The cloud opportunity: 7 Factors for defining success
The market for cloud services is growing rapidly, with 451 Research predicting a compound annual growth rate (CAGR) of 24% from 2011 to 2015. What’s more, the global cloud market is dominated by the US, which owns 63% of total cloud revenues to date. But what about European cloud players?
Most of the hype surrounding cloud computing often comes with an US perspective, particularly considering the provenance of the market’s heavyweights, like Google. But despite the US enjoying great success in this area the European market landscape is a completely different challenge. Only 6% of cloud vendors are European. The absence of a single European hosting market, highly fragmented local markets with significant differences in requirements, culture, market size and IT buying behavior make it all that more difficult for businesses to lay down the required investment and innovation needed to reap the rewards.
So what can European hosting companies do to cut through the noise of the competition and be heard in the cloud market? Here are 7 key success factors that will help any hosting company transform the way they are approaching and capitalizing on cloud computing.
1. Don’t compete on price
Unless you have the scale or deep pockets to compete in a race to the bottom, don’t compete on price. Instead, differentiate yourself from competitors through advice and support. Use the insight you have into your customers’ IT strategies to aid with more complex workloads or business continuity processes where price is not the main issue.
2. The reality is hybrid
Most customers source diverse cloud services from a range of providers. So it makes sense to differentiate your offering through integration capabilities, rather than competing head-on. Use global cloud providers to your advantage; your customers will feel comfortable consuming some workloads from a big public cloud platform, while other workloads need to stay within a local and/or private cloud environment. Look beyond your own platform and use industry or open standards to enable federated usage.
3. Follow the IT life-cycle; monitor the opportunity
Don’t expect IT departments to give up on their existing infrastructure before its life-cycle has ended, especially when budgets are tight. Success ultimately depends on understanding your customers’ technology and economic life-cycles and identifying disruptive technologies that will help them build their business case for cloud migration.
4. Offer the highest possible availability
As the old adage goes, ‘the customer is always right.’ So if customers expect 100% guarantees when their applications have moved to the cloud – even when it’s not realistic – how do you make sure your service is as close to 100% available as possible?
Your service level agreement (SLA) must be based on the physical location – the data center. Choose a provider with first-class in-house design and engineering skills and a proven track record of delivering availability under all conditions over time. Their sites should also be regularly audited to the most stringent standards, so check this is taking place. And when it comes to disaster recovery, you’ll need to offer redundant solutions for critical systems and data.
5. Customer service is paramount
Customer service should always be top priority. This means investing in problem solvers who can understand customer needs and business processes. Customers also want to know who they’re talking to, so put a face to the name. More importantly, your customers will expect technological and commercial flexibility – make sure your suppliers and partners offer the same.
6. Invest in automation
Hosting providers tend to use a variety of open-source, in-house management and monitoring tools. To save time and costs, these tools as pushed as far as they can be across the business. But as enterprise cloud management requirements become more sophisticated, more advanced management and monitoring tools become vital. The initially inexpensive or free tools quickly become too complex and expensive to manage, scale and maintain.
7. Respond to an increasingly mobile world
In light of the Bring-Your-Own-Device (BYOD) trend, enterprise IT departments need to support staff using a variety of mobile devices, from multiple locations, on the move. There is no mobility without the cloud; with the world increasingly operating on a mobile business model, customers naturally require mobile-friendly access to data on demand. Enabling and offering them such services can help you to secure future growth.
Grabbing a slice of the cloud pie
Competition is fierce in the cloud services market, with giants such as Amazon, Microsoft and Google dominating the market, but success can still be achieved. From what we’ve observed, the hosting providers who are enjoying the greatest success in this market are those that have applied these seven key factors to their existing cloud strategies.
Understanding customers’ economic and IT life-cycles, building your cloud business plan on firm physical foundations and quality of offering are key ingredients for hosting providers to differentiate themselves from the competition and boost their chances of grabbing that elusive slice of the cloud pie.
I wrote this article together with my colleague Vincent in ‘t Veld. It was originally published in DCS Europe Magazine, February 2014 .