Amazon Web Services (AWS), as the business is known, has been a hit with startups which need robust and inexpensive web services that they can purchase as the need arises. But big corporations and government agencies, often referred to as enterprise customers, represent a far larger opportunity: they spend more than $300 billion a year on data centers, Bernstein Research estimates.
Now access your favourite content on the go
That market opportunity has helped Amazon's stock price more than triple in the past five years as investors bet that the retailer's cloud computing services will become an integral part of the way companies do business over the internet. Enterprises, however, are far more demanding than start-ups, requiring better service guarantees, closer tracking of expenses, special features for regulatory compliance and much more.
Thus a network of middlemen who develop solutions that work on AWS servers has become central to Amazon's strategy as it takes on established enterprise technology giants such as Oracle
Madrona, headed by long-time Amazon board member Tom Alberg, has invested in a number of start-ups that help enterprises to use AWS and other cloud services, including 2nd Watch, Apptio and Skytap. AWS has more than 4,000 members in its partner network, up from fewer than 1,000 in the first quarter of 2012, according to Terry Wise, its head of global business development. "If AWS didn't have this partner ecosystem, they would be struggling with enterprises," said Kyle Hilgendorf, who set up Eli Lilly & Co's
A study by Hilgendorf and his Gartner colleagues this year concluded that AWS meets 71 percent of what enterprises need to fully embrace public cloud computing. "Partners understand enterprise customers better and can often paper over the cracks," said Mat Ellis, chief executive of Cloudability, which helps big companies such as Adobe Systems
One area where AWS falls short is so-called service-level agreements, or SLAs, which guarantee IT services will keep running. If service is interrupted, the provider has to compensate customers - and if it happens too often, they could become former customers. Consultants that work with AWS say its SLAs are not always adequate for the needs of large enterprises. The one for AWS's popular "EC2" computing service, for example, guarantees downtime will not exceed about 22 minutes a month, according to calculations by Gartner and Cap Gemini.
Yet some enterprises require downtime to average no more than 5 minutes a month, said Joe Coyle, Cap Gemini's chief technology officer in North America. To fix this, Cap Gemini weaves together AWS servers in different regions around the world to make sure that if one data center area goes down, the rest of the network keeps running. "We turn around and write a new contract with the client," Coyle said. "The client would not even know they are on AWS if they didn't ask."
Cap Gemini has nine enterprises using AWS in this way, including intercity bus carrier Greyhound Lines. Other companies, such as start-up 2nd Watch, are also developing their own approaches that guarantee less downtime than AWS itself. The AWS partners can also help enterprises keep existing systems and have them work with AWS, an increasingly popular strategy known as "AWS plus one."
Andy Jassy, head of AWS, said recently that enterprises can now use AWS and their own data centers at the same time. Software firms including BMC and CA Inc
The risk in this approach is that it makes it easier for enterprises to use rival cloud providers. Indeed, many of the larger partners already have long-standing business relationships with Amazon rivals. RightScale, for example, a long-time AWS partner, helps enterprises run applications on multiple cloud platforms, including those offered by Microsoft, Google, Hewlett-Packard Co
RightScale helps Samsung SDS America, a unit of Samsung Electronics, use AWS alongside OpenStack, a cloud platform promoted by Rackspace and other AWS competitors. "Enterprises love the cloud. They just don't want to only use AWS," RightScale CEO Michael Crandell said.
Published Date: May 15, 2013 04:05 pm | Updated Date: May 15, 2013 04:05 pm