IBM Global Business Services White Paper
Strategy and Change
Business Strategy for Cloud Providers
The Case for Potential Cloud Services Providers
Business Strategy for Cloud Providers
This is one paper of a two paper series on cloud strategy from IBM Global Business Services
Cloud computing has the potential to be the next major driver of business innovation, as it promises to enable new business models and services across almost all industries, especially telecommunications, healthcare and government. For some providers, cloud delivery models will open access to new customer segments such as small business and emerging markets. And it will fundamentally change the balance of power in many existing markets. However, as with any technology-driven change, it is difficult to sort out the reality from the hype. And even when the technology is real, being able to capitalize on it with a winning strategy is difficult. Very few companies emerged as clear winners from the dot-com wave compared with the many more that failed. The same will be true of the cloud market. But for the companies that are successful, the rewards will be equally as large. This paper is focused on helping those who want to emerge as winners in the new cloud provider marketplace. We have assessed service provider business models for cloud computing by evaluating services/offerings, strategies, operations and target customers. We believe the recipe for success will require exploring all of these factors coupled with the right partnership strategy.
This paper explores the following areas for cloud providers: •
What are the key attributes of a winning cloud provider business strategy and model? Creating a viable business model through balancing up-front investment risk and cost with profit and revenue opportunities is the key to success for cloud providers. How can partnering across the ecosystem accelerate my success? Both cloud computing and new associated ecosystems are evolving. Providers are partnering in ways that are helping them to accelerate market entry and to expand their breadth of services, which is driving new alliances in some markets. What are the implications if I do not act now? Some service providers must move to cloud delivery models in the near term to survive; others can leverage clouds to differentiate and thrive.
Cloud has the potential to become the next major driver of business innovation by enabling entirely new business models across a wide range of industries. The cloud computing market will include offerings sold as a service such as business processes, software, platform, and infrastructure. And many of these cloud services will be consumed through a pay-per-usage pricing model. The cloud market is appealing to new entrants not only because of its size and growth, but also due to the business potential it brings to a company. Cloud providers benefit by accessing new customers and markets, improving their deployment times, potentially lower their costs and achieving new revenue streams.
IBM Global Business Services
Already, companies are entering the field and the race is underway to determine who will become industry leaders through the use of new delivery models to provide enhanced or even brand new types of customer value. As with any rapidly emerging business segment, the key is to move beyond the business hype and to develop and scale a winning business model. For potential provider of cloud services, seeing through the hype can be difficult. The current opportunity and growth projections are enticing, but one first needs to develop a robust strategy to succeed as a cloud service provider. While much of the skepticism around cloud computing has subsided, some reports theorize that cloud computing will eventually fade, similar to previous evolutions in computing such as grid computing and utility computing. However, unlike previous generations of computing, cloud...
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