and chief financial officer for Insight North America. "It's still quite small for us."

Insight declined to provide any numbers around the size of its public cloud business, with Lamneck saying he wishes to hold off until revenue from public cloud reaches a level where it's meaningful and sustainable.

Lamneck said he believes the revenue gains from cloud-related transactions will more than offset any lost sales of on-premise storage and server devices.

Specifically, Lamneck said, the cloud should give Insight access to new storage and compute clients around IaaS, allow Insight to deepen its relationship with SMB customers in areas such as unified communications, and minimize margin compression by increasing stickiness with customers. The cloud will make it difficult for clients to bid out specific purchases and simply go with whichever is cheapest.

Additionally, the largest two hardware segments today in the channel -- devices and networking -- will not go away in a cloud environment, Lamneck said. Instead, he expects demand around networking tools such as routers and wireless infrastructure to increase as clients look to move more workloads to the cloud.

PUBLISHED DEC. 7, 2015