Continued from Experience or Innovation…
Hosted IVR systems are but one example of software and services that now successfully operate in the cloud. Companies and customers choosing to use the software-as-a-service (SaaS) delivery model utilize cloud computing to execute business processes. (The IVR lives in the cloud.)
Typically, cloud servers are hosted and maintained by a company in a data center (or data centers depending on the level of scalability and redundancy required). Often, these companies have expertise in data center management, server configurations and system maintenance.
As my previous post explained, in the last couple of years startup companies have emerged with the singular goal of offering cloud-computing services to other companies. They design, build, deploy and maintain servers and systems for other companies in need of cloud functionalities. These companies typically cater to any business with cloud needs, regardless of size or type, and thus engage in horizontal integration.
The second type of company attempting to break into the cloud market is what the New York Times refers to “incumbent tech providers.” These companies have been operational for years and are well known for producing other types of technology products and services. Per the Times article, these companies “already have broad portfolios of technology and deep corporate relationships after years of selling products.”
Companies referenced in the article, like Oracle and Hewlett-Packard, were around long before cloud computing was even a possibility. Incumbent tech companies found their niche producing a certain product that became highly successful, enabling them to effectively develop additional products and services.
Incumbent tech companies stand in sharp contrast with start-up companies, and their market proliferation is in keeping with these differences. Startup companies in the cloud-computing sector are considered horizontal integrators, developing one service that caters to a variety of different companies. Conversely, seasoned technology companies practice a strategy of vertical integration, expanding their service and product offerings to better serve their current clients.
Per the New York Times, incumbent tech companies take a single-stack approach, which “falls into a traditional business of offering better service and more features if you buy from a single source. It is known as lock-in, and there is a very high cost in time, energy and data for the consumer who chooses to move off a single provider.”
But what are the advantages and disadvantages of each model? Stay tuned for Choosing a Cloud Provider…
