Dmitry Shchegolkov
Linxdatacenter Integration Department Manager
29.09.2022

Where the clouds are flying: provider gigantism, technology misunderstanding, and "golden niches"

The dynamics of the cloud provider market today is determined by a number of opposing trends. Which of them is stronger and where they will lead the market - argues Dmitriy Schegolkov, head of integration at Linxdatacenter.

Giant inevitability

The main "cloud" trend today: the biggest players will take over the bulk of the available customer base and absorb the business of smaller competitors. Given the changes, it is difficult to give an approximate timeline for such a transformation, but the general movement along this vector is absolutely inevitable.

Large providers have more financial, resource and organizational capabilities to mitigate the consequences of economic shocks. Against the backdrop of declining business opportunities to scale its local IT-systems, companies will accelerate the turn to the cloud and will choose the most functional and affordable options.

It is easier to offer these options to large providers than to small players. Therefore, over time, the cloud market in Russia will be dominated by a limited number of giants, similar to the global market.

It is possible to fight this by attracting investors, finding opportunities for the construction of new sites, etc. But that path is available to few. So there is a second trend.

A golden niche.

In order to survive in these conditions, small providers will have to find (or better, invent and create) a unique market niche. For example, through the development of a service, product or offer, which large players cannot do due to the specifics of the task and the overall "sluggishness" of the giants.

Large providers will not be able to deviate from the general strategy and go into a deep customization of the solution for the client or even for a specific group of clients, united by a common specificity. Such solutions are incompatible with the template provision of large volumes of resources, typical of the business model of cloud giants.

And this is probably the only chance for many quite prominent, but not dominant, players on the market today. What can be such a unique offer, such a golden niche?

The main indicator of such solutions is a high level of development of a specific business process of a potential customer. This can be both industry specific: education, agriculture, retail, manufacturing, and functional specifics: processes, regulations, human resources, etc.

Of course, giants can also do this, but smaller players have an advantage in flexibility, speed of decision-making and rolling out first releases. However, there is one obstacle that can seriously hinder the fight for potential customers.

The competency gap

It is a growing gap between the level of sophistication of cloud technologies and the level of understanding of what and how they can be used to achieve on the business plane. And this gap is equally large both among employees of providers and on the side of specialists on the staff of clients.

Let me explain: the level of abstraction and complexity of PaaS or SaaS cloud services for non-technical professionals is so high that it often leads to a gap between the possibilities of technology and how it is actually used.

Since that time when the data center bought, rented, or hosted its own racks, there's been quite a bit of change. Things have become more complicated in terms of cloud technology devices, and there have been very narrow specializations within cloud products. At the same time, it is the engineering, technical understanding of what and how it is set up and works that has become lacking.

Partly, this problem is caused by the high level of development of modern cloud services: they work as if by themselves, but if there is a slightest need to customize non-standard business tasks, it turns out that it is necessary to "get under the hood" and see what's there.

Usually neither the provider's salespeople, nor the client's projekts are able to accurately assess the available options to implement the project. Unless there is a person with engineering background in the team. But it is a very rare commodity - as a rule such people are engaged in direct technical duties. And this is a systemic problem of the whole market today.

Usually cloud giants are a little better with such gaps because of the larger staff and the ability to attract the best specialists.

What to do?

The key here is culture and competencies. Employees must carry the value of improving and developing professional competencies.

If specialists stop to learn new approaches, practices and technologies, the gap described will inevitably grow. Regardless of the specific area of activity in the company, which can be very narrow and not directly related to the technical implementation of the product, it is necessary to delve into its specifics.

Only on such grounds do courses and any training of employees, both internal and external, make sense.

For example, if a provider wants to develop and resist "cloud globalization", the entire business vertical must have a serious understanding of the structure and capabilities of modern technology. Of course, we are not talking about the level of PaaS platform configuration and maintenance, but the knowledge base should be deep enough to work out scenarios for its use.

Some work has to be done on the client side as well. Businesses cannot go to the cloud for advanced platform services and not change themselves. You need to clearly understand what exactly you are buying and why you need it, what results you want to get for every ruble you spend.

To do this, you need to immerse yourself in the specifics of the technology and study it deeply enough to speak the same language as the provider's technical experts, in case you cannot get the answers you need from the front office.

Remember that a cloud provider is not a full-service IT integrator, but a service seller. When you buy a service, you get access to it, a guarantee of quality, and a set of tools for further work - that's it. From there, everything is in the hands of your specialists. Without a change in the culture and approach to work on the part of the customer, nothing will work.

For example, if a company has slow development cycles of new functionality releases, lengthy approvals and other red tape, then it makes no sense to buy modern PaaS platforms, which allow you to release 5 new software releases per day, in order to accelerate these cycles.

You will only buy the technical ability to make 5 releases a day, but not a guarantee of their release - the productivity of a new solution depends entirely on the organizational culture in the company.

"Fast, trendy and youthful" in terms of quality of IT work provides not a solution per se, but only the correct use of this solution.

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