Before we really get into the meat of service provider business models (and, of course, the associated enabling technologies), I feel obligated to lay some groundwork.
The frustrating part is that I've done most of this already on my other blog. And I don't feel like simply re-stating what's already been shared.
So, in this post, I'll provide some framing via links to material already out there -- just so we can get to the good stuff later ...
My Frame(s) Of Reference
I spend a lot of time speaking publicly about big trends in our industry -- for a sample, see this.
First, there's an underlying belief that -- over time -- more and more IT services will be delivered by IT service providers, and less by traditional IT shops. The reasons why I believe this would take several posts to explain, but we'll leave that for later.
Second, the primary model that we'll likely see as enterprise IT shifts from "delivered in house" to "consumed by a service provider" is the private cloud model. You'll find dozens and dozens of posts from me on this subject -- it's been consuming most of cycles for the last year or so.
Third, enterprise IT is OK with getting help from outside providers, but they need to retain control over service levels, security, data protection as they do with their traditional environments. This leads to a "tenant in control" model whereby service providers expose "control planes" back to enterprise IT organizations to meet this need.
Fourth, service providers will ultimately succeed when they provide services that are better that what IT organizations can do by themselves. Yes, cost is an aspect of "better", but not the only aspect. And any SP business plan that doesn't have this idea somewhere in it is doomed to failure, I believe.
Fifth, there is a set of enabling technology that supports this discussion. I'll use as examples my EMC world (in addition to VMware and Cisco) which includes storage, data protection, service delivery management, security as well as other aspects. Please do not think poorly of me if I tend to use my own products and technologies as examples of ideas and concepts.
There's more, but that's a good starting point.
How To Categorize Service Providers?
As with any new and fast-growing segment, neat categories are hard to come by. Heck, trying to get a clear definition of "cloud" is hard enough, let alone a nice taxonomy of "service providers delivering cloud".
So, in the interests of convenience, I tend to use different terms to describe "where these people came from" rather than "where they're going".
A good example of this is outsourcers -- they're in the process of transitioning from one business model (e.g. fixed infrastructure, fixed service levels, fixed pricing) to another one (e.g. variable infrastructure, variable service levels, variable consumption). To me, they are defined from where they're coming from, rather than where they're going.
Another example would be telco operators -- many of them see providing IT data center services as a nice adjunct to their traditional network businesses. Again, I define them less about where they're going, and more about where they're coming from.
Same general discussion would apply to hosting, managed services, co-location, etc. -- all the various flavors of IT infrastructure as a service.
Another interesting tranche would be the vertical service providers.
The more I look, the more of these people I find. They've taken a critical industry-specific applications, and chosen to sell it as a service, rather than the traditional software / hardware / services sale. Salesforce.com is the familiar example, but that's just the tip of the iceberg.
Yet another chunk would be the horizontal application service providers: ERP, email, CRM, etc. More of these people showing up as well -- the quintessential "software as a service" across many industries.
Still another interesting category is popping up of service providers who provide IT services as a service: backup, security, service level monitoring, compliance, etc.
The Primacy Of The Business Model
Service providers are like any other business, if you think about it. They've got to find paying customers, convince them of their value proposition, fend off alternative and competitive approaches, get their customers on-board and using the offer, and continually finding ways to do more of the above faster and better than anyone else.
What makes this so interesting is that things are moving fast -- customer preferences are changing fast, enabling technology is changing fast, value propositions are changing fast, and there's a whole lot of people investing in these newer business models.
It's a fast and furious feeding frenzy, from where I sit.
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