This week METISfiles presented on the Future of the Dutch Cloud & Hosting Industry at an event organized by the Dutch Hosting Provider Association (DHPA).
The current state of the Dutch cloud & hosting industry can be summarised as follows:
- Cloud & hosting providers provide web hosting, infrastructure hosting, application hosting (or a combination of all three) combined with a set of services.
- For cloud & hosting providers hosting is core but other providers (think IT services, software, telecommunications, digital agencies) sometimes also provide web, infra or application hosting.
- There are hundreds of small providers in the Dutch market, predominantly selling web hosting.
- The Top 10 Independent Dutch Cloud & Hosting Providers have 150+ employees on average and have been established 15 years ago.
- Majority of all providers have been established less than 15 years ago
- There is lots of M&A activity.
- SOHO and SMB are the most common customers
- The market has been built on direct sales
- It is a growth market
Three trends converge to drive growth in this industry (see Figure below):
- The ongoing digitalisation of products & services is driving growth in web hosting
- The increase in IT infrastructure and operations outsourcing is driving growth in infrastructure hosting
- The tendency to acquire everything-as-a-service (think PaaS, SaaS and BPaaS) is driving growth in application hosting
Global public cloud providers such as Amazon (AWS), Microsoft (Azure) and IBM (Softlayer) are providing self service public clouds and are innovating their platforms at a speed that no Dutch cloud & hosting provider can match. In order to stay relevant, local providers are starting to position themselves as cloud integrators and orchestrators to continue to play an important role for their customers. Customers will need to orchestrate, integrate, manage, and source a hybrid mix of cloud and non-cloud resources to satisfy legacy IT and regulatory demands.
Rather than offering generic web, infrastructure or application hosting products and services, cloud and hosting providers should specialize and focus on their core capabilities and markets. Generic providers that offer the best hosting for the lowest price will find it increasingly difficult to differentiate and maintain healthy margins. To maintain customer relevance they should:
- Maintain direct customer contact and trusted advisor role
- Invest in automation, orchestration and self service to drive down costs and cater for hybrid cloud customers
- Manage infrastructure investments for minimal risk and maximum returns
- Invest in an effective partnering strategy, e.g. partnering with public cloud providers to cater for hybrid cloud customers
- Have an active merger and acquisition strategy
- Focus on segments that value direct customer contact and trusted advisor role
- Clearly communicate their key differentiators to their customers
The presentation is available on slideshare.
