“As Unique as Everyone,” the title of Everest Group’s just completed research study on service providers’ cloud computing strategies, tells a large part of the current story. Indeed, after exhaustive discussions with 14 major outsourcing service providers – a mix of multinationals and offshore providers – we found little differentiation among their cloud strategies. Most of them have broadly similar offerings that we segment as:
- Cloud Advisor, where the provider engages with buyers to help with business case development, planning, roadmap, security, and governance
- Cloud Enabler, where the provider typically does not offer a homegrown solution but instead sells cloud services offered by industry partners, and usually takes care of implementation and maintenance of the solution
- Cloud Orchestrator, where the provider acts as an integrator/broker of a buyer’s hybrid infrastructure environment
- Cloud Provider, where the provider either offers the infrastructure engine to run cloud applications, or homegrown cloud solutions in any of the cloud layers.
Against this backdrop, where are the major players seeing cloud computing potential, and where are they focusing their efforts?
While most of the known providers have entrenched partnerships with known cloud application vendors such as Google, Amazon and Microsoft, what they are doing with these partnerships, apart from implementing their cloud services, is not yet clear. Most of the multinationals are focused on leveraging their technology competence to enhance their hosting offerings. In this scenario, for example, an HP may use its infrastructure and technology power to customize the hosted Microsoft Exchange platform, or an Atos Origin may provide global agreements to buyers per its own agreement with a cloud application vendor partner.
All the providers with which we spoke for this research study have standard offerings for cloud business case development, ROI analysis, third-party cloud implementation, and some business utilities as a service. And while serving as an orchestrator is the most lucrative segment in which providers can play, the absence of comprehensive management platforms, and challenges with cloud-to-cloud integration challenges, are holding service providers back in this area. They believe orchestration eventually will be the winner, but the industry needs to develop the needed tools, processes, and standards for seamless management.
Asset heavy players are touting their infrastructure competence by building private clouds hosted on their premises, whereas asset light players are focusing on private clouds from the design and management perspectives. Most of the providers do not believe a pure infrastructure-as-a-service (IaaS) play is going to lead them ahead, and, as such, they want to provide value-added services and differentiate on provisioning, management, and governance.
Do you see any demonstration of differentiation here among these major providers? Neither do we. While there is excitement about the promise of cloud computing in both the buyer and provider communities, our research found that many (nay, most) of the service providers are unclear and unfocused – especially in that their offerings span all cloud layers, which we believe is an untenable proposition – about the path they need to take to tap the market’s potential. To truly cash in on cloud computing, providers need to significantly change their business strategy. Will be able to do it? Only the time will tell.
For more details, please see Everest Group’s research report on Service Provider Cloud Strategies – “As Unique as Everyone.”