Analyst: clouds are 'fat dumb happy pipes'

We've been talking about the growing convergence between SOA and private clouds for providing services across business units of enterprises. Private clouds offer greater security, especially in situations that involve sensitive corporate data. However, public clouds may offer greater flexibility and economies of scale.

Gartner's Daryl Plummer provides his usual sage advice to software vendors seeking to convert their offerings to cloud mode, but I think this is good advice for anyone looking to position and provision software-based services to others. For example, IT departments that may one day be competing with outside service providers. And thus, services originating from internal IT may get commoditized as businesses are increasingly attracted by the lure of outside cloud providers.

The key is to take a page from vendors' playbooks in this regard:

"So what is the answer for making sure you do not get commoditized into just a pipe (or platform)? It’s simple - get closer to the customer in the value chain!! When you are an infrastructure business in a commoditizing paradigm like cloud computing, you don’t want to be at one end of the pipe while your customers are at the other. And, you don’t want to be one of hundreds of vendors who say their customers are the ones who serve customers."

Daryl points out that vendors that gain competitive advantage are those that "either hold the hand of the customer (consulting, or who add value on top of the infrastructure services (e.g. more performance or security or additional services)."

Great advice that can be applied to internal technology providers as well. Keep that upper level of service and support that the outsiders can't match. And, very importantly, governance and architecture are essential to the success of any project -- this is where internal providers hold the edge.

However, there is also an edge that outside providers may have. Outside cloud providers have an advantage in providing far greater economies of scale than internal providers, Daryl points out. "Public cloud providers will have a business model based on gaining millions of customers. I doubt most enterprises can hope for that level of scale. Also, remember that as the infrastructure commoditizes you are still held back on platforms that probalby have not kept up with technology and certainly are not as widely used as the public cloud platforms. Your returns on investment begin to look more and more like just a large heavily virtualized data center."

Daryl also observes that services delivered by private clouds, "will be limited in number, in variety, in price, and in breadth of capability." In addition, agility is limited, since it may be difficult to swap out or replace services.