How An SMB Cloud Provider Can Create 'Swagger' In A Competitive Market

By Antonio Piraino, CTO, ScienceLogic, CRN November 21, 2012

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It's no secret –- there is money to be made in the cloud computing services space, and everyone wants in on the action. SMB cloud providers are no exception, and as the market heats up and competition gets fierce, smaller players need to find ways to compete with the big boys. They will never be able to take advantage of the economies of scale that the largest hosting providers can generate to drive down costs and preserve margin.

At this year's HostingCon, we conducted a survey that yielded some very interesting results. Nearly 50 percent of respondents cited cloud price wars as the greatest threat to their businesses. So what are the opportunities for SMB providers to create true services differentiation and "swagger" versus the industry behemoths, like Rackspace, Amazon and Google?

Interest in and adoption of cloud computing has steadily grown over the past several years. Today, momentum is accelerating as cloud technologies evolve and provide more robust public, private and hybrid cloud opportunities, not just for test and development applications but for enterprise applications.

At its core, cloud computing has an element of commoditization, i.e., IT as a service, which in turn puts increasing pressure on hosting providers, especially SMB hosts, to launch and justify higher-margin cloud services that help to differentiate themselves from the competition. The smart hosters will focus on providing value-added services, such as proactive enterprise-class management and support and managed application services that are aligned with critical business goals.

Today, many SMB hosters leverage a variety of open-source and homegrown tools for management and monitoring. In the interests of time and costs, they stretch these systems as far as they can, but as the business grows, they reach an inflection point where these initially inexpensive and/or free tools quickly become complex, hard to scale, and highly inefficient and expensive to maintain. The next investment must be in automated technology that intelligently removes human intervention, which is unprofitable over the long term, and replaces it with solutions that increase profit and scale on-demand. When it comes to providing cloud services, operational efficiency and the agility to respond to changing demands in real-time can be a real competitive advantage.