Essential Guide

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Overcoming the pitfalls of today's IaaS price wars

Choosing the right IaaS provider can be a stressful experience. How can you avoid the pitfalls so many businesses experience when migrating to the cloud?

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A CIO guide to the service cloud

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One of the major trends of the past year has been the escalating price competition among the leading infrastructure as a service (IaaS) providers: Amazon Web Services (AWS), Google and Microsoft. While this race to the bottom has garnered a lot of attention and generated more interest in the cost benefits of commodity cloud services, it has also enticed a growing number of businesses to make unsuccessful moves to the cloud that could adversely affect the future direction of the cloud marketplace.

A recent survey of 358 IT and business decision makers, conducted by THINKstrategies and INetU, found that 43% of the respondents have had a failed or stalled cloud implementation. Of these, nearly half had cost overruns relative to their original budgets, two-thirds had to change their cloud environment from the original plan within a year, and more than 50% had to make a change in the first six months.

This disappointing record led to only 27% of the survey respondents expressing extreme satisfaction with their overall cloud migration experience.

Anyone familiar with the IaaS go-to-market strategies of AWS, Google and Microsoft knows they are highly dependent on the rapid adoption of their cloud services by new customers followed by additional purchases of higher-priced, value-added services that offset the initial discounted prices of their entry-level IaaS solutions Therefore, unsuccessful deployments cannot only lead to lost upfront sales, but also to even more profitable follow-on revenues being missed. The low satisfaction levels can also result in reduced word-of-mouth referral business.

Unfortunately, many cloud players have succeeded in cloud washing their prospective customers into thinking that moving to the cloud is an easy process. It may be easy to acquire a simple IaaS service, but properly calibrating an IaaS solution to successfully support specific applications and workloads takes specialized skills and experience that most organizations currently lack.

The good news is that the survey raises questions about whether organizations, regardless of their size, can expect meaningful business benefits from off-the-shelf IaaS solutions without taking precautions to ensure they don't experience the same implementation issues, which plagued a large proportion of the survey respondents.

The survey found that organizations that have their IaaS architecture designed by an experienced service provider, that work closely with that provider during the deployment process, and that leverage the provider's managed service capabilities to monitor their IaaS availability and performance on an ongoing basis, are far more likely to be successful and satisfied with the benefits they obtain from their IaaS solutions.

This may seem obvious, but the truth is that AWS, Google, Microsoft and other leading IaaS providers are not equipped to offer the lifecycle of support services to meet their customers' end-to-end implementation and management needs. Instead, they have designed their IaaS offerings to be highly standardized, and structured their services to be delivered in an automated fashion. Although their IaaS solutions can be configured to meet the specific needs of a particular customer, properly configuring them requires specialized skills that the service providers are not incented to support.

Cloud consultancies, systems integrators (SIs), managed service providers (MSPs), value-added resellers (VARs) or other trusted advisors are in the best position to fill this void and help organizations properly select, configure and monitor their IaaS solutions.

These IaaS providers -- including AWS, Google and Microsoft -- are recognizing that they must establish a strong partner ecosystem of third-party consultancies, SIs, MSPs and VARs to ensure the success of their customers.

IT and business decision makers should be sure they also take into account the strength of an IaaS provider's partner ecosystem when they are considering the real economic value of their IaaS solutions.

Kaplan is managing director of THINKstrategies, an independent consulting firm focused on the business implications of the on-demand services movement. He is also the founder of the Cloud Computing Showplace, and the host of the Cloud Innovators Summit series. He can be reached at jkaplan@thinkstrategies.com.

This was first published in January 2015

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