Are Public Clouds on a Support Race to the Bottom?

There is no way for someone with an information systems management degree to ignore cloud computing. During the summer, market analyst firm Ovum found 61 percent year-over-year growth among multinationals, and this coming year should see a flood of adoption.

A Microsoft study suggests that 39 percent of SMBs with between 2 and 250 employees will pay for cloud services within three years. With such burgeoning demand, no wonder that the industry has seen an explosion of public cloud service providers, whether they offer general infrastructure such as computing and storage, or delivery of specific services. But some have noticed a service race to the bottom, as David Taber discusses in CIO:

There’s a phenomenon that economists describe as a “race to the bottom,” where vendors compete by undercutting in price, which leads to a reduction in quality and service. In businesses like airlines, trains, telecoms — with huge fixed costs — these downward spirals of service can last for decades because, fundamentally, the customers don’t have that much choice. Any vendor foolish enough to offer great service will see their costs go up…and their sales go down. Despite complaints about lousy service, the customer won’t tolerate big price increases.

Cloud vendors face this problem because supply is outstripping demand. Such major companies as Amazon, Microsoft, Google, Rackspace, and IBM have already jumped in, and that’s just a sample. All want to win as much business as possible because they consider the space to be strategic going forward, which means that many are willing to lose money now to ensure market share later. But in the process, none of them really want to lose money, so they’ll try to cut costs where they can. One area is in technical support.

Whether outsourcing to automatons who struggle with anything that deviates from the scripts their given, uploading documents (sometimes of questionable value), or tell companies to get help from an online user community, support is an area terribly vulnerable to cost cutting. Any IT group planning to use public cloud services must take this factor into account. Here are some

  • Develop user-side metrics — Your ultimate concern is what impact public cloud services can have on your users … whether end-users, developers, software testers, or anyone else. Measure before any switch and use baselines to determine when you’re not getting what you need.
  • Hold vendors to performance — When you have identified the important user metrics and have baselines, be sure that you hold a cloud vendor responsible in the service level agreement.
  • Interview other customers of the vendor — No set of statistics that a cloud provider hands over will tell you what it’s like to deal with them. For that, you need to get customers — preferably not just the standard list that the vendor might make available. Talk to them at length and find out how responsive and helpful the support services are.
  • Negotiate a bail-out clause — One of the problems in dealing with a cloud provider is managing the situation if things ever go badly. Many providers will charge for you to withdraw all your data. Make sure you’re not left with an economic incentive to put up with bad service.

Public cloud computing can be a boon to a corporation. Make sure a rush on their part to cut back on support to improve their bottom line does make a bust of your IT strategy.

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