Why some cloud vendors are shifting to the managed cloud

When it comes to cloud market share, Amazon Web Services (AWS) (surprise!) leads the pack with 40%, according to Synergy Research’s February 2017 cloud market share report. It’s followed also to no great surprise by Microsoft Azure, Google Cloud Platform and the IBM Cloud. At the same time, the smaller cloud services providers’ (CSP) market share is shrinking.

So what’s a second-tier CSP to do? The answer, increasingly, is to give a managed service business model a try.

Rackspace was one of the first cloud companies, and it was also among the first to shift to a managed cloud approach. Instead of providing just a public or private cloud, Rackspace claims to offer “the best technology, plus the best experts to run that technology.”

They handle support, architecture and design and speed to market. In brief, they offer a complete soup-to-nuts cloud package.

Today, Rackspace supports clients on AWS, Azure and OpenStack cloud. Later this year, Rackspace will extend its managed services offer to Google cloud users as well.

Others have noticed Rackspace’s efforts. Mirantis, for example, began as an OpenStack specific company. Then, co-founder and CMO Boris Renski took a long, hard look at the cloud business and wrote, “I’d love to tell you that … Mirantis OpenStack software is so much better than everybody else’s OpenStack software, but I’d be lying. Everybody’s OpenStack software is equally bad. It’s also as bad as all the other infrastructure software out there – software-defined networking, software-defined storage, cloud management platforms, platforms-as-service, container orchestrators, you name it. It’s all full of bugs, hard to upgrade and a nightmare to operate. It’s all bad.”

So, Renski made a virtue of what Mirantis could supply: “Today customers don’t care about software. Customers care about outcomes. And the reason Mirantis has been successful is because, despite ourselves, outcomes are what we’ve been able to deliver to our customers by complementing crappy OpenStack software with hordes of talented infrastructure hackers that made up for the gaps.”

Today, Mirantis has transitioned existing marquee accounts, like AT&T and Volkswagen, toward its managed open-cloud model. The company has combined its 24×7 software support team with its managed operations crew to improve customer intimacy and agility. The company has also simplified its various pure services by doing away with its ad-hoc architecture and cloud strategy consulting business. The primary emphasis today is on services that enable customers to adopt open cloud based on a Build-Operate-Transfer model. It’s also doubling down on services related to cloud tenant on-boarding and care.

While Mirantis and Rackspace are the two biggest cloud companies that are trying out the managed cloud model, they’re not the only ones. Smaller businesses such as Netfast, CDI Managed Service and NWN are all giving it a try. Some large tech companies also provide cloud management services as part of their portfolios.

Why are they doing this? It’s only partly due to the runaway success of AWS.

In truth, clouds only look simple. To really make the most of them, all but the biggest companies need a technically adept partner. What managed cloud services offer clients is a way to outsource their cloud needs the same way they may have formerly outsourced its IT requirements in the client-server days.


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