We are entering interesting times in the cloud space! We should no longer be talking about the cloud as a destination and we shouldn’t be talking about how cloud can transform business…those days are over! We have entered the next level of adoption whereby the cloud as a delivery framework has become mainstream. You only have to look at what AWS announced last year at Re:Invent with its Outposts offering. The rise of automation and orchestration in mainstream IT also has meant that cloud can be consumed in a more structured and repeatable way.

To that end…where does it leave traditional Service Providers who have for years offered Infrastructure as a Service as the core of their offerings?

Last year I wrote a post on how the the VM shouldn’t  be the base unit of measurement for cloud…and even with some of the happenings since then, I remain convinced that Service Providers can continue to exist and thrive through offering value around the VM construct. Backup and DR as a service remains core to this however and there is ample thirst out there in the market for customers wanting to consume services from cloud providers that are not the giant hyper-scalers.

Almost all technology vendors are succumbing to the reality that they need to extend their own offering to include public cloud services. It is what the market is demanding…and it’s what the likes of AWS Azure, IBM and GCP are pushing for. The backup vendor space especially has had to extend technologies to consume public cloud services such as Amazon S3, Glacier or Azure Blob as targets for offsite backups. Veeam is upping the ante with our Update 4 release of Veeam Backup & Replication 9.5 which includes Cloud Tier to object storage and additional Direct Restore capabilities to Azure Stack and Amazon EC2.

With these additional public cloud features, Service Providers have a right to feel somewhat under threat. However we have seen this before (Office 365 for Hosted Exchange as an example) and the direction that Service Providers need to take is to continue to develop offerings based on vendor technologies and continue to add value to the relationship that they have with their clients. I wrote a long time ago when VMware first announced vCloud Air that people tend to buy based on relationship…and there is no more trusted relationship than that of the Service Provider.

With that, there is no doubting that clients will want to look at using a combination of services from a number of different providers. From where I stand, the days of clients going all in with one provider for all services are gone. This is an opportunity for Service Providers to be the broker. This isn’t a new concept and plenty of Service Providers have thought about how they themselves leverage the Public Cloud to not only augment their own backend services, but make them consumable for their clients via there own portals or systems.

With all that in mind…in my opinion, there are five main areas where Service Providers need to be looking in 2019 and beyond:

  1. Networking is central this and the most successful Service Providers have already worked this out and offer a number of different networking services. It’s imperative that Service Providers offer a way for clients to go beyond their own networks and have the option to connect out to other cloud networks. Telco’s and other carriers have built amazing technology frameworks based on APIs to consume networking in ways that mean extending a network shouldn’t be thought of as a complex undertaking anymore.
  2. Backup, Replication and Recovery is something that Service Providers have offered for a long time now, however there is more and more completion in this area today in the form of built in protection at the application and hardware level. Where providers have traditionally excelled at is a the VM level. Again, that will remain the base unit of measurement for cloud moving forward, but Service Providers need to enhance their BaaS, R/DRaaS offerings for them to remain competitive. Leveraging public cloud to gain economies of scale is one way to enhance those offerings.
  3. Gateway Services are a great way to lock in customers. Gateway services are typically those which a low effort for both the Service Provider and client alike. Take the example of Veeam’s Cloud Connect Backup. It’s a simple service to setup at both ends and works without too much hassle…but there is power for the Service Provider in the data that’s being transferred into their network. From there auxiliary services can be offered such as recovery or other business continuity services. It also leads into discussions about Replication services which can be worked into the total service offering as well.
  4. Managed Services is the one thing that the hyper-scalers can’t match Service Providers in and it’s the one thing that will keep all Service Providers relevant. I’ve mentioned already the trusted advisor thought process in the sales cycle. This is all about continuing to offer value around great vendor technologies that aims to secure the Service Provider to client relationship.
  5. Developing a Channel is central to be able to scale without the need to add resources to the business. Again, the most successful Service Providers all have Channel/Partner program in place and it’s the best way to extend that managed service, trusted provider reach. I’ve seen a number of providers not able to execute on a successful channel play due to poor execution, however if done right it’s one way to extend that reach to more clients…staying relevant in the wake of the hyper-scalers.

This isn’t a new Differentiate or Die!? message…it’s one of ensuring that Service Providers continue to evolve with the market and with industry expectation. That is the only way to thrive and survive!