In depth: Cloud services - marking the margins

Nermin Bajric

Verykios said that because customers dictate their Cloud investment, they have already decided to move certain applications, infrastructure, and data access, and require services providers to fulfill that strategy as the extent of it may not be something that has been figured out yet.

Moving out
While Cloud is thrown into every business transaction, Nexus IT principal, Sean Murphy, claims the benefit behind the "nebulous term" is that it leaves space for "the next good idea and smart way to consume or deliver Cloud, aggregate services, white label, or otherwise add some value to a specific client set."Although it can lead to an array of inappropriately-delivered Cloud services.

The reality for service providers is that not everybody who enters Cloud sticks to it.

According to Murphy, "Various providers are experiencing and understanding that Cloud and IT efficiency are inextricably linked.

"Stories of users moving away from Google Apps are legion and the reality is that Google and Microsoft have worse uptime stats than Nexus customers with managed on premises equipment, or Nexus Cloud, for that matter."

Murphy warns against investment on long-term contracts or capital. He said there is a slight oversupply of capacity to deliver Cloud and some consolidation will come as a result. At the same time, he said because Cloud is disruptive at the infrastructure platform level, it provides an opportunity for smaller companies to displace more established players.

But not all customers exiting the Cloud are doing so as a result of failed investments. Gartner research director, Michael Warrilow, said there have been several scenarios in which customers have canned their Cloud play on a considered 'it doesn't work for us' basis.

"You might go to Cloud to prototype and you get to a certain scale and find it is cheaper to do it yourself," Warrilow said. "A lot of gaming companies have been big Cloud consumers, but have realised they can do it cheaper themselves. The variable pricing issue comes up, and people kind of retreat as they have gone too far too quick.

"Over the last couple of months there has been a lot more angst around security. Some people are saying there are national agendas trying to bring back Cloud providers to be present in country because they don't want opportunities to go offshore into other markets such as North America."

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