Gary Audin
Gary Audin is the President of Delphi, Inc. He has more than 40 years of computer, communications and security...
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Gary Audin | February 15, 2012 |


What's Your Cloud's Business Model?

What's Your Cloud's Business Model? Different business models may complicate some and maybe all of the issues that may arise, such as SLAs, security, privacy, and availability.

Different business models may complicate some and maybe all of the issues that may arise, such as SLAs, security, privacy, and availability.

The cloud hype is all over the place. But have you ever asked the question, "How does the communications cloud provider actually implement the service?" The answers may sway you to consider one provider over another. There is not a single way to deliver the services. There are several business models, some more attractive than others.

One of the differences is that most cloud communications providers use the Internet to provide access to their services. A few providers will bundle in MPLS access to their service. In the latter case, the provider can offer better voice quality because the voice sessions are supported with a high Quality of Service (QoS) that cannot be provided over the Internet.

Cloud Implementation Models
There are many possible business models for the cloud communications providers. Different business models may complicate some and maybe all of the issues that may arise, such as SLAs, security, privacy, and availability when subscribing to a cloud service. I discovered these various models when I performed my survey of cloud communications providers. Here are the business models now in place:

* Vertically Integrated Provider--A total cloud service where the provider owns the hardware, software, network and has the staff that implements and maintains the service. The provider in this case writes the software for their service. This has the advantage that special features and functions can be custom designed to meet the enterprise's requirements. This implementation also has a single provider--other than the Internet access—who is responsible for all aspects of the service; SLAs, security, privacy, and availability.

* Pure Cloud Service--This service can be located on cloud based servers that run provider owned software that is licensed from a third party software vendor. Amazon's EC2 platform is an example of a cloud based business service that already exists that can be used as the implementation platform. Amazon Elastic Compute Cloud (Amazon EC2) is a web service that provides resizable compute capacity in the cloud. Software modifications must be implemented by the third party. The SLAs, security, privacy, and availability are supported by the cloud platform, not directly by the service provider. If the cloud platform has a problem like EC2 did twice in 2011, then the service can fail. The service provider has to wait for the cloud platform to return to operation in order to turn the service back on.

* Alternate Pure Cloud Service--Another model is a communications software vendor (e.g. call center software) operating on a cloud provider's platform. In this case, software changes to customize features and function can be implemented by the software vendor. The Amazon EC2 service is a candidate to support this model as well. The SLAs, security, privacy, and availability issues are the platform's problems. The software vendor depends on the cloud platform operator to take care of these issues.

* Third Party Implementation--A third party installs licensed communications software in the cloud (on a service like EC2) and sells the service directly. Custom feature and function modifications are unlikely to be offered by this implementation. The SLAs, security, privacy, and availability issues are the platform provider’s problems. The software vendor depends on the platform operator to take care of these issues.

* Resold Services--This is a reseller that owns nothing, but resells cloud services from one or more wholesale providers. The reseller can be using the cloud provider's name or it can be a private labeled service offered by the VAR. In either case, the VAR is only passing through a service. Customized features and functions are probably not possible. The VAR has no control over the SLAs, security, privacy, and availability of the service.

The business model will have a great influence on the SLAs and Acceptable Use Policies (AUP) that an enterprise will encounter. The contracts or service agreements may be biased toward the provider if the platform is not part of the provider’s operation but instead provided by a third party such as EC2. The stability of the service can be in jeopardy if the service provider business model is not successful. What if the cloud provider goes out of business? Or the cloud platform bill is not paid by the service provider and customer information like voice mails are not accessible? This has already occurred with some wholesale as well as retail providers. What if the provider decides to terminate some functions or features? For this type of provider, the enterprise should have a backup plan (possibly an alternative cloud provider) in place in case any of these situations occur.


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