Cloud & Data Center

Cloud Brokerage Will Shape Future Cloud Business Models

By TMCnet Special Guest
Matt Davies, Senior Director of Product Marketing, Cordys
  |  March 15, 2013

This article originally appeared in the March 2013 issue of INTERNET TELEPHONY.

Service providers are faced with a number of challenges in fast moving, difficult times. The cloud is often billed as the answer to everything. It offers countless possibilities, from increased agility and reduced operational costs, to a new revenue saviour for service providers as they take their first steps to becoming a cloud broker.

Adopting the cloud broker model can give service providers the chance to go beyond commodity offerings and differentiate in the cloud, by aggregating and combining their own offering together with cloud services to offer these high-margin, value-added services to customers.

But cloud brokers beware: there’s a risk of trying to be all things to all people. It’s vitally important to ensure that a broker’s offering is targeted and created to meet the needs of a specific market. For example, enterprises and SMBs may be unlikely to subscribe to all cloud services from a single provider.

So which approach is best for which target market?

Telcos have significant opportunity as a SaaS (News - Alert) broker with SMEs

For telcos, the Software-as-a-Service broker is the best way to go. This allows them to leverage their broad customer access and sell SaaS to SMEs combined with their carrier portfolio. SMEs will expect consolidated provisioning and billing, but also service aggregation and federated SaaS applications provided by the broker.

For example, CloudItalia is working with Cordys to offer a core set of services that are vertically focused and aimed specifically at the SME customer segment. This approach is all about providing pre-packaged service building blocks that are obvious, intuitive and compelling for SMEs to work with. The ability to create smart applications or enterprise mash-ups is critical here. They provide the capability to build new high-value business applications made up of telco assets such as voice, cloud services and mobile capability that SMEs are most likely to require.

Together with orchestration tools, this allows users to consume exactly the business capability they need and combine building blocks into new applications. Because the cloud service provision component is highly efficient and based on the company’s existing telecom network, this gives customers significant benefits and Cloud Italia the chance to differentiate.

Forrester’s (News - Alert) Forrsights survey data shows that by the end 2012, on average, nine different SaaS applications will be used at the same time in a single business. This will increase to 13 this year. This requires a higher automation of billing, provisioning and integration across the SaaS portfolio, a flexible subscription approach for individual employees and the ability for the telco to create value on top of these vanilla SaaS applications.

Selling to the enterprise as an infrastructure broker

Enterprises are moving to IaaS and typically require a mixture of multiple cloud infrastructure services, probably from multiple providers. Systems integrators and dedicated cloud infrastructure providers can create significant new business opportunity by becoming IaaS brokers. Providing dynamic sourcing across public, virtual private and private clouds, the IaaS broker model leverages temporary spare capacity on the premises, and combines it with spot price offerings of virtual private or public cloud providers.

IaaS offerings vary by a number of factors, including reliability, price, local presence of data centers, legal compliance, performance, and many other characteristics. SIs can retain long-lasting customer relationships or win new business with enterprise buyers by mixing and matching and offering a full portfolio of their own cloud services and reselling public cloud IaaS from others.

Infrastructure broker services add a unique value and make the multi-provider portfolio consumable.

According to Forrester’s Forrsights Hardware Survey, 9 percent of all enterprises today use a hybrid cloud infrastructure, mixing a private cloud with an external cloud provider. This number is expected to increase to 26 percent by 2015, and Forrsights data indicates that half of that group will be using sophisticated cloud management such as policy-driven provisioning.

This group will drive the adoption of infrastructure broker services in the future.

The unified cloud broker

In the future – these two flavors of broker may converge and a single company might become a unified cloud broker, offering SaaS and infrastructure brokering. The availability of a sophisticated process-driven provisioning frameworks, which support the dynamic sourcing of both infrastructure and SaaS applications, would give huge synergy for providers looking forward to a unified cloud broker.

Leading technology vendors are already offering the platforms to support this universal provisioning spectrum. However, it takes a cloud provider at least a year to merge discrete broker services into a unified cloud broker business model and technology stack.

We haven’t seen a unified cloud broker offering yet, but watch this space. It’s coming.

Edited by Braden Becker