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What’s up with enterprises becoming cloud providers?

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While most view enterprises as cloud consumers, many are now becoming providers as well.  As such, they will typically provide access to core applications and data to partners and customers, but they will not offer up utility services, such as storage and compute, to other businesses.  Sometimes they become cloud providers simply to support their customers.  In other cases, it’s to make a few extra dollars.

These days, many enterprises have processes or data they want to share with the world — and they want to do it with this “new fangled cloud computing thing.”  The reasons vary, but some emerging patterns push enterprises to become, in essence, small public cloud providers.  Some exist in a closed ecosystem; others are more open and public.

It’s the need to provide information to outside parties using well-defined and secure interfaces that drives many enterprises to become a cloud provider. For example, the company wants to allow its partners or customers to see the status of an inventory item, or perhaps the company wants to provide complex data and analytics services for demand planning.

Another enterprise may be looking to become a cloud provider to offer access to complete enterprise applications. For example, the company wants to provide SaaS-based delivery of inventory-control applications so that partners and customers can check on inventory status and pricing.

In both cases, the problems are much the same.  They have to take some internal service, application, or data, and externalize it as a true cloud service, typically as an API that is actually a RESTful Web service, or perhaps a browser-driven application.

Of course, if you’re a cloud provider, you know it’s not that easy.  Security needs to be wrapped around the API/service, as well as administration and governance.  Moreover, there should be some way to monitor the use of the service through usage-based tracking and billing.  And don’t forget about tenant management.  In other words, all of the problems that come with being a public cloud provider are your problems now.

However, it’s getting easier. There are cloud infrastructures that essentially come in a box that allow enterprises to become cloud providers right out of their existing data centers.  Take a look at most of the OpenStack distributions that have hit the market in the last few years, and even more proprietary solutions. This means you don’t have to start from scratch when you need to build a cloud.  Many of the core services, such as resource and tenant management, will be handled for you.

Moreover, there are public cloud providers that furnish on-demand cloud infrastructure so that you can build a public cloud within their public cloud, if you want to move in that direction. Many smaller public cloud providers build their offerings in Amazon Web Services, Microsoft Azure, and Google Compute Engine. They are public clouds within public clouds.  Many enterprises are finding that is an easier, less expensive, and less risky path.

No matter which direction you go when becoming a cloud provider, there are a few things you should consider:

  • Internal systems that do not provide good internal services, such as business processes or data, won’t provide good cloud services.  You’ll have to fix those systems first.
  • Security needs to be systemic.  If you have a lackluster approach to security, that will also have to be fixed before exposing things as cloud services.
  • You’re going to need a good architecture and planning cycle, including the development of a sound functional roadmap around the services you’re looking to offer.
  • There should be long testing cycles with your first couple of tries, including performance, stability, management, etc..  Do this using different usage patterns, and at different levels of stress.
  • Make sure to consider use-based accounting services, management, and governance.  You’ll need both approaches, as well as some good technology.

The rise of the enterprise cloud provider will be a growing trend over the next several years.  This addresses a clear requirement for many businesses, and checks off a box that some industries believe they need in order to develop a critical differentiator in the marketplace.  As one enterprise told me, they increased the value of their business twofold, and provide services that their competition will not or cannot provide.  It’s time to think about the potential of this trend within your own marketplace.