IT's a popular childhood pastime - lying on your back to see what shapes you can make out of the clouds above.

These days, however, it's the IT folks doing the searching, and like kids, everyone sees something a little different. These are early days in the evolution of cloud computing, and IT companies are co-opting and manipulating the latest buzzword to fit their capabilities and product offerings.

But most agree that a sea change is under way in how organizations procure computing technology, and the result is a model particularly suitable for the needs of the SMB. This has strong implications for the channel and the VARs that make their living in delivering IT services.

VSR sorted through the hype and asked Kent Erickson, President and CEO, Pointivity, as well as several other VARs and vendors to ferret out these seven facts that VARs should know before breaking into cloud computing.

1. Definitions vary, but cloud computing converges at service and flexibility. Common themes include procuring IT as a service and the ability to scale capacities and, without additional investment in hardware, software licensing or training. While cloud refers to the icon for Internet in IT schematics, not every definition includes Internet-based delivery local, or private, clouds, maintained and invoiced as a service by a third party are also gaining favor.

The cloud family tree is also a source of contention. Software-as-a-service (SaaS) is either an ancestor or a descendent, and Managed Services may (or may not) be a true family member. Other relatives include utility computing, platform-as-a-service, storage-as-a-service and Web services. What's clear is that the world is migrating toward a whole different way to procure IT.

Collaboration is also often mentioned as a benefit of cloud computing. Online tools make it easier to work together despite geographic differences. On the provider side, many cloud providers selling through the channel also maintain collaborative communities where VARs can exchange technical and business ideas. TriActive, for example, which offers system management solutions in the cloud via the channel, maintains an online community for VARs.

2. It's time to get educated and aligned. VARs should visit sites such as Managed Services University and CompTIA, and also read trade-related publications on a regular basis. They should also be talking to vendor partners and the community of cloud/SaaS/ Managed Services providers, to understand their value propositions.

There are two basic types of clouds that VARs need to be concerned with: public and private.

Public clouds typically provide non-strategic, non-customized, horizontal applications: word processing, spreadsheets, e-mail servers, IT asset management, anti-virus, and so on. VARs can aggregate these services for customers, or concede these applications to well-capitalized vendors.

Public cloud applications typically deploy quickly, and VARs can resell them through varying business models. For example, MX Logic, a managed security services provider of email and Web security services, offers three programs; sales agents, those who handle sales and billing, and a third level that also offers first-line support to customers.

Well-designed channel programs allow VARs to try on cloud computing for size and learn to transition their business models without a lot of resource investment.

"Companies are looking for VARs to be experts and offer a lower total cost of ownership," says Sam Masiello, vice president of information security for MX Logic. " a VAR can be an aggregator of clouds they can definitely provide value."

TriActive says its service can drive additional revenue for VARs. "We allow the partner to install the product for free on every customer's machine to get a baseline. They can get a free security assessment, and we always find something" that warrants additional services, says Ron Halversen, vice president of marketing.

Private clouds operate behind the firewall. Applications may be served on premise or off; the VAR acquires and runs hardware and software, supporting these remotely except as on-site services are required. On-premise is a fit for mission-critical applications. VARs can also host these in their own data centers a costly proposition or rent capacity on someone else's. This model offers VARs a recurring revenue stream and the ability to support more customers per technician. As in the past, helping customers choose the best strategy for each application becomes part of the trusted advisor role; it's how they procure them that changes.

The private model has been adopted by Pointivity, a San Diego-based  Zenith Infotech partner, which operates a Managed Services business and provides VARs with a vehicle to do the same. "We take the whole IT (effort) and manage it for companies," says Kent Erickson, president and CEO. "We're able to bring huge cost savings for them." A typical mix for SMBs might eventually be 10 to 20 percent of applications on an internal cloud, and the remainder external, he says.   

At one time, Pointivity switched Managed Services platform providers, the companies that furnish software to help VARs remotely support customers.

"From a technical standpoint they're pretty close," Erickson says of the MS platform vendor market. "It's the control panel, the ability to scale, the labor to implement times the amount of revenue" that influenced his company's selection, he says.

3. Break/fix business models are under siege. Many SMBs are eager to move away from buying and maintaining technology, so the idea of consuming IT for a low monthly fee will gain increasing appeal - once fears about security, privacy and other concerns are addressed. According to AMI-Partners, about 31 percent of medium-size businesses currently use cloud services.

VARs dependent upon hardware and software sales are most threatened by cloud computing. Giants such as Google and Microsoft will offer more convenient, lower-cost and less risky ways to procure common applications that will be difficult for VARs to compete with. Paying a low monthly fee will become a lot more appealing than buying or leasing the hardware, licensing the software and protecting and maintaining it all, even with a VAR's help.

VARs with recurring revenue streams and lower tech-to-customer ratios will be difficult to beat for those still carrying high overhead with feast-and-famine cash flow.

"If all desktops are virtualized, it's much easier to patch them off of one image, so support costs go down" for the VAR, says Clinton Gatewood, vice president of corporate development for Zenith Infotech. Sharing a slice of a server is more cost effective than running a single server with excess capacity. Zenith's upcoming Box Office and Data Center as a Service allow VARs to deliver client IT using a cloud model.

Merrill Lynch estimates that within the next five years, the annual global market for cloud computing will surge to $95 billion, and 12 percent of the worldwide software market will go into the cloud.

"It's not too late to start now," says Chris Schin, senior director of product management for Symantec Protection Network. "VARs ignore this at their peril."

4. Cloud and its variants are often a great fit for SMBs. Cloud computing enables companies with insufficient or varying IT resources to pay as they go and puts costly solutions within reach. Efficiency, backup reliability and service levels improve while risk goes down. IT becomes a predictable operating budget line item.

"For many SMBs, the  data center  may be an office, with no security, no cooling protection, no fire protection, whereas a data center has unlimited bandwidth, physical and network security," says Dan Shapero, vice president of marketing for Kaseya, a managed services platform and data center provider.

"For certain technologies that have SaaS or cloud affinity, this delivery model makes intuitive sense," says Symantec's Schin. For email security, for example, it's best to eliminate viruses and spam in the cloud, before the data ever reaches the customer, than to install and maintain protection locally.

That said, the transition will be gradual. Fortunately, executives are becoming accustomed to trusting remote third parties such as Salesforce.com or Blackberry communications.

"SMBs see this as a nice to have but not a need to have yet," says Chris Squier, channel security solutions advisor for Ingram Micro, which offers cloud services through its Seismic program.

5. The VAR role is evergreen. The rise of massive IT services such as Google Apps would seem to threaten VARs who resell basic applications locally.

"It will be hard for a customer to justify buying Exchange, back-up systems, etcetera, when they can get those for $10 a month," says Akash Saraf, managing director and CEO at Zenith Infotech.

The good news: no matter how the IT is delivered, SMBs will always need expertise in what IT is right for the business, a local presence that understands its unique needs.

"As trusted advisers, people turn to VARs to keep up with all the trends," says Eric Dougherty, vice president, partners and alliances, for Rapid7, a unified vulnerability Managed Services provider with a new channel program. "It's an open-ended question: Is there anything else I should be thinking about."

"At the end of the day, everyone wants to deal with a person," observes Ingram's Squier. Also, "something will always happen with technology."

6. Running a cloud business demands new skillsets. In the cloud model, risk shifts from the customer to the host: how much and which IT to buy, meeting service level agreements, ensuring adequate staffing, and so on. VARs must sell, bill, staff and invest differently. To be successful, "you need financial skills, the ability to measure risk, to manage cash flow," says Pointivity's Erickson. "There is a lot more variability in this, managing costs and risks, looking at your current providers. Your vendors may become your competitors."

Branding is another skill. It's no longer enough to associate with strong IT brands; the VAR must be a brand. "In a cloud, a VAR is now brand-aggregating or using white label," Erickson continues. "That brand has to be strong in order for the customer to trust them."

Several vendors offer sales and marketing training, assistance and pre-packaged programs to help VARs go to market. Kaseya's training, for example, emphasizes business transformation, defining and pricing services, crafting service level agreements and sales rather than technical skills.

7. Walk into clouds with caution. These are early days in for the cloud paradigm. Key questions remain regarding security, data privacy, regulation compliance, liability, risk sharing, and so on.

A 20,000-user cloud service called The Linkup shut down on Aug. 8 after losing access to unspecified amounts of customer data. The LinkUp in turn outsourced storage to third party " illuminating one of the uncertainties underlying the idea of entrusting data to a remote cloud: roadmaps to exactly where your customer's data is sitting can be hard to come by.

The cloud computing market is still in its formative, "Wild West" days. The west won't be won in a day, and if past IT trends are any guide, there will be considerable shakeout and refinement as the model moves toward the mainstream. Many issues still need to be addressed. It's still unclear which IT services are best delivered remotely versus locally. But lessons from past sea changes in IT make it clear that those who act early, but with a clear head, have the best odds for success.