Those who thought cloud computing was just a passing fad are learning that it is made of more solid stuff. That said, severe competition could still rip a large hole through some clouds. Read on for some pointers to stay afloat.
Even as we talk, the two companies that dwarf all other cloud providers, Amazon and Microsoft, are slugging it out on the price front. By far the leader of the pack, Amazon's Web Services (AWS) dropped prices for select services by as much as 22 percent. Microsoft immediately reacted by reducing its own prices to match and then some.
This is great news for customers.
Not so for smaller companies operating in the same space, for truly, when two elephants fight, it's the grass that suffers. But remember, grass is static. And if you are a small company caught in the cross-fire between these two giants, being agile and nimble is the only way to keep yourself from being harmed.
The effort will be worth it. Studies have shown that cloud storage providers delivered more than an exabyte of data under contract in 2013, clearly a signal that traditional storage companies will have to embrace new business models. And there's more good news. According to a report from Market Monitor, a division of 451 Research, the cloud market will generate nearly $20 billion in revenue by the end of 2016.
Consider the pain points
If being a generic storage provider and competing with the likes of Microsoft and Amazon is not your game, then look to smooth out some rough edges. Cloud adoption has faced obstacles in the form of security concerns, transparency and trust issues, workload readiness and internal non-IT-related organizational issues.
There you go—now you know that there are at least four areas you could specialize in. More such pain points will be revealed in long conversations you have with existing or potential customers.
Target specific industries
Niche, industry-specific opportunities are ripe for the picking. If you want to be a big fish in a small pond rather than the reverse, consider focusing on one or two sectors. This might also be a more rewarding path to take for smaller cloud companies as they can more easily measure their contribution to their clients' growth or well-being. If you can provide new business opportunities to your customers, you become indispensable to them.
Find a partner
In the digital world that we live in, you don't have to have a "diversified" portfolio in-house. If you do want to offer multiple services, partner with other specialty firms. Being on the cloud, this can be done more smoothly than ever before.
At the same time, get into talks with some of the larger, generic service providers and find out if they are ready to hold hands. They may want exactly the special, niche service that your firm packages and want to offer it to their customers.
Do not get complacent
If you've read Dr Spenser Johnson's Who moved my cheese?, you already know the point of the story. The message of the book holds true for everybody in every walk of life – do not take anything for granted, for circumstances can change quicker than you expect; be prepared to adjust your business or change your plans to survive in the new reality.
Although little is known about why this happened, a few cloud companies have shut down in recent years. Cirtas Systems Inc., which had raised a little over $30 million in venture capital, closed abruptly in April 2011. And Nirvanix, a company that had raised about $70 million, shut down in September 2013 after being in business for seven long years.
So what does the future of cloud offerings hold for enterprises and cloud providers?
- Bringing together personal clouds and external private cloud services will become essential.
- Enterprises should design private cloud services with a hybrid future in mind and make sure future integration/interoperability is possible.
- Early hybrid cloud services will likely be more static, engineered compositions, but more deployment compositions will emerge as cloud service brokerages evolve.
Look out for the personal cloud
Most professionals today have multiple devices, all being used for work or storing data or entertainment, and sometimes this whole work-play-study stuff gets mixed up. An easier way to resolve the confusion is to have your own personal cloud where all the data you need is stored. Then you don't have to carry multiple devices, just pick up whatever you need from your cloud, whenever and wherever you need it. Cloud companies will ignore this market only if they want to completely stay out of the personal computing space.
A lot of us would be willing to outsource storage of our work documents, personal files, photos, movies, music to a cloud service operator. Now, who's willing to offer the best deal with the tightest security? Time will tell!
About the Author: Ben Trowbridge is an accomplished Outsourcing Advisor with extensive experience in outsourcing and managed services. As a former EY Partner and CEO of Alsbridge, he built successful practices in Transformational Outsourcing, BPO, IT Outsourcing, and Cybersecurity Managed Services. Throughout his career, Ben has advised a broad range of clients on outsourcing and global business services strategy and transactions. As the current CEO of the Outsourcing Center, he provides valuable insights and guidance to buyers and managed services executives. Contact him at [email protected].