Cloud Computing Update: What Business Services Should Service Providers Be Introducing?

Since I joined ScienceLogic a month ago, I have been thrilled to see the progress being made by our engineers to address the dire need of service providers (be they managed hosters or internal IT service providers) to introduce new business services to their constituents. So why is this important? Because service providers will be competing for enterprise and government customers alike by the overlay services they build on top of the underlying infrastructure more so than the underlying components themselves. And in the initial stage of the sales cycle at least, constituents want to assume the cloud platform has the right amount of resiliency, scalability and security deemed necessary to host the crown jewels of their mission-critical workloads. It also means service providers get to offer an SLA at an IT service level rather than purely at a systemic or IT component level.

I spent the better part of last week talking to service providers about some of those potential new services to be offered off the shoulders of their ScienceLogic deployments for IT operations and virtualization/cloud monitoring and management. Naturally, cloud is top of mind. But there is a branching in the cloud services tree taking place between the majority of service providers looking to emulate and compete with the Amazon Web Services and Googles of this world, versus those looking take advantage of the opportunity to differentiate themselves via niche markets and offerings. ViaWest is an example of the latter; last week launching its KINECTed cloud to offer better visibility, control and support as its value proposition against the large cloud providers. Many managed hosting providers are relegating the IaaS providers to a commoditized convenience on top of which to resell new services, ranging from test and dev needs, to those that are extensions of a more highly managed service; or even as a staging area for workloads that they will later move back in-house to their managed environment.

Then there's the Equinix model. Just when people were writing off the colocation/data center providers as a necessary, but backstage player in the cloud world, the 800-pound Gorilla of the data center world just announced its Equinix 'Marketplace.' The concept escalates Equinix as a facilitator not just of interconnectivity in the data center market, but also - in the age of social media - a matchmaker between buyers and sellers of cloud services. This will drive up customer stickiness and revenue per KW hour. The Marketplace is a low-risk service for Equinix that has high reward potential, and provides a free-of-charge sales channel for customers located in their facilities.

The concept of selling the ecosystem has worked well for other cloud vendors like Salesforce.com's AppExchange; similarly for managed hosters OpSource and Rackspace (AppMatcher), and more recently IT distributor Ingram Micro. Even IT consultant and system integrator Infosys recently rebranded, telling the world it is now all in on the cloud services game. The company value proposition revolves around its cloud ecosystem that brings together partners in areas of IaaS, PaaS, applications, technology, cloud brokerage and integration to roll out tools and reference architectures.

In yet another branch are the new brokers of cloud computing, such as Strategic Blue Services that offers discounted cloud rates to users who commit to future resource usage. Granted, the company is still looking for funding, but the concept is interesting in that the value add is the credit checking and risk abatement for cloud service providers. However, it's not as simple as it sounds, since it also means having even more of a need for a resource cost allocation, or chargeback model assigned to different resource pools. More importantly, it shows that there is a play here for everyone from the infrastructure level to the trading level.

Whatever the business model, the notion of hybrid networks is becoming far more extensive, as enterprises now have the choice of on-premise, off-premise third-party managed, and off-premise self-managed cloud computing environments. The need to monitor and manage these environments holistically is becoming more challenging than ever before, and adding the ability to compare apples to apples on a performance and cost allocation basis, has to date been undertaken by very few - but something that we at ScienceLogic whole-heartedly support.

Another service that held so much potential ever since Microsoft announced its new Windows OS, is the hosted virtual desktop solution. In the past I had often heard that the difficulty for managed service providers was the tiresome argument encountered with many enterprises: That the per seat pricing model was more expensive than their current operational cost model. While that certainly isn't the case, once all OS and apps software licenses, server hardware costs, labor costs and even facilities operational costs are taken into account, the true cost and operational benefits to virtual desktop implementations and outsourced management can be financially appealing - the equally appealing part is the consistency of service and control that is garnered via the model. Perhaps the tide is changing however. UK based cloud hoster ThinkGrid just announced a new round of funding, based on the confidence of its new cloud-based services. The most prominent service it is touting is its Virtual Desktop management. A thin client hosted virtual desktop seat is now at about a 100 pounds a month over a three-year contract, whereas before it was almost as expensive as a desktop and therefore not a compelling option. That price point is high for the U.S. but a good sign for service providers.