Who Stands to Win in the Cloud Service Provider Space?

by  \  22 Jun, 2010 \  10:03pm EDT

It would seem that the obvious answer to the question above would be names like HP, IBM, Microsoft, Google, & last but definitely not least Amazon.  However, I would argue that there may be other less obvious names that have an excellent chance of becoming the next cloud provider powerhouses.

The following are three (3) groupings of potential  cloud providers by general segment:

Group A: Google, Amazon, Intuit & Microsoft

Group B: HP, IBM, Dell, Acadia

Group C: Savvis, AT&T, Deutsche Telecom, Tata, Telecom Italia, British Telecom, NTT, etc..

Authors Note: The list of vendors in each of the above groups is not meant to be exhaustive, but merely representative of their industry segments.

What are some of the basic requirements for being a cloud service provider?

Having a well thought out strategic approach to data centers and available power, space & cooling (PSC) capacity is a minimum (floor space). Other requirements include access to a global network, service & delivery staff, a large customer base and an ability to manage to the well defined deliverables of a Service Level Agreement (SLA).

So who Seems to Fit the Above Requirements Best and What is the Importance?

While there are a number of characteristics that are common between each of the three groups, there are 4 primary areas that make Group C stand out.

  • Historical background providing highly reliable services over the network (from home user to large enterprise)
  • Excellent understanding of high availability and change management as well as clearly defined Service Level Agreements (often with financial penalties for missed service levels)
  • A well managed and owned network
  • Cloud hardware and software solution agnostic

“Owned Network”?

That’s right, when you own the network you control performance and delivery of the IT service. Cloud by its very nature is extremely dependent on the network.  However, it’s not just the performance and availability that’s important, it’s cost management. The network is a well understood sunk cost for the vendors in Group C. The providers in the other two groups would have to buy from Group C or build it themselves from scratch.


I’m a firm believer that using cloud solutions should provide the buyer with the ultimate in vendor and solution choice, and with limited risk of lock-in.  Each of the providers in Group A&B is to some extent locked into solutions, largely of their own making.  I’m not trying to say their solutions are bad, quite the contrary, many of them are quite good. However, even the most beautifully gilded cage, is still just a cage.

Does That Mean We Shouldn’t Buy Cloud Services from any of the Companies in Group A or B?

This doesn’t mean you should never buy cloud services from Amazon, HP, or Microsoft. What is does mean is that you should do your best to avoid a situation that forces you to only use one of them. You won’t necessarily have to go to a telecom provider to avoid vendor lock-in, but you should have more options there.

Of course there are more questions that need answering regarding vendor lock-in or the avoidance thereof.  The Telecom provider doesn’t necessarily develop the cloud offering, instead they can become effective resellers of the best of the available solutions. This won’t happen by accident, they’ll have to partner with companies that can help them implement a cloud management platform. The appropriate  management and orchestration engine would ensure the customers have access to any or all the services they need, regardless of who created the service (I.e., Salesforce.com, Intuit, Google, Amazon, Microsoft, etc).  By having the flexibility to choose from the available solutions, the customer also has the option of moving from one to the other as necessary to avoid risk or cost.

A slightly more controversial opinion on the subject of avoiding vendor lock-in is that you carry a higher risk to your business if you put all your eggs in one technology basket. In other words, if you have all of your business running on one company’s solution you run the risk of having the entire environment affected by a vendor specific architecture or service issue.

What’s the Takeaway?

You should consider telecom providers as logical partners in your efforts to move more of your applications and infrastructure into the cloud. This doesn’t mean you won’t have to do your due diligence with each potential provider.  The telecom companies have (in most cases) excellent backgrounds in providing highly available and well managed services.  However, they’re still going to need the right tools to make a broad set of cloud options available to their customers while avoiding vendor lock-in. This applies to your internal operations as well, if like many customers you’re considering maintaining “private internal” cloud capabilities you’re still going to want a strong policy, governance, and management engine.  With this engine in place you’ll be able to guarantee the freedom of choice for your hardware and software and you’ll have a “common” tool for efficiently and safely utilizing your cloud solutions whether they are internal or external or both.

Happy Cloud Computing!

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