A recent business conversation led to the establishment of the fact that the data centre business is becoming more cutthroat than ever. Price wars, advanced offerings, upsells and what not are the usual tactics that have been used, but now competing forces are pressuring data centre providers to go beyond the usual and utilise something new.
Data centre businesses are now relying more and more on leveraging strategic footprints, global presence and larger capabilities to educate and work with customers at a local level – in the United States alone, there are an estimated 3 million data centres. With data centre services more abundant than grocery stores, how will the model sustain itself and what will determine the winners from the losers? My answer: granularity.
Granularity needed by MSPs
Managed service providers (MSPs) work day in and day out with end users. The core of their business revolves around providing cloud services and solutions to their customers. This may include computing power, database, hoisting, storage and many other services that are cloud based. MSPs, however, are facing a challenging time as well. For example, their relationship with data centres, where the need for granularity is evermore necessary.
Consider this: IOTA Services, a medium-scale MSP, has over 800 customers. All 800 customers are hosted on a third-party data centre owned by TrueNorth Data Centre. At the end of every month, TrueNorth Data Centre provides an invoice to IOTA Services for all their utilisation of the infrastructure within the data centre. IOTA Services then looks at what aspect of the infrastructure is used by each customer and then splits the invoice based on a homemade logic consisting of multiple Excel worksheets.
This is one of the biggest challenges faced by MSPs overall; the granularity of consumption. Data centres today can really propel into the success domain by helping MSPs deal with their challenges. Providing data and infrastructure services today is not enough and having more control over your information, infrastructure and the consumption of it is key. If data centres reply on MSPs to drive their business, it makes more sense to empower SPs with what they need to drive the business forward.
Ultimate value for end users
MSPs, on the contrary, are now able to completely view the usage of infrastructure and services at the data centre level and can easily make sense of all the services used by each of their customers. This plays a key role at the end-user level where say a small consulting company that uses IOTA Services to host some of their data and exchange server can now see exactly how much it costs from an IT aspect, assuming, of course, there are adequate margins and other business due diligence in place. End users may have proprietary software or nice software solutions they have deployed. Knowing how much in very precise terms becomes invaluable.
More reasons for granularity to be key
As software solutions have evolved, we are now at a time where the consumption of IT is a key aspect in every business. I have spoken about the need for chargeback and empowering IT to charge back the services and solutions they offer in an enterprise environment for this very reason. Unless you have such a unique offering that nobody else offers in the universe, you will face the same economic terms as everyone else.
Be it the economy, the need to lower expenses, the need to improve margins and the absolute need to scale; everyone has the same set of problems. Knowing where you spend, stopping the bleed and optimising the business are just essentials you should be doing anyway. As a business end user, I absolutely do not want to pay for anything that I do not use. This trend of consumption is growing – be it in our personal lives or the workplace. Enabling this value proposition forms the bedrock of business profitability.
Where to go from here?
We are all going to use a lot of data and IT services going forward. Data centres are amazing with the offerings they have, and so are MSPs who are providing much-needed solutions and services to millions of businesses and essentially helping organisations enable and embrace the cloud. Unless we have an element of granularity built into the billing of cloud solutions and services at every level, we are going to face the challenge of not being happy for what we pay. This is purely because human beings love granularity and businesses especially need granularity to make sense of what they are spending. Global economies are not helping either. Whether it is Canada, the United States or China, daily changing market conditions and economic conditions makes conducting business more difficult.
Let’s make 2016 the year of granularity and help bring more knowledge to what we consume. Let’s also engage in a meaningful conversation with our customers, clients, service providers and peers to know more about the consumption model, cloud, chargebacks, and of course granularity. Do you have ideas about cloud granularity? For the sake of value, let’s start a granular conversation.