The Shortfalls of Large Cloud Service Providers

In the age of the cloud, everything is up for change.  The growing demand for cloud services is not only redefining the technology landscape, it's reshaping channel operations and disrupting traditional structures.  And while big companies such as Amazon, Microsoft (News - Alert) and Google offer brand-name services, they can’t compete with local managed services providers (MSPs) in their customer centricity and the level of attention that these providers deliver to their end user clients.

These large, monolithic cloud providers are simply not built to provide the support enterprise customers value most when implementing a cloud migration strategy. They have neither the ability nor interest in providing these services. These cloud providers are, at heart, technology companies who simply provide a raw ingredient (one of may) from which truly customer-centric solutions are derived. 

There are three key areas that demonstrate how large cloud service providers are failing to address the needs of the enterprise customer, and why it is increasingly clear that it will be the channel that delivers the real business value as they provide the last mile customization that businesses require.

Customer Service and Support

When it comes to outsourced IT services, enterprises are not only concerned with where the services are coming from but also the quality of support they’ll be getting. Larger providers such as AWS, Google (News - Alert) and Microsoft are not properly equipped to address specific customer needs as their offerings are often standardized and come via a preconfigured, automated delivery process, as Jeff Kaplan, managing editor of THINKstrategies, recently pointed out.

In fact, managed cloud provider INetU and THINKStrategies recently conducted a study in which they surveyed 358 companies to understand the CIO experience in migrating their IT services to the cloud. What they found was that almost half of the companies that participated in the survey reported they had either failed or had stopped in their unguided cloud migrations—and a whopping 70 percent were forced to make significant changes to their initial plans.

That guided support during the migration is not the only hurdle companies face. The study also found that 27 percent of respondents cited a need for additional security services, while 20 percent cited the need for compliance services, 13 percent cited capacity planning, monitoring 9 percent, while provisioning and billing are last with 4 percent.

Multi-Cloud Brokering

Customers’ cloud strategies aren’t ever black and white. It is becoming increasingly clear that end customers need and will use multiple cloud services, not just the stock services from any one large provider. Already almost 60 percent of respondents in a February 2014 Market Pulse report by IDG are either using a hybrid cloud environment or are in the process of doing so. 

One reason behind the use of, for example, multiple IaaS providers is location.  While the big cloud service providers have opted for a few large data centers, customers increasingly have found they want and need many distributed points of presence (POPs) so they can place workloads near their end users in order to meet their performance and data residency requirements.

As such, most end user organizations are opting for a portfolio approach to managing workloads. They are not looking to put all their applications in their private cloud, nor are they going to move 100 percent of their workload to a single public cloud. Customers want to utilize multiple cloud services to meet the needs of their various workloads, brokering the placement of their workloads according to their security, compliance, service level and budget requirements.

Thus the need for specialized expertise to help organizations navigate the choices, and ultimately provision the optimal cloud offerings to meet enterprise business, as well as technical requirements, is rapidly increasing. This has led to the emergence of a cloud broker practice where the consultancies help their enterprise customers with all aspects of their cloud strategy: from evaluating cloud service providers to negotiating contracts and documenting cloud vendor deliverables.

Maximizing ROI through Managed Services

While the entry-costs for cloud services from an Amazon or Google are typically favorable, the initial savings are quickly offset by the cost of managing these environments. As a result, enterprise customers have turned to their local managed service providers for cloud. 

In fact, a recent Tech Target (News - Alert) survey of over 1,000 enterprise customers found that 55 percent want their cloud management to be done by a local partner.  These partners have forged close relationships with their customers by helping them develop their IT strategies and migration programs, and provide ongoing monitoring and compliance services on behalf of their customers. More importantly, these providers can deliver a managed cloud service much more cost effectively than the enterprise can. 

They can, with the right wholesale cloud orchestration platform, meet customer-specific needs and package together a set of custom services in a relatively affordable manner while eliminating the need to individually manage different services from multiple providers. And in turn, by embracing the wholesale model, MSPs can quickly enter the cloud services market with no up-front costs and with the ability to add service offerings that complement their particular skills and added value.

Conclusion

As they say, the more things change, the more they stay the same.  In the cloud value chain – just like as with the traditional IT ecosystem – it’s the managed service provider that holds sway.

This is because they hold the local knowledge about the customer’s individual needs, priorities and requirements.  And with this information they are able to develop a customized cloud strategy, implement an individualized migration plan and develop a unique design that satisfies that specific customer’s business, IT management, security and compliance objectives.

More than any other segment, these MSPs are in a prime position to profit from the move to cloud.  This is because they have already conquered the hardest part: building key relationships with their customers. Embracing the transition to the wholesale cloud only completes the circle – and helps drive a strong and profitable line of business for these providers for the foreseeable future.

About the Author: John Humphreys brings more than a decade of technology experience to his role as VP of marketing and has global responsibility for brand awareness, lead generation, sales enablement, product marketing and channel development. Prior to Egenera, Humphreys was senior director, data center and cloud marketing at Citrix Systems (News - Alert). There, he drove efforts around virtualization and cloud and had responsibility for developing marketing strategy, defining packaging and pricing, leading program execution, driving customer engagements and pre-sales activity, and acting as a primary spokesperson. Prior to Citrix, Humphreys founded and was vice president of the virtualization and cloud practice at IDC (News - Alert).