June 10, 2013
For a few years now the punditry has been discussing the need, or otherwise, of a financial intermediary layer that sits between cloud vendors and customers. Those who deny the validity of the space point to the fact that, since cloud vendors are in a direct service-provision relationship with the customers, there is no need for an intermediary that simply adds friction to the transaction. Proponents of the concept however suggest that, analogous to a game of tetris, cloud brokers allow the customer/vendor relationship to be optimized and in doing so, to deliver better outcomes for both the vendor and the customer.
At the same time as this conceptual debate occurs, we have discussion about what a cloud broker actually is – with some people suggesting that anyone who provides a “single pane of glass” to disparate infrastructure is a cloud broker. While these vendors do an important job, they do so as a technical intermediary. Cloud brokers on the other hand are a financial intermediary and that is a very different relationship. In a recent blog post, John Cowan, the CEO of 6Fusion, summed it up well when he said that
Cloud brokers will focus on the business of compute rather than the technical organization of compute. And the business of compute has nothing to do with cloud computing or the technology driving this revolution. The business of compute is about the commoditization of compute, network and storage infrastructure
I’ve been thinking about this distinction a lot lately – since I’ve been spending time talking with the team from Cloud Options a company that is genuinely trying to deliver a financial cloud broker service. As CEO James Mitchell says:
The guys that are trying to sit in between the cloud suppliers and the cloud buyers in the billing chain, allowing each to buy or sell on a financial deal that suits their own circumstances, are true cloud brokers. They are the guys that hedge against the risk of changing expectations of future cloud pricing and buying on larger volumes for longer durations, only to further break those volumes into smaller blocks that match a buyer’s forecast cloud needs
Cloud Options (or, more correctly, its parent company Strategic Blue) is taking part in TechStars Cloud in San Antonio, and I’ve been interested to see how their message and positioning has changed over the time of the program. They’re a company I’m very positive about, partly because I believe they are solving a problem which really exists, and partly because of the makeup of the team.
You see there are two worlds at play in technology – the business world and the technical one. Vendors who provide a product that meets a pressing business need need to be focused on the business conversation, and staffed by people who can focus on the business realm. In the same way that I’d much rather that the broker selling me an insurance policy for my business was an expert in insurance rather than an expert in the minutiae of my particular business, so too should one expect a true cloud broker to have a deep understanding of the business drivers and issues around brokerage. Yes they need to understand the technology landscape, but more importantly they need to understand the true role of the broker. Cloud brokerage is, as the meme goes, “a thing”, but cloud brokers need to be focused on their business case rather than the technical one. And vendors offering a technical single pain of glass to heterogeneous infrastructure, what you do is vitally important, just please don’t call it brokerage.