I have been talking and writing a lot lately about the requirement for SPs to rejigger their offerings in response to Cloud services encroaching on traditional managed services – especially managed hosting. Repeating the message: Accept the Cloud as a new IT reality and exploit the different types of revenue opportunities it presents or look out!
Still some SP execs I meet with are not buying it. Fad, trend, hype – they are waiting it out – cloud will fade and we’ll still be here. Hey I get healthy skepticism but before you write me off as a Cloud shill, I ask you to do one thing – Follow the money. Take any one of your traditional managed hosting/services offerings and go get equilvalent pricing from any one of the name brand Cloud providers – Amazon, Rackspace, GoGrid – you pick it. Look at what is costs to host a Linux or Windows instance. Examine the cost for storage. Look at other services like load balancing. Then factor in the flexibility presented by the new metered billing models. The Cloud providers have magnitudes better pricing alternatives. Magitudes – not 10%, not 20% – magnitudes.
So I ask you – in today’s economic environment will this huge price advantage get CIO mindshare? Yes it will and things will change.