Cloud Service Brokerage: a policy-based business model

Claus Schaale, Cisco

PUBLISHED ON: 28 Nov 2013

The increasing complexity of cloud services has created the opportunity for a new business model: Cloud Services Brokerage. The answer to the interest in policy-aware cloud-solutions is choice, argues Claus Schaale in his guest post for the Internet Policy Review. Claus Schaale is Manager for sales and business development at Cisco.

Generally, policy sets a framework within which innovation is allowed to happen. However, technological innovation can just as well be policy enabling – as can be seen in cloud brokerage services (CSB). CSB is a new business model emerging in the field of cloud computing. As we have seen, big players, such as Deutsche Boerse, are also getting into the game.

Cloud services are getting more complex

There is no doubt that cloud computing is here to stay. Cloud computing brings savings, productivity and innovation that our economies so desperately need. But all of a sudden selecting a cloud provider is no longer a technical decision, but a complex decision tree based on use case, performance, data sovereignty and privacy.

The complexity and rapidly expanding cloud offering is creating this cloud intermediary/broker opportunity. Estimates by information technology research firm Gartner suggest that approximately $100 billion will be spent annually, worldwide, on combined Cloud Services Brokerage ‘roles’ by year-end 2014.

Cloud consumption has grown and evolved over the past few years. Initially cloud was mostly used by the developer community in a “boutique” consumption mode, users knew exactly what they needed and from whom to buy those services. Amazon Web Services became the stronger and bigger player in the market. The rapid expansion of cloud services created the opportunity for other players, such as Terremark and Savvis that added a more personalised and consulting approach to the implementation of cloud solutions. Customers wanted to get in the cloud, but they needed help. The cloud ecosystem developed rapidly and many customers realised that they needed different types of cloud services: Infrastructure as a Service, Customer relationship management, cloud storage, etc.

Cloud services brokerage meets regulation

Cloud services brokerage is a new technology and business model that aggregates many different cloud services under one single portal, allowing cloud users to have one single console to order, manage and use different cloud services. This market was initially led by companies like Parallels 1 and Jamcracker. Lately, we have seen other companies following the path, like Appdirect, Zimory and ServiceMesh, adding new models and more specialised features and functions. Most of these tools have been designed to expose as many options as possible to the user, but not really to help customers choose the right solution.

The first non-technical criterion for cloud selection was location. Banks and governmental institutions were early adopters of cloud services, and they had already a regulation in place that required data to stay in their respective country.  In general, the big cloud consumers verticals are public sector, finance and web based e-commerce, therefore other compliance requirements have been added to the mix, including for the US the Federal Information Security Management Act (FISMA) - or European equivalents, the Health Insurance Portability and Accountability Act (HIPAA), and the Payment Card Industry (PCI) for e-commerce.

What has changed?

Cloud has become ubiquitous. Most cloud users have only worked based on the assumption that as long as I know where my data is and I can connect to it safely (via encryption and/or VPN technologies) my data will be protected. This mindset prevailed despite the existence of the far reaching Foreign Intelligence Surveillance Act (FISA) and its latest amendment act. Since 2008, this law authorises targeting of persons reasonably believed to be located outside the United States.

However, it took the Snowden incident to create awareness for an existing “privacy in the internet” issue. Cloud users are now aware and re-thinking how to select and use these services moving forward.

Cloud services brokerage enables policy-based choices

The technical evolution of the cloud has created a new breed of CSBs. These platforms will not only help customers buy and get a consolidated bill for their cloud services, CSBs will add a decision tree to the selection process. Customers will create ‘cloud profiles’ to establish the conditions under which they want to operate. These criteria could be factors such as location, performance, FISA reach or PCI compliance. Users will be able to create their own services portfolio based on legal, financial and operational criteria.

CSB was not intended to solve policy questions. However, this business innovation can be put to use for policy demands by offering options for users. The current situation with the increased awareness of the internet surveillance serves as an example for possible user demands, especially regarding privacy. In this setting, cloud providers or CBS do not take responsibility by implementing policies in technology, but by giving users the right to choose services according their specific needs.

Europe is the second largest economy, and a place where privacy and data sovereignty are of utmost importance. Furthermore, coming regulatory changes within the EU will most probably make the choice of a cloud provider a central topic. This ongoing technical and legal evolution is creating an interesting space for startups to jump into. There are startups and niche players, such as Nephos in the UK, that are already developing these technologies.

Europe has been the canary in the coal mine this time. The relevance of choosing the right service matching the right regulatory environment will eventually spread across the world. European startups are in a unique position today to lead this emerging policy-based CSB opportunity.

If technological innovation and policy interests sometimes go hand-in-hand. In this case, technological innovation actively enables demand-driven policy adoption by allowing and emphasising user choice.

Footnotes

1. From all the companies mentioned in this article, according to Schaale Cisco does have a 1% equity stake in Parallels.

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