Friday, November 21, 2014

Cloud as a Product - An option to consider

When everyone is talking about the SaaS, and everyone seems to be so much fascinated by it that it seems that whole world is moving towards this new offering. But we as well know that nothing works in isolation for long. I believe in time to come, we are going to see some sort of convergence of Cloud and Productization. The success of XaaS and adoption of Cloud by various organizations (big or small) will drive a new business model in future. We have to be aware that SaaS, PaaS, IaaS are definitely going to have adverse business impact on most IT service or infrastructure providers and they are not gong to sit with folded hands. I would not be surprised if we see following business models in future as a result of Cloud Adoption:

-  Cloud as a Product (CaaP) – As of now we have XaaS which are primarily elastic and chargeable on per use basis. However, as the usage increases and demand stabilizes, we will very well see Cloud being offered as a Product. What this essentially means that there will be business opportunities when a company want to move its IT infrastructure to a Cloud in some distant location, but would like to own the complete Infrastructure, which might include different levels of engagement by service providers. In other words, managed services over Cloud.

- IT services as a product (ITsaP) – As of today, a company purchases IT infrastructure and related licensing, which at times remains unutilized. As Cloud usage tends to grow, we might see the IT infrastructure providing companies to come up with a different pricing model. They can also start offering to turn CAPEX into OPEX and charge on usage basis. It does not mean that a company necessarily have to move to Cloud to take benefit of flexi pricing. Darwin’s law will follow and each one will have to adapt to survive.

- Use-based licensing by product companies like Oracle or IBM or BEA – As of now they are charging per blade which means people using public cloud can take benefit of flexi pricing. It is only a matter of time, when the licenses will be made available on usage basis which will increase the cost of service for Cloud providers. This will be essentially driven by point above that instead of fixed pricing, charging will be based on consumption which will drive-up the cost of services.

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