"Single largest opportunity in cloud computing"

Last week, I was flattered to help host over 100 leading cloud providers, consumers, and thought leaders for a "Cloud Leadership Summit" in San Francisco.  Processing all the interesting ideas from the event will keep me busy for a couple of weeks, but I wanted to get started exploring a concept presented by one of the keynote speakers -- Daryl Plummer, Chief Gartner Fellow.  The concept is a cloud service brokerage, which he calls "the single largest revenue growth opportunity in cloud computing, bar none."

The goal of the event was to move beyond "cloud 101" and explore the issues faced by enterprises taking their second, third and fourth step to the public cloud.

"Adoption of the cloud is rising rapidly-- there's no sign that it's going back.  We have to think about how will we deal with this." Plummer asked the audience, "How many of you think that in the next five years, you will be using less than 5 cloud services? Less than 50? More than likely, you will be dealing with hundreds of cloud services."

That message resonated with this crowd -- led by CIOs from companies like RehabCare and Brady who are already consuming dozens of cloud services from one or more cloud platforms, and are wresting with cross-cloud identity, security, and data integration.

Plummer argued that "someone will stand between the provider and the consumer of a cloud service in order to enhance the service that is being delivered," just as intermediaries have emerged in every other area of commerce where multiple providers need to be brought together for the benefit of a customer.

Plummer calls that "someone" a cloud service brokerage.  "In the cloud brokerage model, there's a company that exists for the purpose of making sure that the cloud is more secure, that it's customized for you, that it's integrated. Why should one cloud provider get in the business of integrating their cloud with 10 others? A broker exists for that very purpose - to bring together the different providers. "

Brokers add value by making it cheaper, easier, or faster to consume cloud services, lowering the risk of consuming cloud services, or adding value on top of cloud services.

"We often talk about clouds, but how often do we talk about stitching it all together?" asks Plummer.  "There's really only one public cloud.... But cloud services certainly don't act like it.   They act like a bunch of different providers.  How do you make them all work together?"

The growth of cloud computing will make brokerage an increasingly important part of the cloud ecosystem.  "Potentially every cloud service needs brokerage.  Potentially every cloud consumer will need brokerage. Do the math-- its multiplicative."

Plummer highlighted an upcoming prediction he's writing about the market for cloud service brokerage: "We think brokerage is not just a big deal.  It's one of the biggest deals.  Through 2015, cloud service brokerage represents the single largest revenue growth opportunity in cloud computing... bar none.  I'm saying that over infrastructure as a service, I'm saying that over platform as a service, I'm saying that over software as a service."

Could it be true that in the cloud gold rush, the best game in town is to sell the proverbial "shovels"?  Perhaps.  But only if there's gold in those hills.  With on-premise technology, bringing together different applications and platforms was so difficult that standalone brokerage proved nearly impossible-- anyone who tried ended up being absorbed into one of the application providers or as a pure professional services business... not a true broker, according to Plummer.  The question is whether cloud services are open and flexible enough to make scalable, value-added brokerage possible.

Next week, we'll hear what the actual providers and consumers of cloud services had to say about this issue, and get their thoughts on what it takes to capture real value in this transition to cloud computing.

Ryan Nichols is the Vice President of Cloudsourcing and Cloud Strategy for Appirio.

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