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SMBs seek alternatives to hyperscale cloud providers

There's no denying the dominance of AWS, Azure and Google within the cloud market. But for some companies, smaller or regional cloud providers offer a more attractive alternative.

The enterprise market has increasingly come to center on a handful of hyperscale cloud providers with wide-ranging services and compelling price structures. However, these giants may not be able to offer some companies -- especially small- to midsize businesses -- the kind of speedy support and hand-holding they need to make the most of cloud.

With those market needs in mind, smaller cloud providers continue to see demand for their style of cloud computing -- and analysts say the trend isn't going away soon.

"What we are seeing is that the major mega clouds -- Azure, AWS (Amazon Web Services), Google and IBM, along with the other large players -- are competing based on scale and global reach and the number of services they are offering," said Dave Bartoletti, principal analyst at Forrester Research in Cambridge, Mass.

But what they offer may not meet the needs of all. For example, migrating workloads to the cloud and determining how to manage and secure resources across cloud and on-premises platforms requires expertise. Smaller firms won't get much help from the hyperscale cloud providers, but may also be reluctant to invest heavily in building out their own IT staff.

That's where smaller cloud providers come in.

The focus for organizations using a smaller cloud provider is not so much on service-level agreements (SLAs), though that's important, but on things like how to provision resources or solve a problem with a particular application, said Richard Villars, vice president of data center and cloud at analyst firm IDC in Framingham, Mass.

"It tends to be more about issues that need human intervention," he said.

In addition, some companies that operate in specific geographic regions might seek out a smaller, local cloud provider to host certain applications with reduced latency. And businesses with applications that are stable in terms of growth and demand don't necessarily need the elasticity of hyperscale cloud providers, which makes a smaller or local cloud a practical alternative.

Considerations for selecting a smaller cloud provider

If you are moving to the cloud and don't know about containers or microservices, it might be nice to work with a partner that has that expertise.
Dave Bartolettiprincipal analyst, Forrester Research

There are plenty of smaller vendors, particularly among the first generation of internet service providers, that are already cloud providers or could evolve in that direction, Villars said.

"Some are already offering cloud services and others could, but they need to transition to the cloud model, which has a different design and different SLAs compared to what they have been doing," he continued, noting that these providers may also need to bulk up their privacy, security and control.

But finding a smaller cloud provider with these capabilities -- especially outside large metropolitan areas -- may not be easy. "In Europe and some other parts of the world, resellers often have a managed service background and are well positioned to become cloud providers," Villars said. In contrast, U.S. resellers typically have more of a hardware focus, and less experience offering services. "It will take more work to identify the right hosting partner here."

Midsize companies should first look for cloud providers or partners that have more than basic infrastructure capabilities. "Partners should be an expert in some business area or function, whether that's a Microsoft or Oracle portfolio or some other expertise that would provide you with value," Villars said.

Second, look for a service provider or hosting partner that offers a full range of options, from simply space in a cloud to full-fledged managed services. This is because, when a company makes the transition to the cloud, it often needs soup-to-nuts options. Organizations might have legacy applications written 20 years ago that they still need to own and operate, but have other functions that can move directly to the cloud, Villars explained. Each requires specific kinds of expertise.

Finally, make sure your smaller cloud provider is an expert at working with local carriers and network providers. This ensures you can make any necessary changes in routing or other network functions that could be barriers to a successful cloud transition.

The role of MSPs

For many organizations, there are other alternatives. For example, a midsize company may have a strong relationship with multiple managed services providers (MSPs) with domain expertise in vertical markets, such as manufacturing or financial services.

"The MSP may be able to fill the cloud provider role, too," Bartoletti said.

In fact, some MSPs already have cloud offerings that allow users to consume infrastructure on an on-demand, pay-as-you-go basis. "If you already have a relationship with them, why not build on that?" he said.

Overall, though, second- or third-tier providers could offer many organizations "a faster path to the cloud" than trying to work hyperscale cloud providers, Bartoletti said. These smaller providers are also likely to offer a range of related consulting or staff augmentation services, and could help ease the adoption of emerging technologies down the road.

"If you are moving to the cloud and don't know about containers or microservices, it might be nice to work with a partner that has that expertise," Bartoletti said.

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