Tag Archives: service providers

May 21 2013

Cloud Computing: it’s about trust!

Google announced that it will discontinue its very popular GoogleReader service by July 1, 2013. For many people, this was a real shock. GoogleReader is perceived as one of the most useful tools out of the Google application portfolio and many users built their daily news consumption completely on this service.

A journalist of one of the biggest German computer magazines (C’T, Computer Technik) found direct words for Google’s announcement: “The sunset of GoogleReader kills any trust in Google.” But why are people so upset? It’s not the first time that Google has stopped one if its services. Actually, since Larry Page took over, services have been discontinued on a frequent basis. I think, the reason for the users to be angry now is the fact that nobody expected that Google would get rid of one of its most popular services on such short notice.

However, transparency never was Google’s strength anyway.

Lets take this move from Google as an opportunity to discuss what we can learn about the relationship of cloud service providers and consumers.

First of all lets discuss why Google is doing this: because they don’t make money with GoogleReader. Google’s business model is to sell advertisements. Most Google services are only vehicles to reach users or gather data to either sell or use to better customize the advertisements and commercial banners for certain users. GoogleReader seemed not valuable enough to support this business model.

So, one important lesson we can learn is to always understand the service provider’s business model and how this is supported by the service you plan to consume.

Next, we can think who are regular clients of this service provider. Is that service provider targeting mainly users or large enterprise clients? In the large enterprise space, continuity of services is considered very important. Migration to or from a certain service can cost a fortune and steps are well planned and usually long term. In the end, user space providers tend to be more on the bleeding edge of technology, including the risk of failing or discontinuing a service.

Who is the regular client base of a service provider and how do I fit in there?

Although Google mainly serves the user area with its services, it tried to target larger companies with its GoogleDocs and GMail services, too. I don’t know if the end of GoogleReader was a very smart move for them to succeed in this space.

Feb 11 2012

Why service providers should not ignore cloud

For many service providers, cloud computing seems to be disruptive for their business model. Especially in the outsourcing business, many service providers are reluctant to offer cloud-based services to their clients. There are two main reasons behind this scepticism:

  • Cloud computing gives agility to the client to subscribe or unsubscribe to services quickly. Although this is a big advantage for the client, it brings challenges to the provider. Smaller service providers have difficulty estimating the required capacity correctly and they risk keeping expensive resources underutilized.
  • Larger providers fear losing their clients once the clients have cloud services with more flexible, standardized contracts. In today’s outsourcing world, it is difficult for a client to switch providers. Services and contracts are not standardized and relatively complex relationships exist between the client’s and service providers’ organizations. The cloud business model breaks this all up by standardizing service descriptions and consumption.

But in any case, ignoring the new trends on the horizon cannot be the solution.

The example of Kodak somehow shows what it means to answer a disruptive business change by just ignoring it. Kodak, inventor of modern photography and one of the market leaders in the early 1990s, decided not to move towards digital photography because this was considered disruptive for their photo development labs all over the world. When they finally accepted the industry trend, they had already lost ground against their competition — and you can read in the news what happened to them in 2012.

The point is, if you are not offering your clients what they want, someone else will.

So, there are good reasons not to ignore cloud to keep your current clients with you, but there are even better reason to think about cloud to win clients you have not thought about before.

Cloud computing enables small and medium businesses (SMB) to leverage services that were only affordable for large enterprises before. Just consider a professional CRM application — before Salesforce.com, such solutions where out of reach for small and medium business (SMB) clients. The same is true for professional platforms like an Oracle database server, which has initial license costs that do not fit in to the business plans of many startup companies. Receiving database services from the cloud, together with others from a shared system, makes this a positive business case. But, to be able to share the infrastructure and costs with others, service providers are required.

Summary:

The new business and delivery model of cloud computing brings risks to service providers. Clients are less forced to loyalty and might change providers more frequently. But it also means chances for new business that should not be under estimated!