Cloud Services Brokers – New Wave in Systems Integration
Multi-tenant, subscription based Software-as-a-Service is entering a new phase. SAP announced in December 2011 that it’s acquiring Success Factors for $3.4 billion. The acquisition of Success Factors is aimed at making SAP AG a leader in “cloud computing”. Seems like a catchup play. The good news is that this acquisition legitimizes the Cloud and makes it mainstream.
Every customer’s reality is that they are going to have multiple datacenters. Inside the private cloud, inside the public cloud, they will use different service providers, and we’re going to live in this world of hybrid IT for all time to come. And you really need a distributed computing fabric that brings things together on behalf of enterprise IT as well as the developers writing native cloud applications. And these commonalities of identity, virtualization, management, and application development is what makes the next generation systems integration challenge very unique.
As SaaS, IaaS and PaaS becomes mainstream, we are seeing a new demand for Systems Integration capability. According to Forrester Research: “…developers are bypassing IT and putting applications onto public clouds at a rate five times greater than IT thinks.”
Companies need to hook up [users, systems, databases, applications, and web services] with more than a dozen different cloud services providers. Instead of doing a point to point integration they are looking to hook into a Cloud Service Brokers, who would serve as intermediaries, offering such services as customization, integration, security, and aggregation.
The figure below shows a simplistic view of the service broker model.
A new category of players is emerging in the Systems Integration market: Cloud Service Brokers (CSB). Because CSB is not a technology, it is necessary to understand describe the business model, providers, functions and enablers.
Cloud Services Brokerage – Business Model
Cloud services brokerage is a business model whereby a third party works on behalf of the consumer of one or more cloud services to intermediate and add value to the services being consumed. Cloud services brokerage is a new form of cloud service that combines integration as a service, governance and other value-added services such as security, context and analytics to intermediate interactions between cloud services providers and consumers.
The need for brokers is compounded by the lack of standards in the cloud services industry, which means that information can’t travel between different services without specially written code to translate among them. If attempt companies integrate different cloud services themselves, they have no hope of saving money. In general, cloud services appeal to companies because they’re less expensive than buying hardware and software.
Some brokers specialize in integration among various providers, including Salesforce.com (CRM), Workday, and Google. This group includes Appirio, HubSpan, Boomi, Cast Iron, SnapLogic, and more than a dozen other companies.
As many corporations will move gradually to cloud services, some integration will need to be done between cloud services and on-premise software obtained from traditional vendors such as SAP (SAP) and Oracle (ORCL). You’ll replace the integration you have today with a different kind of integration challenge.
Systems Integrators Hold Advantage
Some Systems Integrators like Accenture are better-positioned than others to help integrate cloud services. SI’s are already in the business of helping companies get computing systems to work together.
In addition to the major players, a bewildering array of startup firms offer tools and services for cloud infrastructure — and their numbers seem to grow by the day. Though by no means comprehensive, I will describe a few established and emerging startups.
Facebook as a Cloud Service Broker
Many corporate advertising and marketing teams are moving their campaigns to Facebook. From the marketing perspective, Facebook is the alternative to the Web – the faster, more popular, less expensive way to reach a broader targeted audience.
Facebook Platform is a potent, very visible alternative to the Web in the corporate mindset. The stats are quite attractive for driving focused campaigns in an attention deficit world.
- More than 800 million active users
- More than 50% of our active users log on to Facebook in any given day
- Average user has 130 friends
- More than 350 million active users currently access Facebook through their mobile devices
- More than 475 mobile operators globally work to deploy and promote Facebook mobile products
Appirio
Appirio is cloud software and services provider. Appirio is tackling the challenges of enterprise adoption of cloud computing from both the technology and consulting perspectives. Appirio has more than 200 enterprise clients that it has helped implement cloud deployments with vendors, including Google, Salesforce and Amazon. Appirio has a portfolio spanning strategy, migration, development and management. Appirio has been on a acquisition spree, and recently acquired VMG, a consulting firm specializing in cloud training and learning programs.
Appirio provides three distinct CSB roles: aggregation, integration and customization of services. Appirio as an Aggregator unifies access and adds value through managing accounts or enriching each service. As integrator it adds value by creating new integrated solutions, and as a customizer make a service appear to work differently.
Appirio is backed by Sequoia Capital and GGV Capital.
Firms like Appirio will make a lot of money from engineering the different cloud enablers that will support the IaaS and PaaS platforms. The complex taxonomy for cloud enablers is shown above.
Zuora
Zuora handles billing for companies that offer subscriptions to online services. Zuora provides value-added capabilities delivered on top of original cloud services like Facebook. For example, offering consistent billing, integration and visibility and a single provider relationship for any consumed services, as well as enhanced and consistent security and identity management for multiple services aggregated together.
These functions simplify cloud services consumption for an enterprise that needs to consume many cloud services as much of the complexity inherent in managing multiple contractual relationships with cloud service providers is hidden within the CSB’s business.
Zuora released a product, called Z-Commerce that consists of different modules that a developer can use to set up and manage a subscription service on Facebook. Z-Commerce also comes with pre-built widgets that can get plugged into existing Facebook apps without the need for additional code work. Zuora assumes responsibility for the back-end arrangements, including billing and payments.
Bottomline
Why will companies move their applications to the Cloud? Cloud platforms provide a new architectural dimension previously unavailable to developers – instant access to unlimited elastic resources. Since there are no servers or software to buy or manage, development time can be focused on building apps not deploying technology.
However, figuring out which applications to bring into the cloud and which to retain in the traditional data center is a new challenge for every IT organization.
If not done properly, it can create silos or “cloud in a corner” syndrome – where new cloud-based solutions are disconnected from existing IT resources. The result: higher costs due to greater infrastructure complexity, overlapping staff skills and inadequate return on resource investments.
What’s the antidote to “cloud in a corner” syndrome? Effective Cloud Services Brokering and Integration strategies. Cloud brokers will be necessary to do effective service provisioning, integration, aggregation and even arbitrage. See figure below from NIST.
I anticipate that Cloud Services Brokering and Cloud Enabler engineering will represent a large revenue growth opportunity in the cloud systems integration market.
Ref.: Michael Hogan, et al., NIST Cloud Computing Standards Roadmap, NIST, 2011; [link]
Ref.: Fang Liu, et al., NIST Cloud Computing Reference Architecture, NIST, 2011; [link]
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