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Looking at Cloud Computing market possibilities.

I spend most of the time on this blog talking about how cloud computing works and how you can incorporate cloud computing into your enterprise. This time around, I'm going to focus on the provider side of the house. What if you are building private clouds or selling public cloud services? Where do the opportunities lie in the market? How fast is the move to cloud going? Where should you focus your energy to gain clients?

My own client base illustrates that although Fortune 500 corporations are moving toward cloud computing, they are doing so gingerly, while the small and medium business (SMB) market is adopting this new technology stack faster. According to the 2006 US Census Bureau statistics, SMBs (typically characterized as companies with fewer than 500 employees) make up 99.7% of all firms in the United States and represent over 50% of total employment in the country. This is a huge indicator of where the biggest market potential lies for IT services in general. Whereas large businesses are more apt to build internal private clouds on which to deploy their applications, SMBs typically lack the financial ability to back large CAPEX projects internally. In addition, IT is not a core competency for most SMBs, so they are less likely to devote resources if at all possible. SMBs are more likely to look to an outside provider (cloud provider) on which to host their application stack or even look to a SaaS provider if the correct software package is available. Either way, the utility computing model works well for SMBs and this is an excellent way to penetrate this particular market.

If you are sitting in the value added reseller (VAR) or services space, there is probably more promise in the large enterprise market. In many of the large financial institutions I have worked with, certain aspects of IT are seen as core competencies, and they rely on competitive advantage driven by internal teams who specialize in these core competencies. There is almost always a mix of off-the-shelf and custom applications, and when you compare all of these institutions against each other, it is the custom applications and infrastructures that deliver value and competitive advantage. Here is the perfect entrance point into the large enterprise market with cloud computing products and services. Security concerns, compliance and 'trade secrets' will normally drive these large enterprises away from public cloud providers into the private cloud market. This is an excellent chance for VARs and service providers to become trusted advisers as well as proven solution providers.

Knowing the market possibilities and penetration points is only part of the battle. You still need to develop layered strategies to approach these markets. Each potential client will have different challenges for you to architect against. Developing a solutions matrix where you can address these challenges in a methodical manner gives confidence to the client that you have presented the best solution to them. Working within the framework of an architectural reference guide will also aid in the process of migrating, re-factoring or porting applications to a cloud infrastructure.  Oh, and just when you thought you had it all figured out, all of these pieces are constantly evolving moving targets of a nebulous nature. Needless to say, a true cloud strategy is more of a process than a solution, and as the industry is evolving at a break-neck pace, you need to constantly evaluate and modify your cloud strategy.

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