Why Vertical Clouds Are The Future!

Over the last two and a half years I’ve spent in the cloud space, one question that has always concerned me has been, “Is there money in cloud computing?”. I ask it from a provider perspective, as I think there is a lot of money to be made in the cloud ecosystem, but as a direct cloud service provider, is there money to be made.

I think there is, but I don’t think it’s going to be as a commodity platform provider. Why? Because there are just too many business issues that aren’t addressed by cloud computing providers to date.

See, if you’re a business, and you’re looking to make money by offering a service via the web, by leveraging a cloud platform, you’ll need some basic business capabilities. Let’s use tax as a good example. States are permitted to enact their own tax laws, as is the federal government. They don’t have to agree on a standard, meaning one state might declare that tax is applicable if a service is delivered to a resident in their state, while another might declare that tax is applicable if the service is provided out of their state. So as a service provider, you’re going to need some fine grained insight into what’s happening with your service. Let’s keep moving forward with this example. If you are hosting your service with a cloud provider that has two data centers, in different states. Let’s say that for one part of the month, your service is running out of state x. Then something happens, and for a period of time, your service is moved to data center y, and your service is served out of there. Then, the something is fixed, and your service moves back to data center x. Both data centers are in the providers “region a”, just in different states. This introduces a complexity, because what happens if state y considers your tax liability to be based on if you ran a service out of their state? And if you didn’t know your service was running in state x, because the bill you get from the service provider simply says “region a”, you might be in a sticky situation.

Again, this is why purely generic, commodity clouds are a challenge. They don’t have enough “business smarts” baked in, to help you as the customer, stay compliant. It’s not that they need to be tax smart, but they at least need to let you be tax smart.

Taxation is just one area of complexity, compliance is another. For example, what if you’re trying to develop a service to sell to financial services customers? There are a myriad of compliance requirements that financial services customers have. If your service doesn’t support your customers in being compliant, then that’s going to be an insurmountable barrier to them buying your service. And, if you try and use a cloud platform provider who doesn’t have the requisite hooks in place for you to build the controls required to offer compliance, the whole venture is a non-starter.

This is why I think vertical clouds are the future. See, right now, buying and connecting up servers is not a challenge, money is the only factor here. However, standing up a truly automated cloud, one that can dynamically allocate resources based on demand, like the big players have, is far harder, mainly because there aren’t many tried and true options out there. OpenStack is definitely an interesting option, as it’s open source, demonstrated (NASA and RackSpace use it), and provides all the bits you need to get a commodity cloud up and running. OK, so now I have the platform in place, and it’s open source and pluggable, now I have some room to move. So say I decide I’m going to be the premier provider of cloud platform services to the financial services industry. I go a build a bunch of goodies into the base platform that supports all the compliance requirements (tax, legal, etc.) of my industry (same applies to healthcare, etc). Wow, now I have something interesting, because now I can offer customers a high-value cloud platform service that makes it easy for them to do business. What’s more, the future of cloud is absolutely composability and redundancy, so I may have an app that has a financial services capability delivered by FinCloudX and a healthcare capability delivered by HealthCloudY. Ahhhh. And, all the appropriate compliance requirements are taken care of by each cloud.

What do you think?