There was an
interesting article
today on Tech Target (SearchAWS) where Katherine Wiley interviews Nick
Piagentini, who is a senior solutions architect at CloudPassage.
Nick’s argues
that AWS is not really ready for enterprise customers. He also states that
Amazon would be smart to invest in building an enterprise focused professional services
organization or else they will lose out to more enterprise savvy competitors
such as Microsoft and IBM.
This is an argument
that I strongly subscribe to. Amazon has certainly defined the commodity cloud
space, and are pretty much unassailable in the small to medium segment. However
the problem with any commodity service is that it is easily replicated and profits
are always under margin pressure.
Amazon may
be winning market share but that is a double edged sword if your costs start to
rise as they inevitably do when companies get larger. And it’s not as if Amazon’s
profits are particularly healthy lately anyway, they run pretty close to the
edge. Both Microsoft and Google have much larger war chests and much bigger
cash cow revenues to invest in infrastructure and even to undercut AWS if they
chose to do so.
But why would
Microsoft and IBM follow Amazon in a race to the bottom if they can extract
better returns from targeting enterprise customers? What if they let AWS win
the commodity cloud battle? If AWS get “stuck” in commodity then they will have
great difficulty in trying to differentiate their products from a commodity
base, unless they start to develop entirely new products and services, which
will in turn impact profitability. Possible when the market is expanding
quickly, but very challenging as the market matures.
Of course
this is all in the future, as of today AWS can still capture the enterprise
market if they choose to do so. The easiest and quickest way to win the
enterprise is to offer professional enterprise services. They don’t even need
to change the product portfolio significantly at this stage.
AWS must
avoid the mistake relying on partners to address enterprise engagement. Partners
have their place, but enterprise customers will not bet their businesses on small
system integrators, and most of the large services organisations in the world
are pushing alternate vendor cloud visions. This is the mistake that VMware
made with their foray into cloud and still struggle with to this day. It is
critical for vendors to have direct interaction with enterprise customers.
You don’t
have to drive huge revenues out of professional services, but you do need an
option for enterprise customers to rely on a vendor for end to end delivery.
