Daryl Plummer

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Daryl C. Plummer
Managing VP & Gartner Fellow
18 years at Gartner
35 years IT industry

Daryl Plummer is vice president, chief of Research and chief Gartner Fellow. Mr. Plummer manages the Gartner Fellows Program, which is designed to allow senior analysts the opportunity to explore new research ideas and to elevate… Read Full Bio

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Cloud Services Brokerage is Built on Markets Near 1 Trillion in Spend!

by Daryl Plummer  |  October 11, 2010  |  1 Comment

I recently wrote a prediction stating that “Cloud Services Brokerage (CSB) is the single largest revenue growth opportunity in Cloud Computing”. Of course, not everyone agrees with that. So, I had to go out an try to provide more evidence. And to do that, I finished rewriting the definition of cloud services brokerage. Benoit Lheruex and I have been working steadily on this and are seeing notables such as Accenture, Deloitte, and IBM all begin to plan for a significant brokerage future alonside upstarts like Appirio, Boomi, and even stalwarts like GXS. See Ben’s blog post on CSB here.

So, in the definitional piece called “Defining Cloud Services Brokerage: Taking Intermediation to the Next Level”, we said (free peek):

Since CSB is not a technology. It is necessary to describe it in terms of a business model, providers, deliverables, functions and enablers:

  • CSB business model: A model where a business acts on behalf of consumers of one or more cloud services to intermediate and add value to the service being consumed. Providers of cloud services can benefit as well through establishment of an ecosystem of partners, such as brokerages, who enhance the provider’s service and draw customers to it.
  • CSB providers: Specific companies or other legal entities that offer CSB.
  • CSB deliverables and functions: Business and technical value-added capabilities delivered by a CSB provider.
  • CSB enablers and enabling technology: Various IT services, software or hardware assets used to deliver CSB.

But that wasn’t enough. We had to go on and provide a logical reference model (See “A Logical Reference Model for Cloud Services Brokerage“, by me – sorry about the pay wall) and some basis for the judgement that CSB is going to be big Big BIG! So, we used simple logic. We looked at the companies entering the CSB-related markets and companies that were already there. Now, from here, you can do the math.

Use whomever’s market numbers you want. Add up the custom development markets for SIs, SI application and integration projects, B2B integration markets, Process outsourcing (BPO) markets, API governance markets, context brokerage markets, security brokerage markets, value-added reseller markets, internet performance acceleration/content delivery markets, backup and recovery markets and…well, I could keep going but you get the point – we’re getting into the range where there is a “tr-” in front of the “-illion”. Now, let’s go conservative and attribute just 10% (that’s only one customer in 10 doing cloud stuff) of those market totals to companies in those markets doing what they do – but doing it for cloud services. And, if the number you come out with isn’t BIG, then I’ll ask you to count again.

Cloud services brokerage is not one market. It is a composition of parts of markets that are really significant in size. I’m not saying that all the revenue in those (and more) markets will be CSB revenue. I am saying that a non-trivial part will be. If cloud computing will be big, brokerage will flow right along with it. And just like the accessories markets for your iPod, Android phone, PC, and Honda accord, you will find the value-added intermediaries (brokerages) may command the lions share of the spend happening in cloud computing.

Some people feel intermediaries needlessly complicate things in the cloud. I feel the opposite. And, opportunity awaits.

A lot more is coming on this, so join the dialog!

Cheers, Daryl

1 Comment »

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1 response so far ↓

  • 1 Robert Jenkins   October 12, 2010 at 3:23 am

    To add a perspective from a public cloud vendor’s point of view; I couldn’t agree more! I very much see cloud intermediaries as being of far higher importance than standards as the cloud continues to rapidly develop and innovate. Standards not only ossify what is still an early stage technology and freeze out innovation, they also are rarely achieved. Commercial cloud intermediaries are however able to not only incorporate any standards that may emerge but also are nimble enough to rapidly add in vendor specific innovation in a way not possible by others and certainly not standard bodies. It is this combination of embracing standards and encouraging innovation that make cloud intermediaries unique. Of course, by investing development time in leaping over vendor specific barriers (some deliberate, others not), they increase competition and create real interoperability in the cloud as well.

    As you say, far from complicating things, cloud intermediaries can package up separate platforms in one combined interface and abstract users from the minutia of individual vendors. Likewise, customers looking to use cloud intermediaries will likely be looking for multi-location infrastructure management, hardly ‘babes in the wood’ of the IT world and perfectly capable of appraising the market.

    I’m looking forward to your further posts regarding this highly interesting and developing area of cloud computing.

    Kind regards,

    Robert


    Robert Jenkins
    Co-founder
    CloudSigma