Cloud Brokers: If You're Not Targeting SMBs, You're Missing Out

The cloud brokerage model, in which a third party helps customers to select and manage cloud offerings, may be a perfect solution for the SMB, but at least one industry consultant believes that the providers of such services are often more focused a lot farther up the food chain.

"It seems to me like everyone is focused on the enterprise space," said John Ross, an independent architecture consultant based in Dover, N.H. "But the midmarket and small-business space is actually more likely to work with brokers because brokers enable them to consume services much more robustly."

Ross is helping two companies prepare to launch brokerage initiatives at the SMB space and expressed surprise that there are not a lot more companies already competing there.

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"Most people are pointing to the enterprise for cloud brokerage because they have all the complexity, but the actual growth is often at the small- to medium-business level," he said. "There's also a very solid opportunity for managed service providers to move in the direction of cloud brokerage because they often work with smaller and midsize companies that don't have IT staff or a great deal of resources. So this is an area where they can add a great deal of value."

If a cloud brokerage bias favoring the enterprise does exist, it may be caused by the investment in time and resources necessary to build the value proposition.

"It is hard. This is heavy lifting," said Ricky Santos, vice president of cloud and technology services at New York-based Presidio. "To do a cloud brokerage, you start with the selection of a preferred service among several cloud-based services, which is then orchestrated and provisioned. Typically this involves a hybrid cloud solution that allows them to reduce the footprint of IT. You then need to integrate the on-premises environment with the service provider's environment, and perhaps even other cloud providers. And you also have to engage the analytics that are necessary to meet the compliance needs.

"All of this requires a solid integration strategy," he continued. "There is also a major investment in the necessary infrastructure and management capabilities that enable you to do this in an effective way. In order to subsidize this, some of the providers find themselves focused on the enterprise."

Santos added that much of this capability is more likely to roll downstream into SMB, once the processes, procedures and investments become more mature.

Meanwhile, Forrester Research cloud analyst James Staten said that the cloud brokerage model is actually very similar to the managed services model, thereby providing MSPs with an opportunity to bridge their service offerings into the cloud.

"There are opportunities at both the enterprise level and in the SMB level," said Staten. "Part of the challenge is that the cloud broker concept is still a little bit nebulous, and the majority of players that we see in this space are not bringing intellectual property to the table as much as they are emphasizing managed services. So there is a very strong opportunity for channel partners to serve small to medium-sized customers because those customers frequently do not fully understand the services and really want somebody else to handle it for them."

NEXT: Miss The Opportunity And Get Replaced

Forrester's Staten believes that there are cloud brokers focused on SMBs, but they often aren't household names. But cloud providers are beginning to kick off channel programs aimed at attracting partners, he said.

"I think that a VAR or system integrator who is not actively exploring this option is probably missing a major opportunity," said Staten. "And I would not be surprised if those who miss the boat find themselves getting replaced in the process.

"Most companies have no problem signing up for cloud services, but they struggle mightily to try to manage and maintain those services," he continued. "So the channel has a great role there. They need to focus on how cloud solutions differ from on-premise technologies, in terms of the economic model, the integration piece, along with monitoring and security, and also configuring the cloud services to meet the parameters of the desired SLA."

Alternatively, channel partners can engage a cloud-management-as-a- service strategy, which stops short of cloud brokerage but takes on other functions such as monitoring and performance analysis as a managed service. But whichever strategy is employed, there is a strong emphasis upon combining efficiency and simplicity for the benefit of the end customer.

"Giving the customer a massive list of applications can be a recipe for failure," said Rick Mallon, vice president of product management at Toronto-based Sigma Systems, which has built its business around enabling partnerships between service providers and software companies and provides a management platform.

"If the customer has a bewildering number of options, they tend to pick the cheapest one. But the cheapest ones are usually the first to go out of business because they're not well-capitalized. When this happens, there is usually a lot of blow-back on the operator or the broker. So the key is to narrow the field on the customer's behalf and be a trusted adviser. You are far better off with eight to 10 highly reputable cloud vendors who will most likely be around over the long haul."

The essence of cloud brokerage is to bring together different players in the value chain and combine them for the end customer. Therefore, the partner component is huge, according to Chris Vincent, president of Global Data Systems, a Lafayette, La.-based solution provider.

"There is value in the relationship," he said. "It doesn't mean the accounts won't go outside the relationship, but the person who owns the relationship is typically the one who has the contract."