Power, CPU, RAM, storage. This is what IT decision makers used to think of when they engaged with cloud providers. However, that utility model stigma is shifting. Instead, the cloud industry is specialising to meet specific industry needs.
In 2016, rather than being viewed as one-sized-fits-all utility provider, a growing number of cloud providers will specialise by industry.
Think of electrical plugs. Power is standardised; yet, you still need a different plug adapter for every country that you visit. It’s the same when looking at cloud infrastructure. Across industries, there are different infrastructure needs, according to legislation and regulations.
When governments and financial firms are handling sensitive data, the priority is security; whereas e-commerce retailers may be looking for a more dexterous, scalable cloud that can handle a sudden upshot in traffic, such as on Cyber Monday.
As this trend continues to develop, few providers will be able to be everything to everyone. This evolution is leading cloud and hosting providers to specialise by vertical to drive business success. And it will reach a pinnacle in 2016 with the fall of the one-size-fits-all provider.
The move toward specialisation for highly-regulated industries
One key area of specialisation we’ll see more of in 2016 will be for highly-regulated industries. For instance, providers working with government bodies, financial firms or healthcare partners will need to exclusively focus on the needs of these verticals, such as regulatory compliance and security.
These providers operate in very strict environments and undergo long approval processes in order to provide services in these sectors. It’s crucial that providers are familiar and compliant with necessary certifications for these industries.
To illustrate, the G Cloud is a UK government initiative designed to make the IT procurement process easier for government agencies. In order for cloud service providers to work with government entities, they must be listed as an approved supplier.
The G Cloud Framework is just one example of a regulatory requirement causing providers to specialise. And, while the G Cloud may cause cloud providers to become less agile, with all the checks and balances in place, it’s an important step that helps them navigate such diligent approvals and extra security requirements that are common in highly-regulated environments, therefore making them best suited to serve these industries.
That level of expertise will make them highly sought after from other such regulated sectors, giving them a clear target market, too.
The move toward specialisation for high-performance industries
Just as cloud providers working in highly-regulated industries are adapting to become more secure and compliant, those working with high-performance industries are also specialising.
But, with more agile industry requirements, these providers need to offer the necessary scalability and flexibility in order to meet increasingly demanding network traffic and constant uptime needs.
As one example, providers serving the e-commerce vertical will become more specialised for this sector by focusing on offering dexterous scalability to handle large flows of web traffic.
Throughout the holiday shopping season, for instance, network traffic tends to increase, and the need for specialised, high-performance providers becomes exceedingly clear.
In fact, a number of websites failed during the Christmas sales period because their website couldn’t keep up with record-shattering network congestion. Providers will capitalise on these market mishaps and focus on delivering top-notch performance for major companies selling merchandise online.
These providers may also specialise further and remodel their service structure to offer various, flexible options, allowing their e-commerce customers to easily buy packages that fit their needs with the ability to scale up and down depending on the season. This ensures that these providers will serve the best capacity management for their customers.
What does this mean for hosting providers?
Hosting providers should expect big changes on the horizon. As only a few large cloud providers grow to be able to serve the needs of many industries, others competing (unsuccessfully) in the market will dwindle, as illustrated by HP and VMware throwing in the towel and dropping out of the public cloud.
While some hosting providers may still try to meet the needs of everyone (to their peril), those that want to succeed in this fiercely competitive landscape will instead choose to concentrate their services on specific industries going forward.
In fact, Forrester Research agrees that 'the consolidation and shakeout of the cloud market will accelerate in 2016, which will force many current providers to refocus on a narrower field.'
This shakeout will also help serve the preferences of hosting customers. Just as most suffering from heart issues would rather see a cardiologist than go to a free clinic, most hosting customers will prefer to buy services from a specialised provider that can offer direct expertise in their industry, delivering the best fit for their needs.
And, specialised providers gain an advantage, too, by focusing their services to capture more of their respective markets through their new, targeted strategy
The race begins
With these changes ahead, the question is: how quickly will the race to specialise happen? 2016 will be a big year for this movement, which is already taking shape. While the time left in the countdown to specialise by vertical is still unclear, one thing remains certain – the fall of the one-size-fits-all cloud provider is on the way.
Sourced from Daniel Beazer, Cogeco Peer 1