Despite all the hype, the use and adoption of cloud computing is still in its infancy. And as more and more organizations enjoy its benefits, the cloud is evolving in response to market demands. Almost 80 percent of 158 companies surveyed recently say they expect to expand their cloud usage in the next three years and a third are already using three or more public cloud providers, according to a Forrester Research report.
Cloud customers and providers alike are constantly making decisions on its use in terms of costs, effectiveness, complexity and compliance. In response, an ecosystem of managed services providers, cloud brokers and large infrastructure providers is growing in an attempt to serve these customers. Because the cloud has thrown the traditional IT value chain into disruption, cloud service providers (CSPs) are now constantly forming key alliances allowing them to excel at the delivery of one service while still gaining the ability to leverage the delivery of infrastructure as a service (IaaS), platform as a service (PaaS) and software as service (SaaS).
The research firm, Gartner, outlined this shifting cloud landscape in recent report. “Many emerging providers have recognized that they cannot build competency at every level of the value chain, whether in data centers, IaaS or managed and IT services,” Gartner wrote in the report, New Cloud IaaS Providers Need Ecosystem Partners to Succeed.
Instead, these various types of providers often focus on one piece of the puzzle. They’re forming partnerships with other providers to offer their core competencies, and as a result, providing the most efficient cloud services.
We are now entering the next phase of the cloud where evolution is leading to a vibrant marketplace. Here the organizational development of cloud services is starting to focus on alliances in which various providers (eg. cloud IaaS providers, infrastructure vendors, platform management software providers) are partnering to combine global delivery and data center resources with the orchestration of cloud resources to offer cloud marketplaces. And a key to these cloud marketplaces is the orchestration layer. Orchestration services provide a streamlined approach for resellers (MSPs, cloud brokers) to offer and manage multi-cloud services for end-customers. This arrangement must be customizable and meets higher SLAs with unmatched customer service levels than other cloud services. The orchestration capabilities should allow the user – whether a reseller or an end user IT organization – to create custom-purpose-built solutions that are cloud agnostic, leverage aspects of all these different services. In addition, these marketplaces must offer processes that provide the user a single bill that is reflective of what they have consumed from the different services.
Last Mile Channel Solution Providers
These channel solution providers, which include value-added resellers (VARs) and system integrators (Sis), traditionally have strong relationships with customers, offering them a portfolio of IT products and services including, in recent years, cloud services. These local “last mile” solutions providers are where off the shelf products and services are transformed in custom solutions. These providers specialize in customer centricity, providing the end user a higher level of attention and support, which is a huge value creation engine. A survey of almost 700 MSPs by Kaseya, found that among those MSPs with more than 10 percent monthly recurring revenue growth rates, approximately 80 percent listed growth in server support, remote monitoring, cloud services, backup and recovery, service desk, mobile device / BYOD management, and desktop support service revenues. The MSPs with higher growth rates are offering emerging services such as guaranteed client IT service levels, mobile device and BYOD services, and cloud application user/access/content management in higher numbers than MSPs with lower growth rates, the report showed.
However, in recent years, channel solution providers have faced a difficult choice. They can build their own cloud for as much as $500,000 in Capex investment per site and $100,000 to $200,000 per year in Opex, or they can resell services from public cloud service providers at substandard margins. However, the technical experience required to provide public, private and hybrid cloud services is often daunting. As a result, these solution providers look to alliances with wholesale cloud providers to build and manage these services for them.
Today, MSPs can choose from a wide variety of services delivered by many different vendors, which can make the process of matching the service and provider to specific needs complicated. A cloud broker has experience in dealing with multiple vendors on a day-to-day basis and possess a thorough understanding of the cloud service market and its prices. By using a broker, buyers are able to save themselves the trouble of having to conduct this research on their own, and by token of their broker’s experience, receive a more reasonable rate on cloud services that meet their specific needs.
A wholesale service with multi-cloud orchestration capabilities provides a streamlined method for resellers (MSPs and cloud brokers) to offer managed cloud services for end-customers. This arrangement provides choice, is customizable and meets higher SLAs with unmatched customer service levels than other cloud services provide. Most importantly it fits with what end user organizations see as their cloud end game.
An Orchestration as a Service (OaaS) solution can be tied into cloud exchanges, enabling the OaaS service to have access to all the major cloud providers to enable the orchestration and management of any number of multi-cloud environments, giving users the most efficient and cost effective services for their business needs.
It’s a much sought after need, Forrester says. “By investing in a unified cloud management solution that can support their entire cloud portfolio in ways that developers and business users alike,” said Forrester, “IT pros can maintain control and ensure consistency across clouds and across their organizations.”
About the Author
Pete Manca, President and CEO of Egenera brings over 25 years’ experience in enterprise computing and business development, with expertise in a wide range of mission-critical enterprise data center technologies. Previously as CTO and EVP of Engineering at Egenera, Manca led product planning by working directly with customers to understand their most difficult challenges and guide into solutions. Prior to Egenera, Manca served as Vice President of Engineering at Hitachi Computer Products America, and before that he was at Encore Computer, where he began cultivating his specialty in distributed operating systems.
Manca holds bachelor of science and master of science degrees in electrical engineering from Worcester Polytechnic Institute (WPI), where he has taught operating systems and networking at the graduate level.