A Managed Services Business Owners Lament: A talk with Joe D.

The Endpoint Imperative: In a Software World, Hardware Does Matter

By G C Network | January 9, 2018

Hardware matters. From productivity to security to innovation, make sure your machines can keep up. Intel’s Sarah Wieskus joins The End Point Imperative: A Podcast series from Intel to discuss…

IT Transformation with Watson

By G C Network | January 5, 2018

Credit: Shutterstock by Kevin Jackson & Dez Blanchfield   IBM recently launched an exciting new project in the form of a podcast series produced and hosted Dez Blanchfield, appropriately titled the…

The Endpoint Imperative: A Form Factor Renaissance

By G C Network | December 22, 2017

Workplace expectations are changing, and along with them, the devices we use to do our jobs. In this episode of “The End Point Imperative”, Intel’s Sarah Wieskus tells us about…

Cloud Storage 2.0 Set To Dominate Market

By G C Network | December 19, 2017

The enterprise data storage marketplace is poised to become a battlefield. No longer the quiet backwater of cloud computing services, the focus of this global transition is now going from…

Top “Cloud Musings” Posts For 2017

By G C Network | December 17, 2017

    ( This content is being syndicated through multiple channels. The opinions expressed are solely those of the author and do not represent the views of GovCloud Network, GovCloud…

The Endpoint Imperative: ID’ing and Overcoming the Stumbling Blocks to Digital Transformation

By G C Network | December 6, 2017

Digital Transformation is the No 1 priority for organizations large and small. It’s imperative that IT remove any obstacles to digital transformation success – including outdated PCs and mobile devices.…

Industry Verticals Tackle Unstructured Data

By G C Network | December 1, 2017

  Organizations around the world are struggling to cope with the current data explosion. A vital characteristic of this data is that it is unstructured and represents things like email,…

The Endpoint Imperative: The Perimeter is Dead; Long Live the Perimeter!

By G C Network | November 27, 2017

Cloud, mobility and the Internet of Things have obliterated the traditional perimeter that protected organizations. The result: Higher productivity, but bigger challenges for security, data protection, and mobile device management.…

The Data Storage Explosion

By G C Network | November 25, 2017

Cloud computing innovation will power enterprise transformation in 2018.  Cloud growth is also driving a rapid rise in the storage market, exacerbating the enterprise challenge around storage cost and complexity.…

Digital Transformation Drives Mainframe’s Future

By G C Network | November 15, 2017

  Digital Transformation is amplifying mainframe as mission critical to business growth more than ever before. With 70% of the world’s corporate data and over half of the world’s enterprise…


 by Kevin L. Jackson

A few days ago I received a call from a small business owner asking if I would meet him for coffee.  He wanted to run some ideas past me on how he could enhance his current business with cloud computing.  This is the sort of request that I can never turn down so we quickly made an appointment for the next day.  After exchanging pleasantries and settling down with our lattes, he started to give me an overview of his current business.

Joe D. had been a fairly successful manage service provider for about 10 years but for about the last three, his customers all seem to be wondering about “this cloud computing thing”. He was actually selling a “cloud computing offering” by hosting some of his customer’s legacy applications and selling access back to them as “Software-as-a-Service” through a subscription. Most of the customers really liked the idea of exchanging unpredictable maintenance and personnel cost for his consistent monthly charge.  They didn’t even have issues with the three-year minimum term on the contracts. Joe liked it as well because the long-term lock-in gave him a pretty stable business with decent margins. Everything seemed to be going well until some of his first contracts came up for renewal.  That was when cloud computing seemed to change for some reason.
As I stated earlier, cloud computing wasn’t new for Joe D., but he had always looked at it as just another marketing term for IT hosting or managed services. His company had a single datacenter, but he was always able to meet his customer’s operational requirements by having appropriate hot and cold back-ups in place. Service Level Agreement were never an issue either. His strategy was to basically replicate the customer’s architecture and operational processes. Even if they weren’t the best, he was always able to explicitly meet the RFP requirements and deliver service better than the client could themselves. Recently, however, the cloud computing RFPs have been requiring at least two geographically separated datacenter and an ability to elastically scale based on demand. The worst part, however, was that the customers all seem to want these improved services without signing the usual multi-year contract. He had actually lost some of his long-term customer to some of the regional Cloud Service Providers. With many of his most lucrative contracts coming up for renewal in 2015, Joe D. felt that he was now forced to become a “Cloud Service Provider” himself, and wanted me to help him develop and launch an appropriate rebranding and marketing campaign.
To start off, I really had to set Joe D. straight regarding his view on cloud computing as just another marketing term. As a business solution, cloud computing is radically different that hosting or traditional managed services in some very fundamental ways:

  • True Cloud Service Providers build and offer scalable, redundant and elastic resources to the marketplace. In other words, you build it before they come;
  • Cloud services aren’t built to specification based on a RFP. A CSP provides standardized offerings with standardized SLA built on an infrastructure the CSP designs;
  • The cloud computing economic model is built on over-subscription of the CSP’s available services across a large marketplace, not on individual long-term contracts.

I explained the differences by introducing him to the essential characteristics of cloud, namely:
  • On-demand self-service: A consumer can unilaterally provision computing capabilities, such as server time and network storage, as needed automatically without requiring human interaction with each service provider.
  • Broad network access: Capabilities are available over the network and accessed through standard mechanisms that promote use by heterogeneous thin or thick client platforms (e.g., mobile phones, tablets, laptops and workstations).
  • Resource pooling: The provider’s computing resources are pooled to serve multiple consumers using a multi-tenant model, with different physical and virtual resources dynamically assigned and reassigned according to consumer demand. There is a sense of location independence in that the customer generally has no control or knowledge over the exact location of the provided resources but may be able to specify location at a higher level of abstraction (e.g., country, state or datacenter). Examples of resources include storage, processing, memory and network bandwidth.
  • Rapid elasticity: Capabilities can be elastically provisioned and released, in some cases automatically, to scale rapidly outward and inward commensurate with demand. To the consumer, the capabilities available for provisioning often appear to be unlimited and can be appropriated in any quantity at any time.
  • Measured service: Cloud systems automatically control and optimize resource use by leveraging a metering capability at some level of abstraction appropriate to the type of service (e.g., storage, processing, bandwidth and active user accounts). Resource usage can be monitored, controlled and reported, providing transparency for the provider and consumer.
And finally I broke the bad news that unless Joe D. was in the position to make a significant capital investment in multiple geographically separated datacenters and a multi-year transition plan to an entirely new business model, he would never be able to become a cloud service provider.
So now let me come clean with you. I actually didn’t have coffee with Joe Datacenter (Joe D.) and the entire story is fictitious. What is real, however, is that many traditional managed services and hosting companies are having similar conversations internally, looking for a way forward in this cloud computing marketplace. Unless you already have a significant number of geographically distributed datacenters and a large established customer set using it, you will probably never become an independent cloud service provider. There is, however, an excellent way out of this dilemma. Major cloud service providers like Dell, Amazon, and Cloud Forge have built cloud service marketplaces. These marketplaces not only provide an opportunity to resell new services, but they also represent great partnering opportunities for traditional hosting or managed services companies. So if you are a Joe D. or know of one don’t suffer in despair. Take heed of my advice and seek out a marketplace partner and be an active participant in the rapidly expanding cloud computing market!

(This post was written as part of the Dell Insight Partners program, which provides news and analysis about the evolving world of tech. To learn more about tech news and analysis visit Tech Page One. Dell sponsored this article, but the opinions are our own and don’t necessarily represent Dell’s positions or strategies.)

Bookmark and Share

Cloud Musings

( Thank you. If you enjoyed this article, get free updates by email or RSS – © Copyright Kevin L. Jackson 2012)

Follow me at https://Twitter.com/Kevin_Jackson
Posted in

G C Network