In the Cloud Differentiation Means Services

And integration.. Don't forget the integration.

Scott Bils has a post on the "Five Mistakes that Enterprise Cloud Service Providers are Making" over on Leverhawk. Points four and five were particularly interesting because it seems there's a synergistic opportunity there.

Point number four from Scott:

Omitting SaaS and PaaS: Cloud infrastructure service providers have little incentive to migrate customers to public cloud SaaS offerings such as Salesforce.com or Workday. For many customers, migrating legacy apps to SaaS models will be the right answer. Many enterprise cloud service providers conveniently omit this lever from their transformation story and lose customer credibility as a result.

And point number five:

Failing to differentiate:  Many vendors position themselves as providing managed services that make cloud models ”enterprise ready.” The problem is that every other vendor is saying the exact same thing. Enterprise cloud service providers need to think harder about what their distinctive customer value proposition really is.

I will not, for the sake of brevity and out of consideration for your time, offer an extensive list of my own posts on this very point save this one. Suffice to say, differentiation of services is something I've noted in the past and continue to note. Mostly because, as Scott points out, it's a problem.

What caught my eye here is the relationship between these two points, specifically the relationship between SaaS and services in IaaS. Scott is right when he points out the hyper-adoption rates of SaaS as compared to IaaS. As has been often pointed out, SaaS enjoys higher adoption rates than any other cloud model

A Gartner/Goldman Sachs Cloud CIO Survey In 2011 noted 67% of respondents "already do" SaaS. The survey indicated that 75% would be using SaaS by 2017. A modest number, I think, if you look at the rates of adoption over the past few years.

Combined with this is the interest in hybrid cloud models. While usually pointing to the marriage of on- and off-premise cloud environments, hybrid cloud is more generically the joining of two disparate cloud environments. That could also be the joining of two public providers irrespective of model (SaaS, IaaS, PaaS).

What IaaS providers can do to address both points four and five simultaneously is offer services specifically designed to integrate with a variety of at least SaaS offerings. Services that provide federation and/or SSO services for and with Salesforce.com or Google, for example. Services that differentiate the IaaS provider simply by making integration easier for the ever increasing number of enterprises who are adopting SaaS solutions.

IaaS differentiation is not going to come through more varied instance sizes and configurations or through price wars. Enterprise customers understand the value - the business and operational value - of services and pricing is less a deciding factor than it is just one more factor in the overall equation. The value offered by pre-integrated services that make building a hybrid cloud easier, faster and with a greater level of reliability in the stability of the service - such as would be offered by such services - has greater weight than "is it cheap."

Vendors who offer APIs for the purposes of external control and ultimately integration know this already. While having an API has become tablestakes, what is more valued by the customer is the availability of pre-integrated, pre-tested, and validated integration with other enterprise-class systems. Having an API is great, but having existing, validated integration with VMWare vCD, for example, is of considerable value and differentiates one solution from another.

IaaS providers would do well to consider how providing similar services - pre-integrated and validated - would immediately differentiate their entire offering and provide the confidence and incentive for customers to choose their service over another.