The Rise of the Cloud Service Providers

This past summer, I found myself sitting opposite one of Gartner’s research leads. I’ve known him for a long time, so he has no issues with calling me wrong or even providing a metaphorical slap every now and then. Our topic of conversation was the public cloud, and it was very enlightening.

“JD, what do you think of companies utilizing public clouds?” he asked.

“Going to be a long time coming, I’m afraid,” I said.

“JD, you are wrong,” he said. “While many will not go to large-scale public clouds, many will go to a new breed of hosters known as Cloud Service Providers.” He told me that, by the time the current Internet gold rush hits its peak—probably in 2013—there could be a thousand or more of these critters. (Assuming the Mayans are wrong about the apocalypse, of course, and the world doesn’t end within the next couple days.)

Fast-forward a few weeks, and I was on the phone with a potential customer while they described their business to me. Lo and behold, it was exactly the same kind of cloud hoster mentioned by my friend at Gartner. I grew more intrigued as we spoke, and I ended up visiting them for a day along with members of my team. So what exactly is a Cloud Service Provider (CSP)?

Innovation often finds unique ways to solve customer problems.  Many issues with moving to the public (or off-premise) cloud revolve around proximity, compliance, security and familiarity. Note that I did not specifically mention technology. Generally speaking, when it comes to moving to the public/off-premise cloud, most issues are not technical ones; rather, they’re more human concerns. For example, many customers want to ensure privacy of their data. They may also wish to lock that data down to a certain geographical location. Or they may want to simply look their cloud provider in the eye before offloading high-value assets to a third party. Cloud Service Providers offer those “human” niceties in a way that large public clouds cannot.

If I believe my Gartner friend (and I have no reason not to), then many of these CSPs will spring up to meet a growing demand for off-premise clouds that cater to very specific needs—with a particular focus on regional (or national) hosting as well as vertical markets (health-care data vaults, anyone?). Naturally, large-scale cloud providers may not be ecstatic about such developments.

What does all this mean for you? Perhaps the era of on-premise/off-premise cloud is closer than we think. As more of these CSPs pop up, the opportunity to reduce IT costs becomes even more possible. And given all the hype and best practices around virtualization and hybrid clouds, much of the ground of how has been laid. That could make for a very interesting 2013—provided the Mayan apocalypse doesn’t get us in the meantime.

 

JD Marymee is the CEO and co-founder of Technology Innovations Group, an organization that drives disruptive innovation as a daily mission. As part of that mission, he advises clients such as Microsoft and Hitachi as well as numerous startups, facilitating connections with the investment community.
Image: Tom Wang/Shutterstock.com

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