Changing horizons for the cloud provider

Traditionally, IT decision makers have considered the vertical they operate in as irrelevant when selecting a cloud provider. Fast forward to 2016 however, and the trend is very different. Cloud providers are shifting towards specialising in particular industries, to cater to the individual business needs of companies.

The cloud infrastructure requirements of two businesses can vary vastly, therefore this shift is hardly surprising. Just take the example of eCommerce versus the financial sector. Online retailers need a solution that can scale quickly to handle sudden spikes in traffic during events such as Christmas sales. This is quite different from the IT infrastructure needs of a financial firm, which may prioritise security due to the sensitive nature of its data.

As we progress through 2016, we will see increasingly more service providers specialising by sector, which seems to be driving business success. There will be very few that are everything to everyone.

Compliance and regulations  

We will see more cloud providers specialise in highly regulated industries such as government agencies, healthcare partners and the financial sector. These verticals have very strict compliance and regulatory environments and, often, long approval and procurement processes. In order to stay compliant, cloud providers will need to have an understanding of how this works.

The government’s G-Cloud initiative demonstrates the regulatory environment of government bodies. The G-Cloud framework was created to make the process of procuring outsourced IT services easier for public sector teams. Within the digital marketplace, there is a list of pre-approved cloud service providers that they can access and procure without a lengthy process.

G-Cloud shows how cloud providers that are familiar with the framework and how it works, may be better suited to serve the industry. It also means that cloud providers with expertise in this area will be sought after in regulatory industries.

High levels of agility

Industries that deal with high levels of website traffic will have a different set of priorities to those with high regulatory processes. For high-performance sectors, an agile and scalable cloud infrastructure will be of paramount importance.

Let’s take the eCommerce sector as an example. Online retailers require a flexible system that is able to scale up to handle sudden peaks in web traffic. For example, during sales seasons when coupons and the promise of cheap deals drive an influx of bargain hunters to a website. If your site doesn’t have the ability to scale up to meet demand, shoppers will experience site outages and poor performance.

It has been found that 68 per cent of shoppers will abandon a shopping cart when a website takes more than two seconds to load and poor site performance can be detrimental to a brand.

We will start to see more cloud providers that offer specialised services to high-performance industries. They will need to provide flexible, agile and scalable options that give the customer the opportunity to scale up and scale back down again to suit their seasonal demand.

What about hosting providers?

The hosting service structure is in a transitional period and hosting providers should prepare for change. Only a few of the largest providers will be capable of catering to the needs of all sectors.

We will continue to see more and more providers adapt to meet the needs of companies, rather than a one size fits all approach. Cloud providers that try and serve all industries are dwindling. As a result, those that don’t adapt to specialise do so at their own peril and will experience a fiercely competitive landscape.

As businesses start to consolidate their offerings by sector, they can focus their service and target their strategy. Being an expert in the market will bring a big business advantage.

So it really isn’t a question of if the one-size-fits-all providers will be a thing of the past, but when.

Daniel Beazer, Senior Consulting Analyst, Cogeco Peer 1

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