Two reasons why the Cloud marketplace could destroy technology companies as we know them
We hear a lot about the potential impact of cloud, especially on the IT departments within large enterprises. Over the past few months I worked with many of the world’s leaders in the cloud space. Each of them has an impressive array of slideware, plans and some actually have really exciting progress to report. What I am missing though is their fundamental appreciation and reactions to what I believe are two fundamental paradigm shifts about to hit them and in extension us.
Liquidity of Assets and Brokerage of solutions.
Liquidity of Assets will dramatically alter the business model for many traditional service providers. The way I see it, over the next few years there will be a proliferation of innovative companies offering all sorts of cloud services. Infrastructure, Platforms, Applications and Solutions will all be offered in a very dynamic market place.
That market place is yet to evolve and we all know the logistical, legal and other challenges that are inhibiting that. So while those challenges remain I believe that we will quickly see an intermediate step being filled in through emerging Cloud Exchanges. A new model for this concept is already evolving at SwitchNap in the USA.
Take a look at the Switch Nap Cloud Exchange
As this type of exchange takes hold, all services will potentially be available in a very dynamic model. That means that pricing will be determined by the (immediate) availability of cloud solutions that meet our design requirements. That in turn means that the underlying value of assets are continually marked to market. In a world of liquid assets, no enterprise can afford to own assets. I even wonder whether traditional outsourcers can ever be profitable once this shift has occurred. That in my mind changes everything.
Brokerage of solutions.
Enterprises are best served by Cloud Exchanges as they allow us to retain back-end data in those secure centers and that helps us deal with a lot of our regulatory challenges. If I look at the business models deployed by the leading technology service providers, most still seem to see Cloud as an extension of Co-Lo and Hosting and that is where they threaten to derail. The future of Enterprise IT is as a broker of solutions based on our design criteria. We will be very hesitant to tie ourselves to new locked-in cloud solutions, especially when we have the choice not to.
Clearly, I am fairly convinced of these two trends and that these trends will cause untold upheaval in the technology market. What I obviously don’t know is when this type of exchange will emerge as a real market force. I don’t know how dynamic enterprises will actually be in choosing and switching cloud providers and I don’t know when these brokerage models will develop alongside the requisite matured tool-sets that make it all possible. I do know that we need to prepare our internal IT teams to live in a world where design and brokerage replace many of the more traditional working practices. It will take years of cultural adjustment and skills development, so let’s get started now.