Midyear Cloud Review

managed-cloud-hosting-midyearIn our July 14th blog post, How Stable is Your Cloud Provider?, we gave examples of some “seismic shifts” occurring in the cloud computing industry today. The industry witnessed a high level of volatility in the first half of 2014 as cloud solution providers (CSPs) anxiously watched their status slip in Gartner Inc.’s Magic Quadrant for Managed Cloud Hosting, went on massive acquisition sprees, or slashed their pricing for the umpteenth time. Following are some insights into what we can expect in the second half of 2014.

1) Public, Unmanaged IaaS Providers Will Continue to Race to the Bottom

If the recent pricing moves by Google and Amazon are any indication, we can expect to see cost cutting accelerating in 2014. Last March, Google cut its prices massively, reducing the prices of on-demand, pay-as-you-go services by 30%-85%. Amazon fired back the next day with a blog post that begins with the sentence: “It is always fun to write about price reductions.” This price cut by Amazon is the 42nd since 2008, and there is no indication that they will stop anytime soon.

Google and Amazon can afford to implement multiple price cuts because their cloud business is being funded by other areas of their respective companies. However, consumers should be cautious about jumping on these “deals.” These low-touch providers are completely unmanaged – leaving the customer alone to build and support their entire application stack, staff up for availability and security monitoring around the clock, and even perform routine maintenance, such as backups and patching.

2) CSPs Think Security is Everything

Security is top-of-mind for most CSPs, especially in light of recent data breaches experienced by high profile companies such Target, Neiman Marcus and eBay. Healthcare organizations have also been put on notice by the Office of Civil Rights (OCR) who is levying severe fines against those who have failed to meet HIPAA compliance requirements. While security is a critical component of any cloud environment, it’s only part of the equation. Performance and availability comprise the rest of the “cloud trifecta.”

Mirroring the inherent mission-critical nature of healthcare applications, HIPAA makes clear requirements for the availability and recoverability of applications that support clinical activities. Many CSPs with a healthcare message today have architected a platform focused solely on meeting the security requirements outlined by HIPAA and not the broader need to ensure that healthcare IT is always on. It’s not a trivial task to build out multiple geographically-dispersed datacenters, develop the technology platforms, and staff up to support ITIL-based processes that are proven to deliver on the complex, critical demands of healthcare applications. It will be a while before the market has matured to the point that most healthcare hosting options are anything more than security theatre.

3) Cloud Providers are Embracing Managed Services at the Expense of Their Platforms

Severe, ongoing price competition for Infrastructure-as-a-Service (IaaS), has propelled many CSPs into shifting their focus to managed services. Dismissing IaaS as a “commodity cloud business,” CSPs are hoping to make up revenue losses by offering a suite of support services. However in a crowded cloud market, there is a difference between CSPs who “bolt on” disparate services and call center personnel for a mass market audience, and CSPs that serve organizations with mature demands. In the case of the latter, demonstrated core competencies in running data centers, building 24 x 7 IT support operations and maintaining various levels of compliance are just table stakes. An experienced, reputable managed cloud hosting specialist will take a proactive, comprehensive approach to systems management, availability and performance, threat protection and compliance.

Interested in learning about the changing cloud landscape will impact your business? Our managed cloud hosting specialists stand ready to help. Contact us for a personal assessment of your cloud needs.

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