Cloud computing now and in the future

Among the interviewees cloud computing was seen as a market with high growth potential, thus being in line with the forecasts previously described in the paper. However, as it still is a relatively new business concept, it requires companies to observe the market continuously, as changes happen rapidly and new players arise. As naturally for new companies that were interviewed that have built their business model upon cloud computing,  they  described  its  role  as   a  “strategic  cornerstone”  and a precondition for the company’s   existence.   For   companies   with longer history in the ICT-business in general

cloud computing was seen more like a complementary business and an instrument, which enables companies to reach the economies of scale by minimizing the costs per unit. What has also been identified in the market place during the recent years is  customers’  increased   knowledge and awareness of the cloud, and the customers are more or less presuming that cloud based solutions are involved:

“…nowadays… we no longer even discuss (with the customer) whether the service operates  in  the  cloud  or  not” (company B).

The classification between IaaS, PaaS and SaaS was seen among the majority of the interviewees as old-fashioned and irrelevant. As some features inside these service models overlap, in many cases it might even be impossible to draw the line where service model is being discussed. Thus, it can be presumed that better describing terms are likely to be created in recent years as both the business and the solutions start to mature.

“The trend of today that the customers are talking about, is a user-oriented cloud service, meaning how our customers are in the center and the customer has a certain need and how (different cloud services) can be combined to it in a suitable proportion” (company F).

When asked whether the largest global players such as Amazon, Microsoft and Google should be seen as rather competitors or co-operation partners, only one interviewee saw them strictly as competitors, while others saw their role more or less as a partner. This one IaaS provider described their strategy to target the segments that these giant players do not see worthwhile. Also, he mentioned that they can differentiate themselves with more customer focused service, as these giants offer highly standardized and generic service.

What was mentioned among all the interviewed companies was the essential need for them to create added value on top of for example  Amazon’s  services,  whether  this  being  a  unique   service model, local knowledge or innovation. As the interviewee from the company G summarized:

“…   we   need   to   also act like our service innovates more or less the concept significantly, and at that point I always talk about three different issues: either it has (innovation) in the user experience, in the core technology or then in the

business model how it is penetrated to the market, with what terms and through who, or then in their combination usually needs to be something completely unique and  new.” (company G)

The other two IaaS providers (company F and J) saw that by combining their and for example   Amazon’s   offering,   they   can   build   hybrid   cloud   solutions,   which   may   offer   the   most suitable end result for the end customer.  Company  F’s  CTO mentioned that they do not need to be worried of these giants and their public cloud offerings at least in the near future, as local providers can still offer more competitive solutions through their private cloud solutions when prices are compared. However, by creating hybrid clouds, Finnish providers can utilize global players’ services, combine them with their own offering plus gain profit when configuring these applications. One factor highlighted also among the IaaS providers was the need for them to be able to create supplementary service, as the level of profitability in the pure capacity selling business is poor and shortsighted. To be able to succeed in the business in a longer run the strategic focus needs to be in the services adding value, as competing against the largest global players in a pure volume business is not seen as sensible.

For SaaS providers the co-operation approach is natural, as their services are often built on the giants’ IaaS and PaaS models. By  utilizing  the  global  players’  market  reach, they can quickly enter new markets cost-efficiently. This factor   was   highlighted   by   company   H’s   interviewee when asked why they chose Amazon instead of a Finnish IaaS partner:

“…  we  have  done  some  research  and  yes,  Amazon  is  more  expensive,  but   the fact that we can open (a business) within one hour in Sidney or Hong Kong is a big thing  for  us”. (company H)

However, one factor that was mentioned by company B was that the change in the customer field’s   mindset   has   also   enabled   smaller   players   to   compete   against   the   giants.   As in the past the end customers wanted to get one large system that could do a little bit of everything, nowadays the trend has been to put together a system which consist of several companies’   products   and   services.   This   enables   smaller   players   to   create   for   example   a   cutting-edge application, serving  the  customer  better  than  for  example  Google’s  equivalent   application. Also, companies can develop interfaces that help different systems to

communicate with each other and build their business around that. Many interviewees were actually surprised how poor cloud based tools for example Google is offering at the moment when considering the size of their service development department, but naturally this has also given a great possibility for smaller players to enter the market.

For the cloud brokers also the co-operation with the market leaders is essential for their business. As cloud brokers’ business model is built on adding value to the IaaS and PaaS providers’ offerings, their aim can be assumed to co-operate with as many global players as possible, so that their range of services of which the customer can choose from is broad.