Infrastructure is commodity! Vertical services are the future of the cloud.

In 2014, the infrastructure-as-a-service market expects a total revenue of estimated $6 billion worldwide. A good reason to try its luck in this cloud segment. Numerous providers have jumped on this train in recent years and try to catch market share from the top dog Amazon Web Services (AWS). No easy task, since the innovation curve of most followers behaves rather flat compared to AWS. One reason is stiffened in the adherence to the word infrastructure in infrastructure-as-a-service. Arguments to change from AWS to a competitor because of a significantly higher performance sounds tempting in the first moment. But at the end of the day the maturity of the portfolio and the view over the entire offering counts and not just a small area where you have procured a technological advantage.

Infrastructure-as-a-services indeed mean services

Even if the Amazon Web Services was the first IaaS provider on the market, the word “web services” take a central role in the philosophy of the company. Started with the basic and central services Amazon EC2 (computing power, virtual machine) and Amazon S3 (storage) more new services were rolled out in very short periods of time, which only have in the broadest sense something to do with infrastructure. Services like Amazon SQS, Amazon SNS, Amazon SWF or Amazon SES help AWS customers to use the infrastructure. Starting a single Amazon EC2 instance has in fact just as much value as a virtual server at a classic webhoster. Neither more nor less – and is in the end even more expensive per month. So, who hopes to be invited to the party by offering infrastructure components – virtual computing power, storage, gateway – in the future, will probably have to stay out.

To largely stay out of the price war, Amazon, Microsoft and Google currently fighting on, is also advisable. While this pleases the customer, but will sooner or later lead to a market adjustment. Moreover, if you look at how Jeff Bezos leads Amazon (eg Kindle strategy), he gets involved in price wars, just to gain market share. Therefore IaaS providers should prefer to use the capital to increase the attractiveness of their portfolio. Customers are willing to pay for innovation and quality. In addition, decision-makers are willing to partially spend the same for cloud solutions or even more as for on-premise offerings. The significance is enhanced on the flexibility of the enterprise IT, in order to give the company more agility.

To match this, a tweet from my friend and fellow analyst Ben Kepes from New Zealand who hit the nail ironically on the head.

Vertical services are the future of the cloud

The infrastructure-as-a-service market has not yet reached its zenith by far. Nevertheless, infrastructure has become a commodity and is not innovative anymore. We have reached a point in the cloud, where it is important to use cloud infrastructures now to build vertical services on it. For this, companies and developers, along with virtual computing power and storage, are depending on services from the provider to operate its offer, performant, scalable and fail-safe. Despite the meanwhile extensive service portfolio from vendors such as Amazon, Microsoft and Google still a lot of time, knowledge, effort, and thus capital is needed to reach this state. Furthermore, only proprietary infrastructure-related services are offered to work with the infrastructure of the providers. Everything else should be self-developed under the aid of these services.

For this reason, the market has a lack of service-portfolios from external providers that can be used by companies and developers in order to use ready-services on-demand which otherwise must be developed on the infrastructures and platforms themselves. Suchlike value-added services can be integrated horizontally into the vertical services for a specific business scenario and be used when needed.

This BBaaS (business-bricks-as-a-services) integrate provider-independent in existing infrastructure-as-a-service and platform-as-a-service and create added value for the user. The individual business components are standardized and already highly scalable and highly available implemented as web-services and can be easily integrated without much effort.

More about the BBaaS concept can be found at “Business-Bricks-as-a-Service (BBaaS) – Business Building Blocks in the Cloud“.