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Cloud services brokers are much like any other type of broker -- in this case, acting on behalf of customers to aggregate, integrate and customize cloud offerings by multitudes of providers. Cloud services brokerage is mostly about managing and governing, and because cloud brokers eliminate the need for companies to do the legwork themselves, it is a fast-growing field that will see a lot of activity in the next few years, according to Gartner.
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The cloud services brokerage market will reach $160 billion by 2018, Gartner estimates.
"Cloud providers are not in the business of making sure all [cloud services] are integrated," said Daryl Plummer, a managing vice president and chief of research for cloud computing at Gartner. "You need someone to manage, govern and customize all those services that are going to go to cloud. You need an intermediary, someone to … ensure all the integration is working."
Customers are starting to use the term "cloud brokerage" more frequently now, Plummer said, because they are realizing they need help beyond migrating their systems to the cloud.
That's bad news for traditional value-added resellers (VARs) and managed services providers (MSPs) that are not transitioning to a cloud-centric world. Observers say they'll see a significant loss in business if they don't change their models soon. "As you go into the cloud, you no longer need to buy hardware and software but [only] the hardware service and the software service, so system integration goes away and it becomes service integration -- and that service integration is what a cloud broker does,'' explained Kevin Jackson, CEO and founder of GovCloud Network, a consultancy that works with companies and federal agencies. "Tomorrow's system integrator is actually a cloud services broker," he noted, adding, "What good is a VAR if you can't resell software?"
Three hot areas in cloud brokerage are governance of cloud management platforms, which orchestrates or provisions cloud services; integration of different cloud services; and aggregation with cloud marketplaces to find companies that do the work, said Plummer.
Gartner has coined the transition to a digital model as "DigiFlip," which Plummer said brings an industry-wide set of new expectations from providers: better, faster and cheaper. "Who are the vendors leading the way in this new model? Not the traditional vendors," he said. "Who would have thought [companies like] Appirio or Cloud Sherpas could be mentioned in the same breath as CSC or Accenture or Infosys? Until [the latter group of] vendors become power brokers in the cloud, [others will be] taking away the limelight."
Cloud Sherpas has built a team for cloud management and the care and feeding of the monthly, recurring subscriptions for cloud services, said David Hoff, co-founder and CTO. In the hardware world, it was about making sure systems were installed correctly and functioning -- "one and done," Hoff said. In the cloud world, if a customer buys 1,000 licenses for Salesforce, brokers monitor and track those licenses to ensure that at least 90% of the 1,000 are being used, he said.
"We have a very large number of resources dedicated to the cloud management function that ensures our customers are using the solution and understanding it and using it effectively," he explained.
Hoff sees this year being about educating people about what cloud brokers do. "For us, the value-add is around the integration. … In the on-premises world, those integrations were more fragile and expensive because we had this version of 'product X' and that version of 'product Y,' but in the cloud, everyone is in the same version. We build repeatable solutions to share apps across platforms, and organizations don't have to reinvent the wheel."
Kevin JacksonCEO and founder, GovCloud Network
While Hoff sees traditional VARs starting to compete against Cloud Sherpas and other cloud brokers, he said "there are lots of areas like the integration and migration and customization that [traditional VARs] haven't been … able to deliver on. We feel their market is going to keep shrinking." But don’t count out VARs, MSPs and systems integrators just yet. Plummer said he has had discussions with large integrators like CSC, Infosys and Cap Gemini, which are interested in understanding how to make the transition.
"These big integrators want to be the full service, one-stop shop for brokerage," said Plummer. "They’re just not there yet." In order to do so, "they have to retool and retrain their workforce because they have tools associated with on-premises systems they can touch," he said. Now they need to get new tools and skills to deal with cloud system interfaces.
Hoff and Plummer both believe the term "cloud broker" is not a term people understand yet, and Hoff said Cloud Sherpas tends to shy away from using it.
"When a lot of people hear 'brokerage,' they hear [it] with a commodity mindset and it very quickly gets associated with 'Hey, I want to provision 5,000 servers and you guys are going to help me put it on the lowest-cost provider,'" Hoff said.
"They say a 'broker is a low value proposition,'" added Plummer. Often an enterprise decides to move to cloud services to save money but they don't, because they don't know how to negotiate to structure services the way they need them, he said.
"It's going to be a winding road in how [cloud brokerage] plays out," he said. "Whether you use the term 'broker' or not, we're talking about an intermediary who adds value, and that's going to happen. Otherwise, [cloud computing] will fade away. There's no way to deal with the large number of cloud providers and services that they deliver … without some help."
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