Why the cloud brokerage model must change

In this week-in-review podcast, the editors of SearchCloudProvider.com discuss what's new on the site, including the evolution of the cloud brokerage.

Cloud computing is often compared to the Wild West -- not because there are shootouts at high noon, but rather because it seems the rules are still being written for this competitive, untamed market.Cloud brokerage firms surfaced to help customers and providers sort out some of the chaos, but already that business model is growing stale. Brokers need to be more than "the middlemen."

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In this week-in-review podcast, site editor Jessica Scarpati and news writer Gina Narcisi discuss what was new on SearchCloudProvider.com for the week of July 2. Tune in as they review:

  • The evolution of the cloud brokerage and why cloud service brokers need to position themselves as more of strategic partner to customers than just a middleman;
  • A three-part tip series on emerging business models for cloud federation, including partnership opportunities with companies that use the technology to build cloud marketplaces, content delivery network (CDN) services and bigger service footprints.
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CloudCast Weekly: Why the cloud brokerage model must change

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The following is a transcript of the podcast.

Jessica Scarpati: This is CloudCast Weekly, a podcast by SearchCloudProvider.com. I'm Jessica Scarpati, site editor of SearchCloudProvider.com. And with me trapped in the podcast studio on this gorgeous summer day in Boston is our news writer Gina Narcisi. Hey Gina, how you doing?

Gina Narcisi: Good, Jessica. How are you?

Scarpati: Good, thanks for being here. So as always we are here to do a quick wrap-up of all that is new on the site. So Gina, why don't you tell us about the news story that you had this week about Cloud Brokers.

Narcisi: My story this week was called "Cloud Service Brokers Must Differentiate as Cloud Market Matures." My story was about how cloud service brokers currently sort of come in different flavors so to speak. A lot specialize in that public sort of cloud model and Software as a Service offerings.

But Stefan Reid from Forrester Research has said that this model will probably give way to a more unified cloud service broker model. And analysts are saying that while cloud brokers should be sort of friends with cloud providers, they also must differentiate from cloud provider offerings and sort of step away from that role as the middle man between the customer and the cloud provider.

A lot of analysts believe that in the future cloud brokers might actually fade away and cloud providers might come and take on some of those roles. So in order to keep the business going they have to remain a trusted provider to the customer and sort of just keep aware of those offerings out there from cloud providers so they can help the customer pick out the most appropriate offerings for them.

Scarpati: So how is it going to work, like how are they going to ... what does the future of a cloud broker look like versus this middle man image?

Narcisi: Instead of kind of going between and trying to help the customer sort of pick the best one, they should really start with supporting that hybrid model. Maybe customers want to do the private cloud and the public cloud, maybe a mixture of both those things or maybe just depending on compliance issues or whatever the customer has they maybe just want to go for a private one altogether.

Cloud Federation is also going to be a big thing in the future. Some analysts believe that the cloud broker should be the go between and help the customer federate those clouds, especially if they have a multi-vendor cloud environment. And obviously the cloud provider isn't really going to be the one to help you federate all those different cloud solutions your enterprise might have.

Scarpati: Yes, so they're kind of in the right position, too. You spoke to Appirio for the story right?

Narcisi: I did, yes.

Scarpati: Did they explain, I guess, how they are adapting to this? How they're adjusting or changing their strategy or if they've always kind of been doing that anyway?

Narcisi: Right now, they are sort of following that simple cloud broker model that Stefan Reid was talking about. And they offer public cloud environments like Amazon for their customers. But Glenn Weinstein from Appirio believes that cloud federation really is the future for cloud brokers and they are really focusing on that right now

Scarpati: Awesome, well thanks so much, Gina. It was great to have you here.

Narcisi: Thank you, Jessica.

Scarpati: Also this week, we had a great three part tip series on cloud federation from one of our expert contributors Rebecca Wetzel of NetForecast. And it kind of gave us an interesting look at the changing business models here. In the past, when we've covered cloud federation, we've talked about just a basic overview of what the technology is and why you want to use it. But it's time that cloud providers also look at how to monetize it.

So basically this series looks at three different use cases or business models for cloud federation. One of which is using it to enable a market place to bring together buyers and sellers of cloud services.

The next one is how cloud federation can be used to offer content delivery network services.

And the third piece really gets kind of at the heart of the technology -- Using cloud federation for providers to expand their footprints and get more capacity without building out new data centers.

So the series covers this from the perspective of three different companies: SpotCloud, OnApp, and Tier-3. Each one working in one of those three key areas. And there are a few surprising things in there.

So one of the companies highlighted is SpotCloud and their antithesis idea of using cloud federation to build a marketplace, to bring together buyers and sellers. They work with infrastructure as a service providers and it was actually developed by a company called Anomaly, which was later bought by Virtustream. And Anomaly's founder talks about how they're not really seeing the uptake they expected for a cloud marketplace for kind of public cloud services.

What they're really seeing is some interest in using this idea and the technology behind it to federate community clouds. So that's where they kind of see this market going.

The second company highlighted is OnApp. So OnApp's approach to cloud federation is using it to enable smaller providers and admin service providers to get into CDN services -- content delivery network services. And they're trying to go head-to-head with Amazon's cloud front CDN offering.

And the idea makes a lot of sense. A lot of these smaller providers have excess capacity. They need to offer more sophisticated managed services. Why not use cloud federation as a way to accomplish both?

But one of the things providers have to think about is that this is already a fairly mature market. You have players like Akamai, Limelight Networks and even some of the network operators are now getting into building their own CDNs. We even see companies like Netflix building their own CDNs too.

And then there's Tier-3. It's kind of interesting, they were an infrastructure as a service provider themselves. They had their own proprietary platform and they decided to sell it, to license it. So they are selling that to smaller cloud providers, mid-size providers, and to basically just make this one federated cloud as a way for everyone to kind of expand their capacity and their footprint. So one provider would be able to rent capacity from another and vice versa and everyone gets paid for what they use and what they sell.

So it's really going to be interesting for providers that have customers with a lot of disaster recovery needs. So the big question here is going to be about potential conflicts of interest. Are providers going to be competing for the same customers? Are they still going to be able to differentiate? So that's something that the market will have to look at as well.

So, that is all that we have for this week. Be sure to check out all the articles we talked about and more at SearchCloudProvider.com. Thanks so much for joining us.

This was first published in July 2012

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