How To Choose The Right Cloud Service Provider

By Pete Manca, president and CEO, Egenera

It’s no secret enterprise, mid-market, and SMB customers are looking to move to the cloud, and smart service providers are adding cloud services to their portfolios to meet the growing demand. For a service provider, once the decision has been made to add cloud services, the next question is whether to engage a Cloud Service Provider (CSP) or to handle it in-house. These days, most providers realize standing up a cloud can get complex and expensive quickly and opt to work with an experienced, and trusted CSP, which can yield tremendous CAPEX and OPEX savings and speed time to market.

Without a doubt, choosing the right CSP is the key to maximizing success. Because the market is ripe with several options, narrowing in on the right fit can be a challenge, even for the most experienced service providers. The bottom line is most successful providers have found ways to focus on delivering services that leverage the infrastructure provided by CSP. The key is to be in a position to evolve or transition your services business by finding the right CSP partner to do the infrastructure heavy lifting for you.

A successful partner is the one focused on making you a winner. Initially, you may not see the margins you were hoping for in a go-it-alone model and, depending on the CSP you choose, the margins could be in the single digits, which makes it very difficult for you to sustain your business.

One option is to partner with a wholesale CSP, which enables you to realize better margins. With a wholesale CSP there is no public price list for your clients to compare against, so you price by the deal. Also, some wholesale CSPs make it easy for you to offer additional as-a-service offerings such as disaster recovery, backup, migration, etc. These higher value services cost less to deliver in the controlled cloud environment and still demand a premium, which are proven to produce margins of over 60 percent for some service providers.

How Can You Find The Right Partner?

Simply put, the CSP should be an extension of your business. They must align with your vision and provide a high level of strategic and technical support that is required for you and your clients. As you begin your process, you need to see if the CSP is invested heavily in a highly reliable, scalable cloud infrastructure so that you don’t incur additional costs or end up apologizing to your clients for your CSP’s shortcomings. A CSP’s investment in a strong infrastructure is a clear indication they are in the business for the long haul. Flexibility to accommodate the needs of the customer and customer service should also be priorities.

Strategic Criteria To Consider

There are several strategic, business and technical criteria to consider when making the leap to a CSP.

• Trusted partner. Your CSP should be a trusted partner who will work for you, with you, and won’t leave you hanging in a critical situation.
• Flexibility. A good CSP enables its partners to seamlessly build or modify configurations to meet the exact needs of their clients — whether the workload requires physical isolation or can be run in a multi-tenant environment, or even in a bare metal configuration for those workloads not suited for running in a virtualized environment.
• Wholesale pricing. Working with a wholesale CSP partner enables you to realize the best margins and avoid client confrontations every time a price cut is announced by a CSP with published pricing. Large “cloudzilla” CSPs announce price cuts several times a year.
• Back end business functions. A CSP should provide integrated back-end business system support such as invoicing, real-time pricing, margin analysis, etc. so that you are free from doing these tasks.
• International presence and support. When evaluating a CSP, look at the provider’s global footprint and capabilities. Many end customers either need or simply want to keep data local, and the right CSP will enable you to easily meet their needs.
• Pay-as-you-go. Consider an efficient pay-as-you-go model, where you pay for only those resources that are consumed so you can be as responsive as possible to customer demands while keeping their (and your) costs down.
• Complete offering. Make sure your CSP has a complete data path service to provide to your clients; they should have back up, disaster recovery, and mitigation services to offer. Any extraneous third party involvement is ineffective and can result in finger pointing.
• White label marketing support. There should be ample marketing support in terms of white label collateral, presentations, and portal branding to ensure that you are successful and help you avoid excess costs — not bind you down with hidden costs or contracts.
• Training. Training is critical. CSPs should provide training to your employees so they are self-sufficient in servicing your clients. But the CSP must also be available to support you 24X7X365.
• Migration services. Ensure a CSP under consideration provides true migration services where servers can be replicated from either on premise or cloud into the CSP’s cloud. A true migration service delivers migration testing, configuration and synchronization before the cutover to the cloud is performed. The migration service also makes allowance for failback in an unexpected scenario.
• Enterprise-class datacenters and infrastructure. It’s critical your CSP has the infrastructure to support your client’s evolving workloads that are suited for running in both virtualized and non-virtualized environments. For instance, data centers should be classified by a certified authority for security and reliability and provide round the clock pro-active support to mitigate and address issues and risks quickly. Involvement of a third party support dilutes and delays the process.
• SLA’s. Analyze the CSP’s SLAs thoroughly for real-world experiences and encompass the cloud architecture. Make sure the claims made in the SLA hold true by analyzing its infrastructure. If you need to, enlist an expert’s help in combing through the documentation. Make note of the tone of the SLAs. Were the SLAs written to protect the CSP's interest or yours?

The cloud services adoption is exploding as businesses look for ways to reduce costs, while increasing reliability, scalability, and customer value with IT services. Working with the right CSP enables you to evolve your business model to include higher value, higher margin services on top of the reliable heavy lifting cloud services provided by your CSP. In short, it’s absolutely critical to evaluate the size and scope of the CSP by asking the right questions. The CSP's track record, hosting facilities, infrastructure, technical and marketing support, configuration flexibility, breadth of portfolio, availability of end-to-end solutions, contracts, etc., are some of the key considerations in selecting the right long-term partner.

Pete Manca leads Egenera as President and CEO. Manca brings over 25 years of experience in enterprise computing and business development, and has expertise in a wide range of mission critical enterprise datacenter solutions. Prior to Egenera, Manca served as Vice President of Engineering at Hitachi Computer Products America, where he had responsibility for operating systems and enterprise middleware products — contributing to the development of the world’s then-fastest commercial supercomputer.