Building Clouds – Providers of Cloud Services

Clouds coalesce on both technical and business services

Cloud providers see themselves as predominately infrastructure providers showing the hype surrounding ‘cloud’ has not changed the fundamental positioning of these companies and their services.

54% of respondents give their primary focus as one of a set of traditional IT services, with 37% focusing on server infrastructure alone. In contrast, 32% of cloud providers state their focus is the delivery of business applications as their cloud offerings.

What would normally be described as SaaS providers or application service providers increasingly describe themselves as cloud providers. Although tempting to describe such a re-positioning as purely the result of astute marketing, when taken into context of our analys is showing a greater combination of PaaS with SaaS, the results indicate that the combination of business applications such as CRM, HR and Finance with platform services such as Infrastructure, Security, Archive & Backup is increasingly forming a mainstay of cloud provider services.

Cloud providers are predominantly generalists with limited vertical specialization

Of the cloud providers surveyed, 57% gave no particular vertical specialization when asked who they sell to. Generalized enterprise services not only suit larger companies but simplified versions also suit small to mid-sized companies too.

For young companies it is now commonplace to run an office IT environment using cloud infrastructure for each key application type. Horizontal marketing of services to a broad range of businesses is an important factor in the appeal of cloud services to this demographic.

Selling to other cloud provider resultssuggest that the ecosystem of cloud providers supports the creation of compelling cloud packages for customers.

Fast hardware and great software are only half the battle – connectivity and latency are top concerns

Cloud providers continue to focus in core areas of cloud performance. With maturing virtualization technologies and advanced datacentre equipment, ease of provisioning services and overall server performance are increasing. What is clear from our survey is that latency, internet congestion and performance predictability are also key concerns.

As we see more cloud based services becoming used in consumer services and business infrastructure, the more critical these factors become. New breeds of internet applications that rely on data being pushed to web and mobile devices, often place unique demands on network infrastructure. In modern financial information systems, for example, data is pushed over long-running connections to tens of thousands of browsers simultaneously in near real-time.

Modern rich internet applications not only generate far more network demand (Ajax, Rich Media), but are also more susceptible to unpredictable performance. As rich internet applications generally offer richer, more frequent interaction with the user, then the more noticeable to a user are changes in application performance.

Cloud providers look to partner more to build compelling service offerings

Growth in cloud provider services will be driven by both organic growth and partnerships according to the survey results. With almost 46% of respondents choosing partners we predict more complete cloud offerings forming in much the same way as enterprise software stacks matured at the turn of the century.

As enterprise software stacks formed around vertical markets (with differing databases, application servers and middleware being used in financial services versus manufacturing, for example) we predict that cloud services will follow a similar pattern.

For example, media providers will seek partnerships with carriers that can provide strong content delivery and high volume transfer bursts, and process intensive application providers will look for PaaS providers that can provide specialist cloud based compute grids.

Likewise we will see IaaS providers being used for complex compute grids and system integrators creating mashups and doing custom development leveraging PaaS where available.

Part 3: Top Priorities and Concerns