Five competitive differentiators for cloud services

Cloud computing providers have a difficult marketing challenge, in my opinion. Think about it--no matter what service model or deployment model a provider is delivering, they must differentiate their service while meeting the "commodity" needs of as many customers as possible. It would seem these businesses are stuck between providing least common denominator service capabilities and being accused of intentional customer lock-in.

(Credit: Jake Shepherd/Flickr)

From a customer perspective, it is equally challenging when one is "looking for servers and storage" and must choose between a bunch of services that essentially run Linux or Windows and store your files. How does one choose? How do the cloud providers set themselves apart in the customers' eyes?

Unfortunately, I've been inundated of late by an increasing number of cloud service announcements that lack any sense of differentiation. Hosting providers are announcing "on-demand server capacity billed on a pay-as-you-go basis." Platform vendors are simply announcing what language they support, and how much they charge for services. Software-as-a-Service vendors have the easiest job to differentiate service, as they can do so based on functionality alone if they wish, but even there some vendors struggle to differentiate themselves by anything other than the fact they run as a cloud service.

This has to change. Forrester's James Staten is telling us that clients are getting "cloud weary." I believe a lot of this has to do with the ridiculousness of "cloudwashing" that we've seen for some products and services, and the relative monotony of pitches for things are arguably cloud services, especially in the IaaS space.

Below is a list of five key categories of competitive differentiation for cloud computing. It is not a complete list, nor do I think all vendors would look at this question in the same way. However, if you are looking to acquire cloud services, these are the elements I think you start with as you evaluate any service, be it SaaS, PaaS, or IaaS. If you are selling these services, consider this an outline for your next requirements document.

1. Ease of operations. Yeah, I could have kept things simple and just said "ease of use," but "use" in the cloud computing service sense is much more than how humans interact with the system. For instance, how does a company with hundreds of applications in the cloud strewn across a dozen or more vendors monitor and manage those applications to manageable service levels?

   And yes, phenomenal user interfaces will set some providers apart from others, but it will be the "behind the scenes" interfaces--such as APIs, publish and subscribe event streams, transparency and auditability systems, etc.--that will make the most significant differences between providers.

   Will many of the aspects of "ease of operations" be standardized? Sure. The Open Cloud Computing Interface (OCCI) is an example of an attempt to deal with a large part of this challenge. However, differentiation will still be possible through extensions, quality of features and--yes--some custom interfaces.

2. Configurability. One of the things about today's best-known cloud computing environments is that they are essentially infrastructure and software architecture frameworks that dictate a lot about the application architectures that can be built on them. For example, the Amazon Web Services Elastic Compute Cloud (EC2) allows each server to be on one widely shared network. No separation of management traffic from DMZ traffic here (at least not explicitly from the point of view of the OS).

   No, application architects are instead forced to consider how they would build and operate their application in the infrastructure architecture given them. Good books have been written with this in mind, but ultimately the complexity of the problems we wish to solve with information technology will dictate the amount of configurability we require from our infrastructure systems--even if they are delivered as a service by a third party.

   The low-hanging fruit here for IaaS vendors are things like network architectures, data storage options, server options and so on. Also useful here are services that enhance the infrastructure, like security systems, message queueing, and storage tiering.

3. Performance. One public relations contact I got recently was quite interesting. A hosting company sent me an email indicating that they have an increasing number of customers coming to them from AWS, and finding that their applications actually perform better in the former than the latter. I haven't confirmed the truth of that claim, but it is an interesting claim nonetheless.

   Processing speed, memory speed, storage access, read and write speeds, latency, bandwidth--these are all things that are tunable by the cloud provider, either through technology acquisition, or through superior engineering and operations expertise. And, as with servers and storage, the fastest speeds per dollar spent will generally win.

   I would not be surprised if we saw a cloud performance war, similar to the RDBMS benchmark wars, especially in the IaaS category (though it would make sense in the PaaS and SaaS categories as well).

4. Reliability and security. I debated combining these two elements, as they represent different aspects of the same concept. However, that core concept--risk mitigation--is at the heart of so much of the decision over whether public cloud services are better than private data centers, that I think they will often be viewed through the same lens.

   Companies will need time to demonstrate differentiation in both of these categories, but features can be introduced today to increase the transparency of both operations and security in any provider. Redundant distributed data stores, "early warning" DDoS detection events, auditability APIs; these are all features that would "open the kimono" in a controlled fashion and increase customer's ability to trust that their provider has made the protection and availability of their data and functionality a core competency.

5. Customer service. After I wrote my closing post for the "big rethink" series, Kevin Magee, COO of ZeroTouch IT, wrote a post in which he noted several additional predictions for the effect of cloud computing on IT. Most notably, he pointed out that cloud will change "[h]ow Vendor Relationship Management will become a key discipline in IT organizations." Amen, brother, and I completely agree.

   In a tongue-in-cheek post from early 2008, I noted that system administrators should "get good at waiting on hold for customer service representatives." In reality, there is truth to that, but the providers have a lot of room to craft that experience.

   One thing they can do is advance the technical leading edge in terms of customer self-service and operations transparency. (Hmm. Has anyone else noted how often 'transparancy' comes up in this discussion.) I noted some ideas about this in a previous post. Smart providers will find others.

Cloud computing is one of those truly disruptive market opportunities that makes or breaks companies. The winners will find ways to differntiate. Those that don't almost certainly can't win. So, please, no more press releases that fail to differentiate in any meaningful way.

[BTRoundtable]

James,

IMHO, it would seem that #5 on your list is a likely place to create "meaningful and substantive" differentiation that's difficult for competitors to replicate -- if you believe that most other things tend to be equal, the customer support experience is a key defining factor.

Remember, in a service-centric business standing out from the crowd tends to be all about people, process and technology (in that order). Therefore, maybe it should be #1.

David Deans

[Steve_Hughes_Colt]

James,

At the moment all service providers are building out their service offerings. Hence the similarity in the PR. However, if I've remembered my Porter correctly, you either aim for competitive advantage as the least cost provider or you follow a differentiation strategy. Differentiation on a feature level will come from your list, although I feel that the quality, rigour and extent of service levels will also play a major role. For example, how can you offer an end-to-end application service level if you don't own/control the wide-area network level?
Differentiation on a strategic level will come from providing solutions to specific business problems, not by simply selling IaaS, PaaS or SaaS. Over time I expect these solutions, targeted at vertical market sectors or communities, will become the real differentiators. Its early days, but anyone who is trying to be a me-too to the likes of Amazon, Google or Microsoft as lowest-cost provider better have deep pockets..

[rlebherz]

James,

Good Article, and being in the space I agree.
We met at a show in San Fran, and presented the OpSourcecloud

I cant speak directly for the company, but this is exactly what we are doing today and have been doing for a while.We have always been focused on providing security, performance, and control from day 1. We also offer 24x7 phone support and a complete online community trolled by our CTO and direct product managers. We have published an API to do anything you can thru our UI. And much more to come.

www.opsourcecloud.net
RLE01 will get your readers 20% off 1st month.

Keep up the good work