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Niche providers make a splash in the cloud computing market

With big fish such as Amazon and Google stealing cloud computing market share, lesser-known providers must make a splash to get noticed.

Like the tired analogy, the cloud market is filled with big fish in a small -- but growing -- pond. Amazon Web Services, Google and Microsoft have made a splash in the cloud market and get most of the attention. However, under the surface there is another group of providers -- vertical market specialists that are also making waves.

"With cloud gaining acceptance, we are seeing a number of new solutions emerge that are geared to meeting the needs of specific companies," said Jillian Mirandi, senior analyst at Technology Business Research Inc.

These niche cloud vendors are found in a number of industries, including in particular healthcare and financial services, where anything as a service (XaaS) options are trying to meet specific industry demands.

The potential for these vendors is great. Heavily regulated industries have specific issues that major cloud vendors often cannot tailor their offerings to. Smaller, vertical-specific cloud providers are getting the chance to make waves in these industries.

With cloud gaining acceptance, we are seeing a number of new solutions emerge that are geared to meeting the needs of specific companies.
Jillian Mirandisenior analyst, Technology Business Research, Inc.

The number of these selections is expected to increase. In some cases, the niche suppliers build the services themselves from the ground up. In other cases, third parties, such as Veeva, take horizontal platforms (in this case, Salesforce.com) and tailor them to specific niches.

Salesforce.com estimates that approximately one-quarter of the new applications added to its AppExchange marketplace in 2013 had a vertical market focus. So, regardless of the means taken, SMBs and enterprises with specific needs can expect to have more cloud options in the future.

Healthcare-specific cloud vendors

The healthcare vertical has highly regulated and very specific needs. Some cloud service providers have stepped up to pinpoint the vertical's must-haves -- which the big three cloud providers struggle to do. Rather than offering a wide variety of services that would encompass any company's needs, the providers such as the ones below offer tailored services to meet just the needs of healthcare. It should come as no surprise that many of the offerings were built by industry veterans themselves.

  • In 1997, Jonathan Bush and Todd Park, two doctors running a birthing center, founded software company Athenahealth to streamline the healthcare industry's paper and payment processes via the cloud. Athenahealth offers cloud-based athenaClinicals, an electronic medical record management system; athenaCollector, an administrative application for medical billing; and athenaCommunicator, a doctor-to-patient information exchange system.
  • Health Catalyst was also formed by a group of healthcare industry veterans who built data analytics services for the industry. Understanding the issues that arise with highly regulated verticals, Health Catalyst has a plan that focuses on the governance issues that may arise with storing confidential information in the cloud.
  • Operating since 2009, CareCloud Inc. offers HIPAA-compliant cloud storage, so patient records can be stored safely in the cloud. The service includes electronic health records, so physicians can use the cloud to access patient information on demand.

Financial services-specific cloud vendors

Like healthcare, the financial industry is burdened with compliance, security and governance regulations. Wall Street firms and even smaller finance companies can be hesitant to move to the cloud despite its many benefits because of these regulations and a concern about losing control over the sensitive data. Similarly to the healthcare vertical, industry pros in finance have stepped up to offer finance-specific cloud services that understand the detailed needs of those in the industry, and they have found success competing with the major cloud providers across the globe.

For example, the Navatar Group partnered with Salesforce and developed cloud CRM and content management for capital markets, asset management firms and banks in more than 30 countries. The group was founded by Deloitte Consulting veterans, who aimed to allow finance companies to access the financial and efficiency benefits of cloud computing.

Other niche cloud vendors

Though they may not fall under the compliance and security standards of highly regulated industries, other specific verticals are finding that cloud services tailored to their needs are more effective than major cloud providers' all-encompassing services. Companies in the retail, hospitality and other sectors are finding more options for niche cloud providers.

For example, Irvine, California-based The Retail Equation focuses on providing retail-specific cloud services, including retail transaction optimization services and its Verify Return Authorization cloud service, which uses statistical modeling and analytics to detect fraudulent and abusive behavior when returns are processed.

The flip side of the vertical focus

While the various vertical cloud computing market services can be helpful, they come with some potential downsides. Horizontal suppliers, such as Amazon Web Services, are able to drive costs down by offering generic services to corporations in many industries. The niche suppliers lack such volume, so their services tend to be higher priced than the services of the better-known cloud companies.

The small fish are also swimming among large sharks. Long term, they could either be swallowed up or put out of business by the bigger players. So, enterprises assume an element of risk when opting for the specialized services.

About the author:
Paul Korzeniowski is a freelance writer who specializes in cloud computing issues. Based in Sudbury, Mass., Korzeniowski has been covering technology issues for more than two decades and can be reached at [email protected].

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