Is there a role for cloud brokers?

By: Steve Hughes - 04/10/2011

Steve joined Colt in 2008 and has played a key role in developing Colt’s cloud and virtualisation services. He is a member of the IT Services portfolio marketing team where he is responsible for defining and introducing new services for the European market. Catch up with Steve’s latest views at

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In the rush to get to the commoditised nirvana of “on-tap” IT, new business models are being touted as the future path for IT service delivery. Recently, there has been much discussion on the potential of the cloud broker model. But what is it and why would we need one?

Both Forrester and Gartner are pushing the concept of a cloud broker.

According to Stefan Ried at Forrester: “the cloud broker model represents the most promising, but also the most ambitious, cloud approach.  It offers IT and telecom service providers — but also other vendors — the timely and unique opportunity to overcome the rapid commoditization of their existing services business and build a sustainable, more margin-rich service delivery model”.

Whilst Gartner’s Cloud computing hype cycle has cloud  brokerage at the start of the hype curve — the ‘technology trigger’ area. Even so, it predicts that “through 2015, Cloud service brokerage will represent the single largest revenue growth opportunity in cloud computing”.

Now NIST has entered the fray with a somewhat controversial definition:

 “An entity that manages the use, performance and delivery of cloud services, and negotiates relationships between Cloud Providers and Cloud Consumers”.

The need for this is outlined by NIST as follows: “As cloud computing evolves, the integration of cloud services can be too complex for cloud consumers to manage”.

So we are saying that cloud services are going to continue to grow at such a pace in the next 5 to 10 years that we will need an intermediary between the cloud consumers and the cloud providers.  That intermediary could fulfil one of three different roles:

  • Service Intermediation: A cloud broker enhances a given service by improving some specific capability and providing value-added services to cloud consumers. The improvement can be managing access to cloud services, identity management, performance reporting, enhanced security and so on.
  • Service Aggregation: A cloud broker combines and integrates multiple services into one or more new services. The broker provides data integration and ensures the secure data movement between the cloud consumer and multiple cloud providers.
  • Service Arbitrage: Service arbitrage is similar to service aggregation except that the services being aggregated are not fixed. Service arbitrage means a broker has the flexibility to choose services from multiple agencies. The cloud broker, for example, can use a credit-scoring service to measure and select an agency with the best score.

While the Conceptual Reference model from NIST is a very good model, it is not a crystal ball.  Enter my favourite phrase of the moment. Kevin Kelly, (Senior Maverick at Wired magazine until 1999) recently wrote, “Futurists have a dilemma. Any believable prediction will be wrong. Any correct prediction will be unbelievable.”

Traditionally companies have integrated along the value chain to improve their competitive position. While the NIST definition includes Cloud Providers, Carriers, Brokers and Auditors, these roles will not be allowed to grow but subsumed quickly by players in the market before these separate power bases in the value chain  have a chance to develop. The most important role will be that nearest to the customer.  As Paul Maritz, CEO at VMware, said “the customer’s {NIST “cloud consumer”} key strategic supplier relationship going forward will not be with his hardware suppliers of old but with his service provider”. The company who can best combine the NIST roles of carrier, auditor, broker and cloud provider may be best placed in this new market to offer the customer the services they will need. Maybe NIST has just defined the Information Delivery Platform…

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