A trio of CEO’s presented at the infra/STRUCTURE Summit 2024 in Las Vegas about trends in the managed infrastructure and cloud sector. Moderated by Philbert (“Phil”) Shih, Managing Director of Structure Research, Ben Gabler, CEO of Rocket.net; Jeremy Pease, CEO of Colohouse/Hivelocity and Warren Patterson, CEO of Summit Hosting shared leadership insights from their perspectives leading managed services and colocation and cloud infrastructure companies.
During the discussion, the panelists highlighted several key factors driving the trend of cloud repatriation. Rising public cloud costs, increasing complexity, compliance requirements, and a lack of quality customer service from hyperscale providers were all cited as significant contributors. They noted that customers are increasingly turning to managed infrastructure providers for better performance, reliability, and cost savings, which are often more challenging to achieve in the public cloud environment.
More specifically, Ben Gabler commented that he sees a “public cloud exodus” driven by rising public cloud costs, “noisy neighbor syndrome”, and the availability of dedicated servers and private cloud options that offer more flexibility and cost savings.
Whereas Jeremy Pease agreed that there is a big piece of cloud repatriation happening, citing the “3Cs” identified at the Broadcom Summit – cost, complexity, and compliance. Pease adds a 4th “C” – customer service – noting the lack of quality support from the hyperscale providers.
Warren Madison chiming in with his shared optimism about the repatriation trend, noting that it was a “contrarian” view a couple years ago that is now playing out. Madison also doubled-down on Pease’s comments regarding customer service, agreeing that it can be a key differentiator.
Also, each of the panelists shared their strategies for competing with public cloud providers and winning back business. They are focused on offering feature parity with the public cloud, providing excellent customer service, and building solutions tailored to the specific needs of their customers. Emphasizing the importance of becoming trusted advisors, they aim to help customers better understand the total cost of ownership and the advantages of managed infrastructure solutions over public cloud alternatives.
For example, Ben Gabler shared that his team focuses on providing feature parity with public cloud in terms of capabilities like snapshots and live migrations. Coupled with customer service, it’s a differentiator for their business noting that many large public cloud providers lack good support options. As a result, Gabler’s firm, Rocket, can pass cost savings from their bare metal private cloud infrastructure onto customers, making their services more attractive.
Hivelocity/Colohouse CEO, Jeremy Pease highlighted the importance of balancing automation and service to provide value to customers. Pease shared examples of customers starting small and then rapidly growing their spend as they see the benefits of the platform. He noted that the challenge with larger customers is the need to be also their “trusted advisors.”
And Warren Madison reiterated Summit’s “customer-centric” approach, as his team provides a “calm and reassuring” voice compared to the marketing-heavy approaches of larger providers. Madison remarked, “we don’t try to win every customer, but focus on the key inflection points where customers are looking to move away from public cloud.”
As the conversation continued, the panelists emphasized the critical role of community engagement, content creation, and relationship building in their go-to-market strategies. By actively participating in community involvement, producing thought leadership content, and positioning themselves as true partners to their customers, they are able to build strong relationships. This approach, they noted, helps establish trust and credibility, which is essential when competing in a market dominated by large public cloud providers.
Madison shared the success that Summit has had with offering data center tours for new customers, allowing them to see the infrastructure and meet the team. The result, he shared, is that this helps build trust and understanding, which is crucial when competing against larger providers.
Similarly, Pease emphasized the importance of having company executives actively participate in online forums and developer communities to demonstrate their involvement and problem-solving abilities. This stance complements Pease’s leadership approach which values having dedicated customer success teams that can speak to different customer segments and build those relationships.
Garber remarked that traditional marketing approaches ,like Pay-Per-Click (PPC) are expensive and don’t effectively target the right customers. Instead, Rocket focuses on community-driven initiatives like user groups, Facebook groups, and content production to establish entry points and build relationships.
Further on in the discussion, Gabler shared how his firm is addressing customer demands for global expansion, security, and edge computing by leveraging partnerships, explaining that
His company leverages partnerships, like with Cloudflare, to extend their global footprint and offer services like CDN without needing to build out their own PoPs around the world. Pease remarked that it’s important to understand what the customer is actually trying to solve for, rather than just taking their stated requirements at face value. “By having a consultative approach, (they) can often recommend more cost-effective solutions, like using a CDN instead of deploying the application in a specific location,” Pease said.
And finally, the panelists acknowledged the growing demand for GPU-powered cloud services, while also noting significant challenges related to high costs and power constraints. Jeremy Pease emphasized that his company has thoroughly evaluated the GPU opportunity, pointing out the difficulties in achieving a strong return on investment and the long payback periods associated with GPU hardware. He explained that they are actively seeking partnerships with emerging chipset providers to bring more affordable, multi-tenant GPU solutions to market, expanding access beyond just the largest enterprises. Warren Madison compared the GPU cloud services opportunity to the colocation business, where the focus is on providing infrastructure in a multi-tenant model. He suggested that the key to success lies in delivering these services affordably, rather than exclusively targeting large enterprises. In summary, the responding panelists highlighted the economic challenges of GPU hardware and the opportunity to partner with chipset providers to develop cost-effective solutions, with the goal of making GPU-powered services accessible to smaller businesses, much like the approach in the colocation market.
Overall, the panelists see potential in this market, but recognize the need to address the cost and accessibility challenges to truly capitalize on the opportunity.
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