Taking on the hyperscalers and their comprehensive suite of services is no easy task. A fact borne out by the most recent Gartner figures that show the big five (Alibaba, Amazon Web Services, Google, IBM and Microsoft) now have a combined market share of 77 per cent.
However, smaller cloud providers, though squeezed, have important advantages against their larger competitors, not least a more personalised, localised and tailored service. Hyperscalers are so vast that it is impossible to provide all but their largest customers a level of expected service and support.
But taking on the hyperscalers takes more than a personalised, tailored service. We would like to see smaller cloud providers working together to combine their niche offers in an effort to provide a comprehensive single service to customers, without losing sight of their individual expertise and heritage.
These collaboration strategies would open new doors, opportunities and we believe would sustain a valuable place in the market for smaller cloud providers, and the advantages they bring to the customer.
With these challenging market dynamics in mind, I will explore more of the drivers for smaller cloud providers to become more discerning about collaborating with partners.
Evolution of multi-cloud strategies
Different cloud platforms provide varying types of service and are often used for different purposes. Many companies now depend on multi-cloud infrastructures for their operations and it is estimated that more than 75% of midsize and large organisations will have adopted a multi-cloud and/or hybrid IT strategy by 2021.
The increasing use of a multi-cloud infrastructure is a great market opportunity for small cloud providers to collaborate and build on each other’s niche specialisation. The difficulty for a hyperscaler is that no matter the question a customer asks, the answer will always be their public cloud offering. With a network of smaller cloud providers working together, customers are really listened to and enjoy a genuine tailored solution to their needs. Furthermore, smaller cloud vendors are often more competitively priced as well as being able to offer a more personalised service.
A comprehensive approach to data security
Network security is another big challenge for today’s C-suite leaders. Recent reports show how some of the biggest tech companies (Facebook, Yahoo, Equifax) have suffered massive security failures, giving us insight into how big the problem of cybersecurity really is. With increasing dependence on cloud systems, businesses are also facing a sudden rise in the scale and sophistication of cyberthreats. So, as the trend of multiple cloud use grows, a similar tailored approach to data security is required. No two data infrastructure set-ups are the same and it is therefore important for cloud providers to be part of an agnostic broad network of cybersecurity experts.
The urgency of the issue is heightened because financial penalties from data breaches alone can pose an existential risk to their operations. Many business leaders are unaware where their data is being held or what steps need to be taken in the case of a data breach. This is especially dangerous after the implementation of GDPR.
While no business can ever outsource ultimate responsibility for their security to an external provider, there are a large number of experts who can help. Having a tightknit network of cloud and security companies collaborating together can make it easier to manage the overall security architecture.
Know your data location
With so much data at the heart of digital transformation, it is important that businesses store this data on a reliable platform. We all know that the loss or misuse of data, accidental or otherwise, could prove to be an existential risk for businesses. It can destroy reputations, result in significant regulatory fines, and cause serious organisational disruption. The threat is even more for SMEs with limited resources but greater interests at stake. It is therefore important that businesses choose their cloud provider with the utmost care and intelligence.
Management must be careful and develop a good understanding of the data security processes and policies of the vendor before signing on the dotted lines. However, with the multi-cloud approach, businesses can be assured of personalised, cost-efficient and reliable cloud services, which is definitely not expected from the big five.
The way forward
In such challenging times, I believe the best way forward for small cloud providers is through collaboration with other niche players and by playing to their strengths. Also, as someone who has worked with the cloud services industry for many years now, I feel it is my professional responsibility to highlight the importance of knowing your data location and availing the advantage of multiple cloud partners than just one hyperscaler. Our company Memset is a brilliant example of how a smaller cloud provider has recognised the changing market dynamics and grabbed the opportunity with both hands to build a portfolio of partners to deliver secure reliable services to our customers.