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When discussing cloud computing, the the dialogue has moved way past hype—and into a phase of heightened competition. To compete effectively, enjoy high margins and avoid getting stuck in commoditized markets, emerging cloud vendors will need to deliver truly differentiated services. Ken Vanderweel, Nimsoft Marketing Director, discusses some potential avenues service providers can take to differentiate their cloud offerings. —Jennifer D. Bosavage
Compared with traditional software and infrastructure investment, cloud investments are increasing quickly. Whether you’re looking at models such as SaaS, IaaS or PaaS, growth rates are projected to be much higher than those of traditional IT products and services. Two years ago, for example, Nimsoft surveyed some 800 service providers, and no one expressed interest in SaaS. Recently, a similar poll revealed that more than a third are consuming and deploying "as-a-service" models.
Many leading service providers and VARs are already offering a variety of cloud solutions, and most are planning to expand their offerings. For smaller MSPs and traditional resellers who have yet to make the leap, many opportunities exist—but there are also a lot of risks. Channel decision makers must carefully consider alternative cloud models, target markets and services.
One risk is betting on the wrong cloud model. For example, if you’re thinking about building and delivering Infrastructure-as-a-Service (IaaS), you might want to think again. Established players have turned IaaS into a commodity, to the point where Amazon Web Services is offering EC2 for free. Clearly, that makes it hard to compete and maintain healthy margins.
Another risk is rushing into the market. If you slap a “cloud” label on a solution or service, you jeopardize your credibility out of the gate. Buyers are very leery of “cloud washing,” and—while a cloud label may get you in the door—you’ll be very quickly pushed out the same door if you’re not delivering a legitimate cloud solution.
One key to cloud success, then, is to craft legitimate cloud solutions that are differentiated from commodity IaaS offerings. Such solutions will save you from competing on price and ensure your credibility in the market from the outset. Here is the first of three potential strategies for building credible and differentiated cloud solutions: