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Successful business models for IaaS providers

As a commercial consultancy for IT Service Providers, we speak to many new and existing cloud providers specialising in infrastructure services. In doing so, many providers struggle to grow their businesses further. In the initial discussions on this, we will address the following questions, among others:

  • Why do you deliver private IaaS services?
  • Voor welke soort klant is de dienstverlening het meest geschikt?

Responses to this are not always comparable. It very much depends on the type of provider and its situation. This affects the answers to the above questions. Let us, therefore, address the questions by type of IAAS provider.

Why do parties deliver private IaaS services?

Broadly, we see three parties offering this:

Data centre

  • These service providers offer colocation services and are now setting up new IaaS services in their data centres.
  • Why? The reason for doing this is a combination of customer demand and customer migration to the Public Cloud like AWS, Azure, Oracle Cloud, Google Cloud and others.
  • Examples: Some Dutch Cloud providers are Dataplace and Bytesnet.

IT Resellers

  • These IT companies traditionally offer mainly hardware solutions and consultancy to the market. They are offering a new IAAS service with the support of major brands.
  • Why? The reason for these parties to offer IaaS is that they see their project revenue declining. And the parties are looking for recurring revenue. IT resellers often offer IaaS services with partners such as HPE Greenlake or Uniserver .
  • Examples: Some Dutch examples include parties such as PQR, Dovilo, Axez.

Pure play IaaS

  • These are providers, sometimes including start-ups, that only offer IaaS. Companies enter the market with a new technology or concept.
  • Why? The reason is that they see a need in the market for flexible IT computing power and cloud storage.
  • Example: Leaf.cloud, which offers a “green” IaaS. In addition, many of the existing providers have IaaS offerings. Sometimes under a separate label, for example, Fuga (link) of Cyso , but also from the provider itself as with Fundaments or Intermax .

Of course, the hyperscalers (Azure , AWS en Google ) also offer IaaS services, but they have a completely different financial and operational model compared to the private IaaS providers, and I will leave them out of consideration here.

Voor welke soort klant is de dienstverlening het meest geschikt?

The second question is about who they think their services are suitable for. We often gain insight into the real go-to-market problem, the commerce behind IAAS providers. Only a few parties have opted for a market.

This applies to all three types of IAAS vendors. Although a few pure-play IAAS parties may have specifically chosen a market or target group.

For example,Uniserver provides its services for IT partners and a party like Intermax for the healthcare sector. This is where they have been very successful. The service is fully designed and ‘branded’ for its target audience. The target group recognises itself in it, is curious about what this service can do for them and engages with them about it. Engaging in the conversation with the target audience’s knowledge and offering a targeted proposition makes their commerce successful.

Many others do not choose and thus are very similar and even replaceable.

IaaS is neither co-location nor hardware

IaaS is a semi-finished product

By offering only the IAAS service, providers, who are not very focused on a target group or customer solution, are ignoring the nature of the IaaS service. After all, IAAS is nothing yet. Before you, as a customer, can use your available IT resources, there are many things you need to put in place. You need to install your Operating System, your applications, your data, your policies and much more. You must configure the whole environment as if you bought your hardware.

Thus, many providers do offer their IAAS as a partial solution. They see IaaS as a replacement for colocation services or an alternative to proprietary hardware. Of course, you can market the service this way. Doing so creates relatively little added value and makes you easily comparable for the customer. This is compounded by the fact that most IaaS parties only communicate about the technical benefits and features.

At that point, who do you put the translation between that technical semi-finished product and your customers’ business to as an IAAS provider? As an IAAS provider, who expects to have the intelligence to see the potential applications and benefits to their organisations’ operations when combined with a virtual server in your Cloud environment or your partners? Right, with your potential customer. The latter has to make an extra effort to understand what he can do with you and what he gains from it, specifically in his case.

Help your customer understand you.

As an IaaS provider, you must help potential customers with those questions. Translate your technology services, the client’s business, and the market developments your target and potential client is facing.

With data centre services, this is unnecessary, where the added value is focused on the equipment in the data centre. Then things like energy, cooling, location, security and so on do matter. Hardware resell often involves replacing what is already there or a newer generation of systems. Specifications then matter most.

With IaaS services, the operational nature of the service means you slide much more into your customer’s business. He will also outsource more with you. And he will engage with you for a more extended period. So he needs to understand your current and future value to his organisation very well. What precisely will you help him with?

You need to explain that. You are helping your potential customer understand the value of your service to their kind of organisation. Especially in the first phase of his buying process, the awareness phase, this is important. You can do so by choosing. To choose clients that best suit your services. Because if you know them, you can translate for these organisations. This will cost the organisation less effort, and he can explain it better within his organisation.

To be able to explain it is to choose

So you have to choose a type of customer you find within specific target groups. On the standard and relevant developments and themes within those audiences, you will then explain your value. Your translation. By doing so, the target audience recognises your value again, and curiosity is more likely to be aroused in awareness and need. And that makes him more likely to enter the conversation with you.

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Force21 is a commercial consultancy for IT providers with clients in the hosting, cloud and MSP market. For our clients, we make a difference with new revenue growth.


Do you want to know more or have a talk? Plan a call with Thijs van Hofwegen, the founder of Force21.

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