IaaS is neither co-location nor hardware

As a commercial consulting firm for IT Service Providers, we speak to many new and existing cloud providers specialising in infrastructure services. In doing so, we notice that many providers are struggling with further growth in their business. In our initial conversations about this, we address the following questions, among others:

  • Why do you provide private IaaS services?

  • For which type of customer is the service best suited?

The answers to these questions are not always comparable. It depends very much on the type of provider and its situation and affects the answers to the above questions. Therefore, let’s address the questions by type of IAAS provider.

Why do parties provide private IaaS services?

We see three parties offering it:

  1. Data Centers

Service providers that offer co-location services are now setting up a new IaaS service in their data centres.

  • Why? The reason for doing this is a combination of customer demand and the migration of customers to the Public Cloud as AWS, Azure, Oracle Cloud, Google Cloud, etc.

  • Examples: Some Dutch examples are Dataplace and Bytesnet.

2. IT Resellers

IT companies that traditionally offer mainly hardware solutions and consultancy to the market. They provide a new IAAS service with the support of the big brands.

  • Why? The reason for these parties to offer IaaS is because they see their project revenue decreasing. And the parties are looking for recurring income (Recurring Revenues). IT resellers often offer IaaS services with partners such as HPE Greenlake or Uniserver.

  • Examples: Some Dutch examples are PQRDoviloAxez, etc.

3. Pure play IaaS

These are providers, sometimes also start-ups, that only offer IaaS. So companies that 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.

  • Examples: 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 from Cyso, but also from within the provider itself like Fundaments or Intermax.

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

What type of customer suits this service best?

The second question is for whom they feel their service is appropriate. Here we often get insight into the real problem of the go-to-market, the commerce behind the IAAS providers. Only a few parties have chosen to go to market.

This is true of all three types of IAAS providers, by the way. Although a few pure-play IAAS parties may have specifically chosen a market or target group.

Uniserver, for example, provides its services specifically for IT partners and a party like Intermax for the healthcare sector. And very successful too. Their services are fully designed and ‘branded’ for their target group. The target group recognises itself in the service, is curious about what this service can do for them and enters into a discussion with them. By using the target group’s knowledge to enter into a conversation and be able to offer a targeted proposition, the commerce of these organisations is successful

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

Man in IT-sector

IaaS is a semi-finished product

By offering only the IAAS service, the providers, who are not very focused on a target group or customer solution, ignore the nature of the IaaS service. IAAS is nothing yet. Before you, as a customer, can use your available IT resources, you still have to arrange a lot of things. You have to install your operating system, applications, data, policies, and much more. You have to configure the whole environment as if you had bought your own hardware.

So this is how many providers offer their IAAS as a partial solution. They see IaaS as a replacement for co-location services or as an alternative to your hardware. Of course, you can market the service in this way. However, you create relatively little added value by doing so, and you make yourself easily comparable to the customer. This is reinforced 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 with as an IAAS provider? As an IAAS provider, who expects to have the intelligence to see the possible applications and benefits for their organisation’s business in combination with a virtual server in your Cloud environment or in that of your partners? Right, with your potential customer. He needs to make an extra effort to understand what he can do with you and what he can gain from it, specifically in his case.

Help your customer understand you

As an IaaS provider, you have to help your potential customers with these questions. Be the translator between your technical services, the customer’s business, and the market developments that your target group and the potential customer are dealing with.

This is not necessary in the case of data centre services, where the added value is focused on the equipment that will be placed in the data centre. Issues such as energy, cooling, location, security and so on are important. Hardware reselling is often about replacing existing systems or a newer generation of systems. Specifications are then essential.

With IaaS services, you shift more to your customer’s business because of the service’s operational character. He also feels he is outsourcing more and will be working with you for a more extended period of time. So he needs to understand your current and future value to his organisation. What specifically are you going to help him with?

That’s what you need to explain. Help your potential customer understand the value of your services for his kind of organisation. This is important, especially in the first phase of his buying process, the awareness phase. You can do this by choosing. By choosing organisations that best fit your service. Because if you know them, you can do the translation for these organisations. This costs the organisation less effort, and he can explain it better within his organisation.

Being able to explain is choosing

Therefore, you must choose the type of customer you find within specific target groups. You will then explain your value on the standard and relevant developments and themes within those target groups, which is your translation. So the target group recognises itself in your value and is more likely to be curious about its awareness and need. And that makes him more likely to talk to you.

How do you organise and execute that? That is specifically our area of expertise. We are happy to help you with an initial analysis and advice about the value of your service. So sign up for a free business scan from us.

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.

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Would you like to know more about the latest developments in portfolio innovation, marketing and sales in general? Read our other blogs or have a chat with one of us at Force21: Tjarko Kwee and Thijs van Hofwegen.

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