Trusted Service Provider ≠ “Big” Service Provider

HP Upline, Yahoo Briefcase, and AOL XDrive have already closed or are closing their online file services. HP suffered a long outage recently, but in all likelihood their main reason for closing the business was a lack of short-term profitable financial results. This is most likely the case for Yahoo.

These online file services are not easy to offer. First, a competitive offering needs to be far more than just a place to store and retrieve files. Second, the service needs to be bulletproof. Finally, the service provider needs to be fully committed to the business.

In these difficult financial times, it is very easy for the financial organization of a large company to look at a service offering that is just one of many ventures, and quickly conclude that by shuttering the service, some short-term savings can be achieved. Never mind the trust that the many users have already placed in the service, and the problems that ceasing the operation could cause, which range from inconvenience to loss of data.

Speaking of trust, Google just sent a notice to a number of users of its Document and

Spreadsheets products stating that it may have inadvertently shared

some of their documents with contacts who were never granted access to

them. Ouch!

So who can you trust?

I believe that these cloud-based services can and should be delivered through a network of IT Hosting companies and managed service providers. Why? Because they are closer to their customers and believe that their differentiation is their commitment to serving the customer. A new service offering that can replace costly servers, brings significant value, and delivers savings to their customers will not be easily dismissed.

IT Hosting providers, managed service providers and VARs looking to provide such services should not shy away from doing so. When considering the options for delivering online file services, they may want to consider the following.

First, how much control of the services will you really have? Things like SLAs, hosting, backend storage options and branding should all be factors in making this decision. Providers should want an offering that is truly differentiated and is easy to use in order to see real adoption.

Second, as a provider, you will want to look at the cost associated with service delivery. Finding a real strategic partner in this area means finding one that will not only give you a very low cost of entry, but will share in the investment with a pricing model that monetizes services as you do. And of course speed to market is also a must: getting to market quickly and generating immediate new monthly recurring revenue is a priority on everyone’s business plan as we face the current economic situation.

In a recent article on the Gerson Lehman Group web site, entitled SaaS Offers Three Benefits for Tough Economic Times, (which is an analysis of the ComputerWorld article, In a down economy, SaaS revenues rise), the unnamed author outlines three key value propositions that are extremely representative of why providers will want to offer online file storage as a service instead of the traditional hardware alternative of a local file server:

1) No Capital Expense;

2) Variable Cost; and

3) Scalability.

“These benefits are tailor made to address the challenges businesses face now.” The article goes on to say “This makes the three benefits of SaaS irresistible. Given the credit crunch and the uncertain outlook for any venture, it is important to try out new ventures without incurring large capital expenses. SaaS offers companies a way to get started without large up front costs.”

So, being close to your customer and managing their IT needs should naturally include offerings that help replace the capital expense of file servers. It turns out that part of being a trusted service provider includes a commitment to how you will serve the customer, and positioning your business for success in your offerings. It means a robust offering, with appropriate availability and backup. It means a partnership that enables success, for the customer, the service provider, and the service enabler.

Although finding these types of partners may seem hard, there are companies beginning to emerge who address many if not all of these critical needs, you just need to know where to look.

The cloud isn’t just for the big players. Look to the early stage and start ups to fuel not only solution innovation but business model innovation as well.

There’s plenty of room in the cloud.

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