By Rich Wiltbank
The other day, I was talking to my colleague, Richard Whitehead, about how partners should integrate the cloud delivery model into their current offerings. He threw out a simplified analogy of a local bank, which I paraphrase here:
Several years ago, the key to a bank’s profitability with its customers was a checking/savings account. The bank went out of its way to establish and maintain accounts with local customers and businesses. This account is similar to the physical infrastructure and personal relationship solution providers have with their customers.
Then, the banks started offering overdraft protection on those accounts. This was a way for the customer to have a line of credit just when they needed it – and it was a profitable business offering for the bank. This is analogous to the flexibility provided by a virtualized infrastructure that a solution provider may provide its customers.
Subsequently, the banks started offering their customers additional credit by providing credit cards. The bank didn’t create its own credit card brand, but used existing infrastructure, processes, and branding established by large credit card companies (Visa, MasterCard, etc) and became a sales and billing arm for those large companies. This is similar to what is currently available in the cloud computing model for solution providers.
You should note that the banks never stopped pushing to acquire and maintain accounts, because that is where they have great value. However, they make their most profitable money by leveraging their account relationship with their customers and providing additional products and services to those customers. These additional products and services are very profitable, simply because they don’t have to pay for the infrastructure or maintenance of those products themselves – it is done by another company.
To push the analogy a bit, in the banking industry, there are very few credit card companies (Visa, MasterCard, Discover, American Express, Diners Club) and no new ones have sprung up for years. Conversely, hundreds of new banks, each founded on a base of local accounts and value-added services, are started each year in the US (according to the FDIC).
I believe that today’s solution provider market is similar. There is limited opportunity to start a cloud provider business – this will dominated by a few, large companies. There are, however, tremendous opportunities for solution providers to help existing and new customers integrate new cloud-based products and services into their existing IT infrastructure.
How do you help your customers integrate cloud services into their existing infrastructure?