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Cloud Services Strategy: Leverage or Synergy?

ALS_Louis_Pellegrino
by Louis Pellegrino

With the cloud services landscape defined for the foreseeable future, buyers should consider how to do business in the context of the existing competitive climate.

One decision is whether to pursue a strategy of “leverage” or to opt instead for one of “synergy.”

“Leverage” involves a multi-provider approach, and can be effective for a “lift and shift” initiative aimed at convenience and cost avoidance. The approach here is to let each of the three major players know that the lowest cost provider stands a better chance of landing more subscription activity. A leverage model also enables flexibility and reduces the risk of lock-in, but also places the burden of integration on the customer, with minimal customer support from providers.

“Synergy,” meanwhile, involves going with single cloud services provider and offers the benefit of easier integration. Platform lock-in is the most obvious risk, as customers may bet on a provider’s vision to extend the tools and services initially used to build out a solution, and then find themselves out on a limb, as witnessed by Microsoft’s recent withdrawal from RemoteApp on Azure that has sent users scrambling for alternatives to growing their solution.

The appropriate approach depends largely on whether the cloud initiative is designed to support a “run the business” (RTB) or a “change the business” (CTB) strategy. Factors to consider in a run the business model include cost compression, control, governance and security. If the intent is simply to augment an existing approach to commodity services without adding new functionality, then a leverage approach can be effective to optimize pricing. For a change the business strategy designed to build new services or exploit a new market opportunity, mobile integration, Internet of Things integration and social engagement are key.  Here, relying on a single provider’s offerings and support makes more sense than assuming greater liability for the final integration work needed to develop and deploy a new service or solution.

That said, the leverage vs. synergy question is not necessarily an either/or proposition; in fact, buyers can take advantage of both models. Organizations that start with a CTB initiative tied to a single provider may discover that their applications can evolve using services from other providers.  This creates an opportunity to use multiple providers to do a cross-section of CTB initiatives, rather than just one.  Conversely, a leveraged, multi-provider approach to cloud to support a RTB program can allow a customer to understand the services and costs of each provider, and enable development of a more strategic and committed relationship with any one of those providers over time.

About the Author

After a 20 year career with Microsoft, Louis Pellegrino has compiled a track record of enterprise client success underpinned by customer focus, strategic thinking, organizational agility, problem-solving acumen and impactful knowledge transfer which has established his reputation as a Microsoft licensing expert.