Want to Make More Rain? Squeeze the Big Clouds

By Howard M. Cohen

You could certainly measure success in selling cloud services the same way most sales are judged — by volume of revenue. But real success also requires selling each customer the right cloud. Mismatches may sacrifice profitability to support costs, while a proper fit equals ongoing revenues.

The natural inclination when seeking the right fit is to stick to the big names in cloud computing, just as you would with any technology. The problem is that “cloud” covers such a mind-boggling variety of services that there are no universal leaders, despite what Amazon may wish us to believe. Who’s really big in cloud always depends on what you’re selling and to whom, so let’s keep this simple.

Is your customer looking to obtain “traditional” IT services from the cloud? Run standard line-of-business applications? Their biggest priorities are solid reliability and stability of performance.

Or is your customer seeking to partner with a provider to build an agile environment in which they can innovate, explore and create new ways of doing things? Their biggest priorities are agility and leading-edge technology.

Industry analyst Gartner Research refers to these as “Mode 1″ and “Mode 2″ approaches to IT and insists that most companies need both, what it calls “Bimodal IT.” We’ll just stick with “simple” and “complex.” From a selling standpoint, a customer with simple needs will closely resemble a typical telecom buyer — sign up for a standard package of services that will be delivered by the cloud provider with little or no support from the reseller. A complex customer seeking agile computing capabilities to create competitive advantage will require extensive assistance from systems integrators, developers and other IT service professionals with whom you can partner to create a complete solution.

Good enough, but that still leaves the vendor question. In the cloud era, fill in the blank: No one ever got fired for buying [      ] cloud.

There’s no one right answer. And that’s where you come in.

The Lineup

Let’s take a look at the power players in this game with an eye toward how they built their cloud offerings, and which you can most readily turn to for “simple” and “complex” customer requirements. Not to dismiss small, specialized providers. They can often be great fits, but remember — the point of cloud is economy of scale and the resulting cost, redundancy and other benefits. 

There are many ways to define who has the “biggest” cloud, and comparisons tend to be complex because different vendors bake different services into their metrics. Synergy Research combined infrastructure-as-a-service (IaaS), platform-as-a-service (PaaS), private cloud and various public cloud services in its February Cloud Infrastructure Services report, covering market share and …

… revenue growth for the last quarter of 2014; see the figure to the left.  

If you measure by market share alone, Amazon is the clear leader, with 28 percent, followed by Microsoft with 10 percent of the market, IBM with 7 percent, Google with 5 percent, Salesforce with 4 percent, and Rackspace with 3 percent. But market share isn’t the whole story. While Amazon grew 51 percent year-over-year, Microsoft almost doubled that rate with 96 percent growth, and Google enjoyed 81 percent growth. The market is in flux. While Amazon still beats its top four competitors combined, that is poised to change. So evaluations take more than just looking at the numbers.

Perhaps the most well-known gauge of leadership in the IT industry is the Gartner Magic Quadrant, in which the analyst firm evaluates companies in a given sector based on its definition of completeness of vision, moving from left to right, and ability to execute, moving upward. The competitor furthest up and to the right is therefore considered superior.

In the most recent Worldwide MQ for Cloud Infrastructure, released in May, Amazon Web Services is the clear leader in ability to execute, at least by Gartner’s standards, with completeness of vision just slightly better than its top challenger, Microsoft. The fact that Synergy Research’s No. 3 market share leader, IBM SoftLayer, barely sneaks into the Visionaries quadrant, with much lower ability to execute, demonstrates that including hardware and software revenues along with cloud services may skew the numbers, making revenue the wrong place to look for leadership until reporting improves.

So where does that leave you when deciding whom to partner with? Let’s break down strategies for the four dominant players according to Synergy, with an emphasis on doing right by both simple and complex customer needs.

Inside the Big 4 Playbooks

Amazon Web Services: Still concerned that Web services is an “afterthought” business to Amazon?

While Amazon has a diverse customer base and the broadest range of use cases, according to Gartner’s ranking, including enterprise and mission-critical applications, the firm also points out that AWS can be a complex vendor to manage. Many services and features that are bundled in by other cloud providers are a la carte with AWS, which further skews …

… price comparisons. Most customers will need third-party cost and operations management tools.

“In terms of profit potential, Amazon is a cloud infrastructure provider disguised as an e-tailer,” wrote ZDNet editor-in-chief Larry Dignan in April, pointing out that all of Amazon’s North American sales generated $517 million in the first quarter of 2015. AWS by itself generated $265 million.

While many “simple” Mode 1 requirements can be fulfilled by Amazon, Gartner says AWS has the richest array of IaaS features and PaaS-like capabilities and that it’s rapidly expanding its service offerings. That means AWS is most attractive to customers that require more complex Mode 2 tools and resources — and have the requisite expertise in-house or via a partner.

As the market leader and trailblazer in the cloud space, AWS has attracted a very large technology partner ecosystem that provides measurement and management tools, software applications specifically packaged to run on AWS, plus all of the professional and managed services required to get the most value out of AWS.

Microsoft Azure: In his first email to all employees last summer, new Microsoft CEO Satya Nadella declared that, “At our core, Microsoft is the productivity and platform company for the mobile-first and cloud-first world.” Those who speak fluent Microsoft quickly translated “productivity” to mean “Office 365″ and “platform” to mean “Microsoft Azure.” Clearly, Microsoft wants to become your and your customers’ data center, or at least an extension thereof, and in fact it offers several advantages from the perspective of data center operations.

First, Active Directory is the default construct for managing rights and security across enterprises, and the company recently announced that Active Directory for Windows Server 2012 R2 and Active Directory for Microsoft Azure will interoperate seamlessly. Second, Azure is simpler to use than some competitive offerings because …

… every service ultimately boils down to being just another virtual machine — the functional equivalent of a hardware server running an operating system and processing a workload. The difference is that VMs can be provisioned on the fly, paid for as used, and then taken down just as quickly. Finally, Microsoft’s most recent priority is to let everyone know that “Azure Loves Open Source!” and that Linux and other operating systems, MySQL and other databases, and Java and other programming languages all run well and are easily managed on Microsoft Azure. Nadella clearly wants customers to know Microsoft understands the real multivendor world your customers live in. These factors mean data center operators can use Azure to scale up and down, simply and securely, without purchasing hardware and licenses that would sit idle when demand returns to normal. This means not only cost savings but also consistency of operations, simplified management and a wide range of OS and application choices.

Another advantage is the Microsoft Partner Network comprising more than 700,000 companies worldwide that sell, implement and support Microsoft platforms. This channel has long-term, well-developed relationships with many large and midsize customers, making it easier for them to introduce Azure successfully. Many telecom specialists have partnered very productively with IT channel partners who are already familiar with the accounts, their infrastructures and who the decision makers are.

Google Cloud: Mode 2 “complex” environments want to “do IT like Google.” Its strongest suit is an ever-expanding set of advanced technologies, many of which are very appealing to those with a taste for the bleeding edge. More often than not, these are technology-centered businesses. According to Gartner, Google “is still in the rudimentary stages of learning to engage with enterprise and midmarket customers, and needs to expand its sales, solutions engineering and support capabilities.” It’s probably not the choice for customers who just need simple …

… IaaS, but technologically is an innovator. It’s especially focused on databases and predictive data analysis, with no fewer than six such offerings under the Google Cloud Platform umbrella.

The channel may be its Achilles heel: Not many IT or telecom providers take Google seriously as a partner. Still, it does have a reseller program and last year added channel tiers with personnel and revenue targets for the top two levels. It also has a dedicated Google Apps for Work reseller business and is making inroads in the education vertical with Chromebooks.

IBM: IBM shut down its own SmartCloud Enterprise infrastructure services offering in January 2014 and moved all of its customers over to SoftLayer, which it had acquired the previous July. Consistent with its long tradition as a comprehensive provider of information technologies, IBM positions itself as the ideal resource no matter which way a customer wants to do cloud. Prefer to build your own private cloud infrastructure? IBM servers can do that. Want virtualized servers? IBM SoftLayer is your best choice. Need some bare-metal, non-virtualized servers on which you can do anything you want? IBM SoftLayer is your best bet. It badly wants to have the right answer every time.

This is really an expansion of Microsoft’s approach into the hardware world. IBM customers can range from those who simply need to run applications on a server in a managed data center to those who want to craft their entire solutions themselves using someone else’s infrastructure, all while …

… making connections as needed between various platforms.

SoftLayer is an excellent platform for customers that prefer open source because it features OpenStack-based object storage. However, its current business model is primarily focused on what would be considered non-cloud services, such as hosting of dedicated servers and appliances. Given that IBM has owned SoftLayer for only a short time, we anticipate seeing this shift in the near future. At the bottom line, IBM SoftLayer along with classic IBM core offerings provide “complex” Mode 2 customers with tremendous flexibility. With IBM leading a charge to create simpler services for the more fundamental customers, look forward to seeing more Mode 1 customers finding IBM offerings attractive in the future.

Hundreds of smaller cloud providers build their services on top of these and other big networks. As we discuss in “Cloud Risk: Hype vs. Reality,” that means you need to understand what strengths and weaknesses customers will inherit.

Planning Your Presentations, Proposals

Selecting the right cloud begins with your evaluation of the customer. If their needs are fundamental, choose a provider whose strength is in solid reliability in fundamental delivery of applications. If your customer is looking for …

… a fertile playground for new ideas, you have several options, culminating with the ultimate geek choice, Google.

Beyond that, however, are some less obvious factors. Many of the customers you speak with today grew up in a world where “nobody ever got fired for buying IBM.” Others are deeply invested in the Microsoft stack. Still others are opposed to Amazon or Google or others because of acquired attitudes that may or may not have any foundation in fact. With the Mode 1 client, you’ll probably never have implementation or support concerns because they’re being managed by the largest providers in the industry. With Mode 2 clients you’ll need to be far more creative in identifying and vetting the right resources to get the job done right.

Of course, there is the alternative of turning to smaller cloud providers, the ones relegated to Gartner’s “niche players” as well as a bunch of cloud services providers that are even smaller and niche-ier — boutique shops that are very highly specialized, and right in the crosshairs of IBM. Just remember that for cloud, small means far fewer support resources. That can become all too important at the worst possible time.

Cloud is here — 85 percent of new software is being built to run on a cloud architecture, according to IBM. Laggards will fall behind, so understand your customers and what they want to do, match them with a reliable provider whose offerings are consistent with their needs, and watch your cloud business rise.

Howard M. Cohen has more than 30 years of IT channel executive experience and now consults, presents and writes extensively on IT topics including virtualization, infrastructure, cloud and management. He has written previously for VARBusiness, Redmond Channel Partner, eWeek, Microsoft, Citrix, Cisco, IBM, CA, Dell, Verisign, Ingram Micro and many top solution providers. Cohen has served on many key vendor partner councils including the Apple, HP, IBM and NEC Service Advisory Councils and the Ingram Micro Service Network board and has served as a U.S. Board member, National Communications Chair — and Eastern Regional Chair — of the International Association of Microsoft Channel Partners.

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Twitter: @howardmcohen