Building Cloud IaaS Market Share by Tackling Application On-boarding

The rush is on for service providers to offer cloud infrastructure services. Many of the new entrants in the cloud IaaS market are coming from the hosting space where shared and dedicated hosting providers are extending their services to include cloud servers and infrastructure. Similarly, a large number of telecom and network service providers offer hosting services and are growing their service offerings to include cloud infrastructure services. Unfortunately, the ability to serve up on-demand, self-service, pay-as-you-go, elastic infrastructures is only the first step toward establishing a sizeable and profitable position in the market.

With a solid set of cloud infrastructure services in place, there are still nearly unlimited strategic approaches that can be followed in the fight for market share. For example, cloud service providers are differentiating via infrastructure features, infrastructure quality, infrastructure flexibility and infrastructure cost. The repetitive use of the word infrastructure is no accident. The point is that too many cloud service providers are overemphasizing their infrastructure capabilities.

This is not meant to suggest that infrastructure attributes don’t matter. They do. In fact, there are tremendous opportunities for innovation, differentiation and so on within the cloud infrastructure. Still, the best infrastructure in the world with too few customers is not the objective.

What cloud service providers need most is customers, and lots of them. So an obvious question is “What makes a good customer?” Well, isn’t it someone with an application than can benefit by running on a cloud infrastructure? After all, if there is no net benefit of running an application on a cloud infrastructure, why go to the trouble of moving it there? The good news is that several different classes of applications have emerged as good candidates for public clouds:

• Applications that only need to run periodically.
• Applications with large variations in resource consumption.
• Applications that only produce value within brief, unpredictable time windows.
• etc.

The problem is there are often a number of barriers preventing even these “well qualified” applications, as well as the less qualified applications, from moving to cloud infrastructures. A few examples include:

• Cost of migrating existing applications.
• Lack of management tools for cloud applications and infrastructure.
• Enterprise IT staff not having the skills or experience for cloud deployment.
• Application dependencies on directories and databases in the enterprise datacenter.
• etc.

Note that these barriers are not particularly infrastructure related. They are essentially application on-boarding issues. For cloud service providers, this is equivalent to having customer on-boarding issues. Cloud service providers that fail to address application on boarding issues are limiting their potential. On the other hand, those that address these challenges have a huge opportunity to build their market share.

A Focus on Application On-Boarding

I for one would like to see more focus by cloud service providers on application on-boarding. One way to approach this is through partnerships with some of the many innovative software vendors that specifically focused on related solutions. [There are some other interesting ways to consider as well… e.g. involving PaaS services, the enhancement of IaaS offerings to include more application support services etc. However, these are currently more complicated, still evolving quickly and not discussed here]. With the software vendor partnership approach, there are already a number of strong offerings that help with application on-boarding:

• Application provisioning tools are being reinvented to package and deploy applications specifically for cloud environments.
• Data integration tools are enabling applications to live in the cloud yet access shared corporate data in the enterprise data center.
• Network bridging software is allowing distributed applications to have some of their components in a public cloud and others in the enterprise datacenter.
• Virtualization tools are allowing translation of differing VM image formats so that VMs can run in cloud that do not support their native formats.
• Management tools that enable monitoring and more across multiple cloud and non-cloud environments are emerging.
• Large and small professional service firms have offerings that include cloud on-boarding.

It is quite easy to see the variety of solutions available to help on-board applications to cloud environments. It is less easy to see cloud IaaS providers taking advantage of this opportunity to partner and blend these solutions with their own services to increase market share. Perhaps some great examples will emerge during 2011.

Do you see any cloud IaaS providers doing a particularly good job of application on-boarding? Do you believe that some cloud IaaS providers can dramatically increase their market share by following a similar approach? I’m interested in your thoughts!