New Rules for IT Infrastructure Providers in an "as-a-Service" World

New Rules for IT Infrastructure Providers SmallIn my previous posts, I spent quite some time trying to explain why I believed that the Service Provider plays an important role in the success of any cloud strategy. I discussed how the delivery of a quality service requires a set of skills that aren't easy to replicate and take time to build.

This leads me to an important follow-up question:

What does this reality mean to the incumbent developers and manufacturers of IT Technology who have historically dominated the IT industry?

For almost as long as the IT industry has existed, the companies that design and deliver the next leading edge piece of hardware or software have driven the industry forward and have taken leadership roles in the industry structure.

From the first pizza-box servers to blades to new networking equipment that did faster and cheaper to new capabilities in storage technologies, hardware and software innovation has driven technology adoption.

These innovators have grown to the size of juggernauts. They have built s global channel that resell and install their next new shiny piece of equipment or software. They have owned the IT industry.

"Cloud" presents these leading companies with some brand new challenges.

Now, every single one of these companies, without exception, purports to have a cloud strategy. Their "home pages" talk almost exclusively about cloud. In sessions with their partners and customers, they discuss why they will continue to lead in the "as-a-service" world.

However, as you scratch the surface, in many cases, the companies-in-question have yet to adapt their go to market and organisational structure to deliver cloud services in an effective way. As I commented in my first post, I would be willing to bet that most of these cloud strategies will fail.

In many cases, the companies continue to organise around product (hardware or software) business units that have targets for shipping new product. Sales reps in the companies are not compensated for selling a service that is powered by their technology but only receive their commission if new boxes are purchased.

By the same token, for the most part, these organisations continue to go to market with exactly the same channel that has served them in the old world. Small and medium sized businesses who have grown up reselling computer equipment to customers continue to receive their annual resale targets and are looking to move those boxes so that they can hit their targets and receive their rebates.

To be completely fair, many of these resellers have also begun to develop their own cloud strategy to compete against AWS, Azure and others. However, as I explained in my previous posts, these companies have never really been service providers and many will find making the transition quite difficult.

So, if a company is organised as it always has been, if it compensates its people the same way as it has in the past, if it uses exactly the same partners as before to sell its products, how will it succeed while the industry goes through such transformational change.

In my opinion, it won't be easy. Read my next blog to find out some factors for companies to maintain their leadership position.

Added 30 September 2014

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