There has recently been a flurry of speculative news reports around whether some of Microsoft’s Azure data centres globally are facing capacity issues, with SME’s being turned away due to server shortages - including in the UK.
Although Microsoft hasn’t yet made any public statements on capacity issues that are reportedly facing some of its Azure data centers, speculation is rife in the industry that they are no longer accepting new clients.
It’s thought that they want to reserve capacity so that existing clients can expand – if that’s true, it certainly has some very big enterprise companies using their platforms.
While that’s potentially great news for big enterprise companies, if Microsoft or another of the big four providers start prioritizing larger customers over SME’s, this could have significant consequences; not least if it’s because of supply chain issues.
Are SME’s at risk of being turned away or not getting the same level of priority with one of the big four providers when scaling their business up or down? And does this shine a light on why smaller providers may be a better fit for SME’s?
Let’s look at the potential cause for this uncertainty. Global supply chains have been placed under intense strain in the last couple of years. Clearly the ongoing impact of Coronavirus has huge implications, but other macroeconomic factors are having an additional knock on effect for many supply chains across the globe. Consequently, essential supply chains that we rely on in the IT sector, such as manufacturing, mining and construction, are continuing to struggle with shortages.
From building more factories that can manufacture microchips and other essential IT hardware such as servers, through to getting hold of concrete to build new data centers and other important infrastructure to increase capacity for customers, the IT supply chain can be challenging to navigate.
While the industry has seen a reduction in supply, demand for the cloud continues to grow significantly – and this will have contributed to the various supply chain issues now being faced by the sector.
Forethought spares afterthought
It’s clear that when it comes to forward planning, some cloud providers have struggled to even maintain basic stock levels and parts which could now be putting a strain on their services. As part of Europe’s largest ISP, we’re fortunate to have strong and reliable procurement relationships which helps us to minimise any potential issues in the supply chain.
Even before COVID hit, Brexit allowed us to anticipate and plan around potential supply challenges ahead of the transition period. By prioritizing forward planning a minimum of six months or more in advance, this prepared us for the unknown, helping us to double down on our plans as Coronavirus emerged. We’ve since been able to overcome most challenges with positive outcomes – and we continue to reap the rewards of that approach today.
Without our team’s foresight and meticulous forward planning, it would have been impossible to construct our data center in Worcester, due to open this autumn, in the face of supply chain issues and materials and parts shortages.
A window of opportunity for smaller providers
Naturally, all cloud providers could be exposed to some risk concerning supply chain, but any situation relating to capacity restraint provides opportunities for smaller ones. Away from the big four, it’s an opportunity for smaller cloud providers to demonstrate their strengths in this area.
End users should be looking for reliability and availability when choosing a cloud provider. And any cloud provider needs to sell itself on the flexibility and ability to scale both back and up to meet the needs of a business.
If all of a sudden a business can’t scale up and meet its demands due to capacity constraints and limitations, that will be a significant issue. There are opportunities for us and other providers beyond the big four.
Don’t let the cloud hang over your head
For SME’s that haven’t yet moved to the cloud, now’s the time to do so. However, it’s essential that they first do their homework and carefully select a cloud provider that has a well-established supply chain.
Why is understanding customs regimes and getting parts from A to B and onto C so important? Because if you don’t get the cloud provider right from the outset, this can have a potentially stifling impact on a company’s ability to flex and grow when it comes to transformational change.
When it comes to procurement, it’s important that SME’s ask cloud providers about supply chain for business continuity – for example, is it robust, what are their timelines. It’s a healthy thing to do as you also need to ensure that your supply chain is ethical and sustainable – understanding who you’re working with, who the company partners with – should be part of your thinking about which provider you work with. I would encourage procurement departments to be robust not only for business continuity but also to understand who you’re doing business with.
Consider references too – Microsoft is a vastly powerful provider and their credentials will be good, but perhaps the size of the company may not be big enough to care about so it’s best to seek references from companies of a similar size, of a similar technical nature and in a similar industry. It’s important that you have similar requirements in references.
Don’t put all your eggs in one basket
SME’s may be struggling to establish relationships with the big if they’re not big enough for them to care about.
For SME’s that are existing customers of the big four they might consider diversifying – for example if they have a secondary site with a different provider, it’s worth hedging risks on that basis – but that’s in the eye of the end client.
Given that the stakes are high, it’s therefore no wonder that some cloud providers might be feeling the squeeze and reviewing their offering for customers. But against the current backdrop of uncertainty, my advice would be for SME’s to strongly consider hedging their risk and working with multiple cloud providers.