If you have not seen or read James Urquhar’s recent articles on “’Go to’ clouds of the future”, I encourage you to do so. It’s a great assessment of today’s service providers position in the marketplace as they transition to cloud computing models.
I’m inclined to agree with several of the points that James makes in “’Go to’ clouds of the future” particularly when he states, “start-ups and small businesses will be seeking integrated services, either from one vendor, or a highly integrated vendor ecosystem.” He also adds, “But there are very few companies out there today that can achieve broad IT systems integration.”
This is something that I have been giving a lot of thought to lately in discussions and email exchanges with hosting companies. When I ask, “How are you preparing for cloud computing?” The answers range from, “we are the cloud” to “we provide cloud offerings such as…” – and go on to mention hosting offerings or their ability to provide virtual machines in minutes.
Yet, in my conversations with SMBs, those are not the types of offerings they seek out. Instead, SMBs talk about SaaS offerings such as Salesforce.com and Google Apps. While hosting companies are thinking about delivering IT as a Service, SMB is seeking to consume office and business applications as services.
Those conversations have led me to a similar position mentioned in James’ article, “‘Go to’ clouds of the future, part 2”, where he indicates, “Companies such as Rackspace, Terremark, and other hosting companies that have embraced the cloud for IaaS services are important players in the overall cloud model, but I don’t believe that they are ready to contend, when it comes to integrated cloud suites, at this time. However, if VMware or another cloud infrastructure software provider builds a suite of services that they can simply deploy and operate, that may change quickly. They just are not contenders based on today’s business models.”
Unlike James, I don’t see VMware or other cloud infrastructure providers focused on building the suite of services that smaller hosting companies can leverage. Even if they were focused on doing so, you have to wonder whether they will be fast enough to catch the SMB cloud computing transition.
What I do see is the likelihood that hosting companies will need to partner or be acquired by players that are more strongly positioned to deliver on this vision of cloud computing.
The cloud service provider of the future will have to deliver an integrated ecosystem or a one-stop shop of integrated IT systems and integrated business applications simple enough for SMB to consume unless someone can figure out how to deliver integrated SaaS offerings to SMB seamlessly, though given the difficulty of such integration challenge, we’re more likely to see the path of least resistance – acquisitions and partnerships – at least for the time being – and that makes hosting pure plays ripe for the taking.
-Tune The Future-
Business Innovations 
Fred van den Bosch
February 3, 2011
Ray,
I agree that SMB’s interest will mostly be for SaaS offerings and that integration between applications will be a high priority. However, that does not necessarily mean that all cloud service providers have to deliver such a fully integrated set of services. One can compare IaaS vendors with the computer system vendors of the legacy IT world; some provide a completely integrated software stack (and consulting services) with their platforms, while others focus (and are successful in doing so) on delivering the most cost effective platforms, with 3rd parties (ISV’s and integrators) providing solutions to specific (horizontal or vertical) market segments. Based on that I believe that there will be room for (lean) IaaS-only vendors in the industry, for others to host their PaaS and SaaS offerings, just as there will be for SaaS- or PaaS only providers, and for vendors that do it all.
Ray DePena
February 3, 2011
I agree. After all, IBM mainframes were supposed to die long ago. That being said, I think most of the market in the future will have shifted, but I do agree with you that there will still be room for legacy business systems and models.