Cloud Service ProvidersCSPs and MSPs

How CSPs can exploit multi-cloud to grow revenues?

6 Mins read

Revenue growth is a hot topic in the managed cloud service providers’ space. Revenue generation has now become more important than ever, owing to the economic crisis brought forth by the COVID-19 pandemic.

If a business needs to survive amidst this global and economic crisis, it needs to identify fresh sources of recurring revenue and build its service offerings around it.

For a cloud service provider (CSP), selling hyperscale solutions or multi-cloud can be the best way to secure a recurring source of revenue. The following article discusses:


The hype around hyperscalers

As per the data released by Synergy Research Group, the Q1/2020 spending on cloud infrastructure has reached $29 billion, up from 37% from the first quarter of 2019. The expected market growth shows no negative impact of COVID, at least in the cloud infrastructure services.

Source: Synergy Research Group

The same research also shows that cloud solutions by hyperscalers like Microsoft, Amazon, and Google have occupied most of the cloud market share.

Hyperscalers are undoubtedly taking over at a striking rate. While dominating and maintaining a strong presence in the cloud is the primary reason behind the success of hyperscalers; the organizations look towards them due to the host of services they have to offer.

Hyperscalers are undoubtedly taking over at a striking rate. While dominating and maintaining a strong presence in the cloud is the primary reason behind the success of hyperscalers; the organizations look towards them due to the host of services they have to offer.

If you think from the perspective of an enterprise, cloud computing has several use cases. From managing applications in the cloud and running workloads to maintaining a secure repository of organizations’ data in the cloud and ensuring data security. Thus, one cloud does not fit all.

Hence, enterprises are increasingly utilizing multiple public and private cloud deployments to avoid vendor lock-ins and exploiting best-of-breed solutions – that can be summed up in one word as a multi-cloud approach.

What is multi-cloud?

Multi-cloud, essentially, is the use of two or more cloud services – public or private, from different cloud providers. For example, an enterprise can move their bare-metal servers to a virtualization service in a public cloud environment; the same enterprise can use another public cloud (this time from another vendor) to support one of its crucial customer-facing application.

According to Gartner,The 10 biggest public cloud providers will command, at a minimum, half of the total public cloud market until at least 2023.”

Here, it is important to draw a quick line of difference between a multi-cloud strategy and hybrid cloud. While the former involves deployment of more than one cloud of the same type (like a public or private cloud), the latter involves using multiple deployment types like storing critical application data on-premise while having a backup service in a private cloud.

For an enterprise that uses cloud services across different functions and geographies, sticking to one public cloud infrastructure provider is a challenge. Thus, for these large enterprises, the decision to adopt a multi-cloud strategy is clear. Mostly, the three major reasons or decision drivers for a multi-cloud approach are:

  • Avoiding Vendor lock-in: Enterprises want to increase their agility while minimizing vendor lock-in. This is to enhance availability, data sovereignty, performance, regulatory requirements, and labour costs.
  • Modern Cloud Architecture: Today, most business applications are designed and created in a modular style, allowing them to consume services from multiple clouds.
  • Governance: Enterprises look forward to unifying administration and monitoring of their IT systems. This is done to standardize policies, processes, and procedures. Adopting a multi-cloud approach facilitates better disaster recovery and easier migration.


Challenges faced by enterprises in adopting a multi-cloud strategy

According to a study, the complexity of managing hybrid/multi-cloud environments is one of the top challenges when it comes to achieving organizations’ goals.

Source: Turbonomic State of Multi-Cloud 2020 Report

While a multi-cloud strategy can help enterprises modernize their IT environment, it also comes with a few challenges.

  • Due to the involvement of different service providers, enterprises must address service ownership boundaries.
  • Some cloud services require certain levels of integration, especially if the service needs to be linked within the IT environment of the enterprise. This means enterprises must deal with APIs, functions and feature integrations, containerization, etc. when moving to a multi-cloud architecture.
  • Enterprises can also face the issue of portability and interoperability – migrating one cloud component to another without making any major modifications in the existing systems.
  • Enterprises must take care of the latency issues. The end customers must be able to check/access data seamlessly and as and when required.
  • Security and privacy challenges are the most prominent ones when adopting multi-cloud services. Though cloud providers use appropriate security controls to protect the user data; in a multi-cloud environment, enterprises must ensure that the data is safe and encrypted when being migrated from one cloud to another.

The growing use cases of multi-cloud approach within SMEs and challenges in adoption opens up a window of opportunity for managed cloud service providers.

Hyperscaler solutions – a window of opportunity for CSPs

Selling multi-cloud solutions can be a game-changer for the CSPs. When you look at the competitive landscape, the public cloud market is mainly dominated by five top players – Amazon Web Services (AWS), Microsoft Azure, Google Cloud Platform, IBM Cloud, and Alibaba Cloud.

According to the most recent data by Statista in its Global market share of cloud infrastructure services from 2017 to 2020, by the vendor, AWS has a lion’s share of 32%, followed by Microsoft with 18%, and IBM at 8%. Their collective market share is greater than the market share of the other cloud providers.

Source: Statista

CSPs can capitalize this opportunity by building multi-cloud offerings with a variety of cloud services to choose from. New and emerging technologies like Artificial Intelligence (AI), Machine Learning (ML), Digital Twins, Blockchain, and Big Data are continuously re-defining end-user data processing. Enterprises are willing to explore best-of-the-breed solutions to build applications and products that meet the changing technological requirements. Sensing this changing customer demand, leading cloud vendors like Microsoft and AWS have already started offering extended cloud services to facilitate Big Data and AI applications.

Multi-cloud services are designed to simplify IT architecture within an enterprise, by deploying the appropriate cloud to service each IT workflow.

When choosing the right cloud partner for your business, you should consider the hybrid cloud options. Because enterprises are looking forward to adopting a multi-cloud architecture – using a mix of cloud service for each of their IT workloads. Till date, we have seen how IaaS has allowed enterprises to provision their own virtual machines and storage in the cloud. For big data and other database application, enterprises go for extended data lake services. And now the next generation of cloud services will be centred around AI-as-a-Service and machine learning.

So, it has now become imperative to mix and match cloud services and offer a comprehensive product catalogue to the end-customer.

So far, we learned how multi-cloud is going to be the new normal and how it is an opportunity for the CSPs.

To ensure a recurring revenue flow and maintaining a positive customer experience, CSPs need to follow a few tips or best practices.

Driving revenue by enhancing customer experience in cloud

The modern consumer is spoilt with choices, and Information Technology (IT) industry is not an exception here. Even a temporary break in services can make the consumer switch to a different vendor. And with subscription business models, the consumer is always free to leave your services at the end of a billing cycle.

Every CSP aspires to be a success, but your journey to the top starts with operational excellence and following the best practices to sell cloud. Let’s take a quick look at what factors do you need to bring differentiation in your Managed Services business.

  • Build the right product offering: When building a new product offering, you must proceed with caution. You must ensure that you have the right resources and expertise to simplify your customers’ journey to the cloud. The modern business has moved past the notion of caveat emptor; sellers too, need to ensure that they build the right product offering.
  • Cross-sell, up-sell through bundle offerings: As we said, there is no one size fits for all now. The application requirements are changing with new technologies like AI, ML, etc, ushering in. So, you need to be ready to offer bundled services to your customers.
  • Be digitally mature: Digital maturity is vital for business continuity in the pandemic and even in the post-pandemic era. Before you propagate the idea of digital transformation to your customers, you must be digitally transformed. Consider building quality assurance in your product delivery and provisioning and taking the help of a cloud management software.
  • Invest in cloud management software: Enterprises who are using or plan to utilize the multi-cloud approach might want to lock down a solution that unifies all the data from different places to give one big-picture overview. You can meet these criteria with the help of multi-cloud management software like RackNap. It can also help you in automating every part and process of your cloud service delivery model – like billing, customer support, marketing and lead generation, customer profiling, etc.

The cloud market is set for unprecedented growth in the next few years. This growth brings an opportunity for the CSP partners across the world and we can see some tough competition as well.

To beat the competition and meet customer expectations, you must be ready to differentiate your offerings and be digitally mature with automation.

To know how RackNap can help you sell hyperscaler solutions to increase your revenue, drop a mail to [email protected] and we will get in touch.

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About author
Sabarinathan, SVP of RackNap heads product and technical delivery functions. He has over 18 years of experience in the IT industry with specialization in cloud services delivery. He believes that to be successful, cloud service providers need – right business strategy, right automation platform along with skilled manpower.
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