Different Angles for Cloud Computing Vendors

Earlier this week Firas Raouf and I met with a group of UK-based expansion stage software companies organized by the UK Trade and Investment arm at the British Consulate.

Topics ranged from venture capital investment, to business growth strategies, to the type of operational support OpenView Venture Partners provides to expansion stage software companies.

Then we got to the topic of OpenView’s view on the cloud computing space. After all, the event’s theme was around cloud computing.

What struck me, though, was that — with the exception of a few companies — most of the businesses were not focused on cloud computing in and of itself. Rather, they focused on providing SaaS solutions, and some of them relied on cloud environment to deliver those solutions.

So I said: Before I share my thoughts on cloud computing, how do you define cloud computing?

It turns out, there was no consensus definition in the group. So I laid out my view on the subject, which I wrote about earlier here.

I then discussed the different angles I see for building a business around cloud computing, using my first definition around elastic, virtualized computing resources:

* Offer a hosted cloud service, basically like Amazon, but perhaps geared to more specific pain points and use cases with some software and configurations
* Sell software to enable others to offer hosted cloud services
* Sell software to enable enterprises to build and manage a private cloud
* Offer a hosted solution that itself has nothing to do with cloud computing (like a marketing automation platform, CRM, BI, e-mail archiving), but leverage the cloud for its infrastructure

In the last case, I feel that while using the cloud to offer a hosted service can create some marketing hype in the short run, in the longer run it won’t matter at all for your business unless:

* Offering the solution in the cloud allows you to offer a higher performance level and more scalability and flexibility to your customers than competitors not utilizing cloud computing
* Offering the solution in the cloud allows you to offer a solution at a much lower and more flexible price point to your customers without degrading performance
* Offering the solution in the cloud significantly reduces your capex and other costs and therefore makes your business more profitable and / or cash-rich.