Amazon Web Services (AWS) is growing apace with revenues expected to hit $8.2 billion by 2017, according to UBS AG analysts. Its continued innovation and growth shows the massive demand for flexible cloud services, yet its scalability and speed of innovation has left service providers asking how they can compete with their own cloud services.
Without the resources of the large enterprises, service providers need to understand the ways in which to differentiate in the marketplace to stay competitive in the ever-changing world of traditional hardware, virtualisation and cloud computing.
Service providers need to firstly view cloud as a market opportunity rather than a disruptive threat. By being more agile and playing to their strengths service providers can use the cloud to not only consolidate their existing revenue streams, but also to create many new revenue opportunities too. They just haven't nailed it yet.
Cloud gives service providers the means to be indispensable to their customers. Gone are the days of focusing just on moving infrastructure to the cloud, they need to offer services on top to really seize this opportunity.
Shifting to the offensive
Investing in orchestration and cloud technologies opens up a range of additional services to traditional IT, bolstering their expertise and scalability. But they need to undo old habits that have seen them behave defensively.
Service providers need to look at their customers, look at the market and find out exactly what their customers want and need and then build the services to meet that. They are not being aggressive enough at building their own innovative services.
Instead many are continuing to disbelieve that the cloud momentum is real, even in the face of overwhelming proof. According to IDC, worldwide spending on public IT cloud services is expected to be more than $107 billion in 2017, demonstrating the financial opportunities available to service providers.
Those that do appreciate this need to provide a wider range of cloud services sometimes do not appreciate the urgency in doing so. Spending a year investigating projects to try and deliver such offerings will simply be too late.
Meeting the customer's every need
Cloud computing also offers service providers the opportunity to position themselves right at the heart of their customers' operations.
It is entirely possible for them to become one-stop shops for all of their customers' needs; ranging from the more homogeneous IT infrastructure services they already provide today, to a growing array of high margin applications and services. They can offer it all and they can deliver it with one service level agreement, one point of contact and one bill.
The rollout of cloud services today is dependent on service providers being willing to adapt and change to new models, finding their niche and taking advantage of the opportunities they have.
The technology is already here to allow them to compete; now the people and processes need to catch-up so that service providers can become more offensive in the battle for the cloud.
- Tony spent 12 years as CEO and majority owner of XCalibre Communications, a web hosting company. During the latter half of this period, he developed the FlexiScale cloud computing technology, which now forms the core component of Flexiant's Cloud Orchestrator platform.