Cloud Service Brokerage is the New Buzz in IT Town

While investing in stocks, we often feel safe if a stockbroker makes our investment decisions in the share market. This is for the simple reason that they suggest good investment opportunities, and maintain details about our transactions in the stock market. Wherever there is a service, the desired consumers would avail it and to facilitate the consumers with an apt service, which would suit their needs, brokerage has to emerge.

A similar phenomenon has been observed in the case of cloud computing as well. Seeing the evolution of cloud, Gartner predicts that combination of cloud services will be too complex and untrustworthy for the end consumers to handle their integration. As cloud services are adopted, the ability to govern their use, performance, and delivery will be provided by cloud service brokerages (CSBs).

Cloud service brokerage is an emerging model, where an entity who is well-informed about the various kinds of cloud services, intends to act as a manager of multiple cloud services befitting the needs of the businesses. In a nutshell, they act as an intermediary between the cloud service provider and the consumer. CSB is like a value added service, where a cloud service broker not only mediates between the cloud service provider and the consumer but also customizes the service by aggregating, integrating, and enhancing the servicespromising it to be more secure, cost- effective, and trustworthy. And this is seen as one of the ways to avoid vendor lock-in.

Need for CSBs

As per the figures suggested by Gartner, the total of all global cloud service revenue in 2008 was $46.4 bn which is projected to rise to $150 bn by 2013. In a situation, where there will be innumerable cloud service providers, each one of them owning their own API, price structure and various other set of services, it will only strain the end users to access each service and decide about the best one to go for. If there is some entity which can offer flexible choices and take care of the system provisioning, monitoring, and billing of services, the need for CSBs will become quintessential.

This service is based on pay-per-use model. , says Lakshminarayan Rao, marketing director, global channel programs, Jamcracker.

Businesses would like to avail cloud services and by handing over the responsibility of selecting the right kind of cloud services and managing their entire life cycle, consumers will have more time to focus on their business as they would be assured about getting services which can match their budgets.

CSB Business in India

Having the second largest population of SMBs, India could be one of the best destinations for these brokerage services but the trend is yet to evolve here. Cloud is still emerging and it will be a big business but it will not happen right away. There are not many CSB firms in India as of now and this business is still at a very nascent stage, says Seema Ambastha, Director, Technology, VMWare. As the price sensitive SMBs would prefer moving their applications to the public cloud, Ambashtha explains that CSBs would be more relevant for those adopting public cloud services as the public cloud is about multi-tenancy, catering to multiple customers, and above all, it is about security, flexibility, integration, and other factors.

CSBs are emerging in the west. Some of them like Appirio, Boomi, Cast Iron, SnapLogic are specialists in integrating various service providers. After IBM had acquired Cast Iron in May, 2010, Dell acquired Boomi in November, 2010.

Boomi is an excellent vehicle for us to learn the idiosyncrasies of the CSB market (or at least the way Boomi operates in a market) and gauge what the frictions, obstacles, and opportunities will be as the cloud market grows and moves CSBs from an adjacency to the cloud market to its own market, says James A Strikelether, chief innovation officer, Dell.

Now when the bigger organizations are acquiring CSBs and trying to gain deep understanding about the nature of the CSB business, Could that be a threat to the existence of independent CSBs. And as more and more applications of cloud are offered to the end users, will they adopt those services offered by independent CSBs or will the brand value of reputed giants steal the show.

Will Independent CSBs Survive?

The acquisition of Boomi by Dell and Cast iron by IBM and many more strategic alliances and tie-ups by other established MNCs with independent CSBs, might bring in a big question about the survival of independent CSBs. What seems to be a bigger concern is whether the acquisiton of CSB firms by market leaders leave the potential yet not so talked about the cloud services unexploited.

The barrier to entry is low technically for aggregation. Really valuable services like integration or brokerage have much higher barriers and may exist independently for longer. Having said that, the market or existing set of large customers is very hard to create. To the extent that these services migrate to where the eyeballs are, may mean that the CSBs end up in some form of a concentration, explains Strikelether. Most of the players in the CSB and cloud computing space are optimistic about the existence of independent CSBs.

There are large IT vendors who would want to protect their large consumer base and therefore, they would end up acquiring a CSB or build their own CSB model or would get into strategic alliances. I dont think there will be any monopoly happening. In fact, the market should open up further because it will bring more awareness and adoption, awareness as in terms of large number of players trying to propagate the idea of IT automation explains Rao.

Future of CSB in India

Though the concept of CSB seems to be of great interest to many companies, there is still a long way to go as organizations would opt to see the evolution of the Indian market. At this point, they would like to test ways to seed this idea so that their CSB business can identify better opportunities in the market.
Strikelether says, It is very premature to suggest how India will evolve in this tertiary offering. On the other hand, there are things companies in India could do to leapfrog some of these issues, and if so, accelerate our considerations.

CSBs could bank on the abundance of choices available in the cloud offerings and the lack of understanding about various cloud services by the enterprises. Though it might not indicate about their resistance towards adoption. Given the simplicity of deployment which involves low initial investments, the freedom to exit and a good return on investment, SMEs will get motivated to consider IT automation, explains Rao.

Looking at the rate of adoption of technology in India, CSBs could help the enterprises to make the right choices. All we need to see is, when will this trend emerge in a profound way in India, where the CSBs will facilitate their customers to use different service providers in a unified way.

Pragyan Acharya
Pragyana@cybermedia.co.in