What is a Vertical Cloud… and Why Should You Care?

In his latest Cloud State of Play YouTube videocast Richard Simon (a.k.a. The Cloud Therapist) and I discuss, amongst other things, Vertical Clouds.

In my opinion, Cloud is inherently horizontal. In other words, the same standard product or solution can be used in multiple different vertical industries. That is not to say that developers can’t build specific vertical applications on that horizontal Cloud platform and, in any case, slowly but surely, the term Vertical Cloud is creeping into IT vendors’ vocabulary. For example, there is IBM Cloud for Financial Services, or Oracle Manufacturing Cloud and Microsoft Cloud for Non-Profit (organisations) to name but three. You will also see these referred to as Industry Clouds. So far, so good. But dig under the skin of the headlines and you start to see that in terms of scope and functionality there are major differences in what is being delivered. Furthermore, we would argue that what they are providing is already being covered using different terminologies.

My colleague, Martin Banks stated recently that:

On the subjects of Industry Vertical Clouds and Industry (or use case) Platforms two thoughts occur. One is that these can be seen as different perceptions of the same thing which have as a very probable delivery vehicle – Software-as-a-Service (SaaS), and nearly all the service delivery products/offerings are now, fundamentally, SaaS.”

A look at the different Industry Clouds being marketed supports that premise for some. Oracle Manufacturing Cloud is very much in the SaaS category. Indeed, looking at the marketing blurb there is little detail on the underlying platform. But others are much more like a PaaS (Platform-as-a-Service) that provide some specific compute, security, industry compliance policy handling and other data handling requirements specific to the industry use case on which to build the apps themselves. IBM Cloud for Financial Services falls more into this category. AWS GovCloud appears to be little more than standard AWS capabilities isolated in a specific region that only Government customers can register for and access, which, if true, makes it little more than an IaaS (Infrastructure-as-a-Service) offering.

For as long as I can remember IT Vendors have struggled to understand what makes a solution vertical, be it in the Cloud or on premises. Back in 2012, Chris Skinner (he of the Financial Services Club fame) wrote an excellent article on this topic in his very readable Finanser blog series. I’ll let you read it to get the detail, but his points are well made. Just saying you have a focus on a specific vertical doesn’t make collaboration tools, office suites, even HR systems vertical. They can all be deployed across multiple different verticals…without change. So, they are horizontal.

The other issue I see regularly, is that vendors talk about having a vertical focus, such as Financial Services, without realising that the term covers a very disparate set of companies doing different things that have very different IT requirements. I will often as a vendor who says they focus on Financial Services (without specifying specific sub-segments or use cases) whether an organisation like Merrill Lynch, engaged in financial market trading is more like Lloyds Bank or Betfair. From a technology point of view the answer is Betfair. The IT platform needed to deliver on-line gaming and gambling applications is much more akin to the trading platforms used by financial traders than that required to service retail banking customers.

So, why is this important for buyers to understand? If you are after a packaged application you need a SaaS solution. Your focus then needs to be in on the functional fit of the software to your requirements. If you have your own application developers but don’t want to spend time thinking about both the hardware and compliance requirements for example, then a Platform-as-a-Service (PaaS) that provides all the performance and industry specific compliance requirements to support the applications you are developing is probably what you need.

Don’t get carried away with the concept of a vertical cloud. They are really SaaS, PaaS and even, possibly only IaaS (Infrastructure-as-a-Service) offerings that may, or may not be right for you. Be sure what you are looking for (and I don’t mean just a Cloud solution.) Make sure the vendor understands demonstrably both the market segment you operate in and your specific use-case requirement. I still say that Cloud is inherently horizontal. Challenge your prospective vendors to prove otherwise.