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Framing “the Cloud Opportunity” for IT Suppliers

Posted by Frank Gens on September 23rd, 2008

In “Defining ‘Cloud Services’ and ‘Cloud Computing’“, we wrote about the emergence of the cloud services model for delivering business and consumer services of all kinds, and – in turn – the enabling role of IT in the development, deployment and delivery of those services.  

We use the graphic below – in which we show an IT supplier (the bottom block), serving an enterprise/business customer (the block above the IT supplier), which is in turn serving its enterprise and/or consumer customers (the blocks at the top) - to identify the two principal opportunities for IT suppliers from the growth of cloud services. 


  1. Being an IT Cloud Services Provider - One area of opportunity (#1 in the graphic) for the IT supplier is to consider is delivering its own IT products or services to customers via the cloud model.  For IT product vendors, this means considering whether to get into the software-as-a-service (SaaS) business, the storage cloud business, the server cloud business, etc.  For IT services providers, this means considering whether some offerings might benefit (through growth and/or profitability) from being delivered in a cloud services model; for example, extending beyond a Hosted Applications business by adding offerings that meet the cloud services checklist (e.g., pay-as-you-go, shared instance/multi-tenancy, self-service provisioning, et al.).  [We'll soon publish a forecast of how much customer IT demand will flow via IT cloud services, as opposed to traditional models, as one important metric that informs this consideration. ]
  2. Being a Supplier to Business and Consumer Cloud Services Providers - The other major area of opportunity (#2 in the graphic) for the IT supplier to consider is how its current and future offerings of all types – traditional, next-gen  on-premise, and cloud – can support its customers’ development, deployment and delivery of a wide variety of business and consumer cloud services.  Often people refer to this as an “arms dealer” role – providing the tools for others to get into the cloud services business.  [A number of IDC research teams have already analyzed and forecasted the opportunity for selling IT products and services in support of cloud services to the growing population of cloud service providers - which will ultimately include many businesses in most industries.]

This picture is, of course, greatly oversimplified.  For example, a key element missing is partners – both development partners and channel partners – and how they will participate (and will need to transform) to support these two opportunity areas.  As we’ve mentioned many times before, partners will be much more critical in this Cloud Era than in the past.  [Look for a post in the near future on this dimension of the new marketplace.]  

But this framework provides a good starting point for rich discussion about what role(s) IT suppliers want to play in this new marketplace.  The challenge – that will keep us all busy working to resolve it – is that both of these opportunities will require major investments, and major changes in traditional market assumptions and approaches.

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3 Responses to “Framing “the Cloud Opportunity” for IT Suppliers”

Some of us are old enough to remember the original cloud – though back then it was called the ‘mainframe’. Soon we’ll be relying upon the Cloud, running the applications that the Cloud allows us to at the times allowed by the Cloud.

We’ll have come full circle

Yes Dave – I agree there’s a lot of conceptual similarity with the mainframe-centric model, but a lot that’s different – and better – in implementation. For more detail, check out my Comment back to Bruce Arnold.

…hmmm… according to your logic we should all be driving model t’s ….and apparently they should be green…..

Back in your cubicle…… your cobol is showing…..

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