As it is well-known, the cloud market is dominated by large cloud service suppliers (CSP) such as Amazon, Google, and Azure. Amazon Web Services is dominating the market with 47.1% of the Public Cloud Market Share. The smaller CSPs are increasingly having to diversify their offering and collaborating rather than competing with large and other small providers, for example to deliver specialised services specifically for a market vertical.
The concept of cloud computing is being defined and redefined again by the larger players and the smaller players are continually playing catch up. The agility and functionality of the smaller players however is increasing to support a more agile approach to integrating and working with public cloud providers. The large CSPs are interested in providing cost and profit effective computing services and the more niche specialist requirements are largely ignored. This has delivered a partnership advantage to the smaller CSPs. This is facilitated by tools such as AWS Direct Connect and Azure Express Route allowing on premises or data centre providers to scale into the public cloud on demand.
The concept of multi-cloud in the context of smaller providers is now being spread in multiple dimensions:
- Hybrid cloud: Providing customers ability to hyper scale from their private cloud environment into public cloud providers.
- Network connectivity: Providing interconnects to proprietary networks such as health and social care network (HSCN) which large public cloud providers are not capable of providing directly.
- Backup and disaster recovery: Using geographically diverse and different CSPs/data center operators to deliver enterprise solutions.
Smaller CSPs need to be able to provide a comparable specialised service and toolset to be able to match the agility that the larger players provide.
Collaborate, not compete
Domain specific knowledge smaller CSPs now have means that larger CSPs are being driven to collaborate with the smaller providers to resolve the gap in their domain specific knowledge.
As an example, in the health care domain, CSPs with domain specific knowledge have gained that because they are close to the endusers. Often CSP domain experts are not engaging with technical people but with clinicians who are at the cutting edge of adopting new and innovative cloud based technologies as part of their service to patients. It is not just a case of CSPs selling equipment as a service, they need to create a service which meets the needs of the end user, and this cannot be done being one step removed from the user’s domain experts. An overall service offering to match all the client’s requirements in terms of availability, performance, security, privacy, etc. the will drive an increasing demand for an alliance with other CSPs. Providers will need to be prepared to enable and facilitate such scenarios.
Larger cloud service providers particularly delivering to the public sector must consider a reputational risk associated with their business relations with smaller CSPs. Recently, Data Centred, a Manchester UK-based data center provider was put into bankruptcy administration after its only customer, the UK government’s department of Revenue and Customs (HMRC), opted to move their complete environment out into the AWS public cloud. It can be argued that building a business on one, admittedly large, customer is high risk and Data Centred should have diversified and built a wider customer base. However, even if Data Centred had developed a more diverse customer portfolio the loss of this disproportionately large customer would have resulted in a major re-structuring, downsizing, and even then bankruptcy may not have been avoided. This has led to a public concern regarding the competition generated — predominately American providers — delivering data center services to EU-based businesses and governments. To counter this perceived problem many public cloud providers are opting to work with local CSPs to front services that are supported by the public cloud.
Security and Privacy
In the CloudWATCH Summit in September 2017, Nicola Franchetto, senior associate and data protection officer at ICT Legal Consulting explained that the upcoming General Data Protection Regulation EU Directive (GDPR) will broaden territorial reach compared to the current regime, The new directive will apply not only to data controllers and processors in the EU, but also to processors outside the EU that offer goods or services to data subjects in the EU and/or monitor the behaviour of data subjects in the EU.
In this context, small providers mastering local regulations and data protection in the cloud will play a valuable role as allies of those big players from within and outside the EU that need to demonstrate adherence to the EU GDPR. Further, application and service providers in privacy demanding vertical domains would be willing to opt for cloud offers that ease their compliance and supply them with the necessary security and privacy controlling mechanisms as those provided by MUSA framework.
In conclusion, the picture of cloud service provision is not as simple as the marketing of the larger CSPs would ask us to believe. Domain expertise and local expertise are frequently quoted as reasons for a collaborative approach to providing services, leading to an increase in multi-cloud service provision. The future impact of GDPR cannot be ignored by large CSPs and will further influence the need for partnership alliances. Large CSPs find that it is often easier to collaborate with smaller local CSPs rather than ignore them. After all, cloud computing is a collaboration between the customer and supplier and expanding that relationship is natural.
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