Jamcracker and the Need for Brokers

While in San Jose recently attending the Cloud Connect event, I took the opportunity to meet up with Jamcracker to get a briefing both on their solution and what they’re currently working on. Jamcracker is a 10 year old vendor that takes an aggregation approach towards cloud services brokerage, they have master agreements with multiple cloud providers and offer those solutions to their own customers who integrate them and on sell them. It’s not a novel idea, but one which resonates, especially with the telcos that Jamcracker predominantly sells to – with telcos traditional revenue streams drying up, cloud computing is a logical area for them to move into.

I spoke with both Steve Crawford, VP of Marketing, and Vijay Sarathy, VP of Product about their offering and what it’s really like to sell to the notoriously difficult to deal with telcos.

Jamcracker has three legs towards its approach in the marketplace. these are;

  • The technology platform they’ve built that allows them to integrate disparate services
  • The ecosystem they’ve nurtured – master agreements with vendors etc
  • The business process layer they have built around the product catalog

One of the issues I raised with Jamcracker was the problems around SLAs. Many of the end customers that Jamcracker’s own customers are selling to will want a high degree of clarity around the SLA relating to their services. One of the issues with intermeidated services in the cloud is that it increases the complexity around SLA liability. Is it the base provider, the broker, or the MSP who is ultimately liable for the SLA. It’s an ongoing issue and one that I’m not seeing a clear resolution to.

Another risk for Jamcracker, and other brokers, is the potential for telcos to simply go out and build their own clouds without using a broker. It’s something that Korea Telecom have done – they’ve built their own cloud offering by engaging companies to help with the build-out. Two of the companies that helped with the set-up, Cloudscaling and Cloud.com are prominent faces of the cloud computing community and, while the initial setup cost to build their own cloud was more than an equivalent services-based purchase, KT are clearly confident that the business will be large enough to warrant the capital outlay.

This is especially so when it comes to telcos situated outside of the US – local regulations and network latency mean that local infrastructure (be it owned or purchased as a service) is often seen as preferable. While Jamcracker could readily bring local cloud providers into their portfolio, the current dearth of these offerings makes that difficult.

Another question that remains unanswered in all of this is whether there is really an ongoing need for brokers in the cloud space. With so many tools coming online that allow the easy management of public and private clouds, and with the high degree of transparency that cloud services tend to have, Jamcracker and the other brokers are playing a game of arbitrage that may not be ultimately viable. It’s a different situation from that of SpotCloud, the clearing house for cloud capacity that I’m bullish about. A clearing house is a good play as it allows vendors to rid excess capacity that would otherwise go to waste, while enabling consumers to see acquire services at rock bottom prices. A brokerage that tries to resell premium products at premium prices is a different model however, and the key here for Jamcracker and others is to provide sufficient extra value to justify that.

Crawford gave me an example of this sort of added value. In the case of their deal with Telstra in Australia, billing is run out of Telstra’s own data center with their own payment gateway. Jamcracker ws able to integrate telstra’s billing into their own product, even to the point of having the billing ping the Australian Business Number database to authorize transactions – that sort of integration is useful – but not impossible to create in house.

It’s early days and the brokers have plenty of opportunities in the short to medium term. Time will tell how that goes longer term.

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