Cloud providers Amazon Web Services, Google Cloud and Microsoft Azure each have rolled out multiple industry-specific offerings in an attempt to better appeal to companies in specific industries, including financial services, retail, telecommunications, media, energy, to name a few.
Amazon and Google Cloud have been the most aggressive in this area, each with 20 different industry-specific cloud offerings.
In some ways, vertical industry clouds are a natural evolution after the general purpose cloud services (like Azure and AWS), and the horizontal function-driven SaaS platforms.
Works for Some, Not for All
While the idea of an industry-specific offering certainly has some appeal for many of the targeted customers, there are still other instances in which these offerings aren't quite the right fit.
The horizontal cloud providers haven't had the expertise in house to fully understand all of an industry's needs and restrictions (e.g., security, compliance requirements, etc.). As a result, they have been honing their industry-specific offerings using input from former industry experts. These horizontal providers have either hired former industry professionals directly or have acquired their services as the result of an acquisition.
The new employees and industry partners handle the brunt of the industry-specific refinements while the cloud providers focus on technical aspects of their technologies, like edge computing, networking, and more.
There are a few different reasons why an industry-specific cloud might not provide as many benefits as the cloud providers say they will — advantages that seem to be expected, at least at first glance.
The financial services sector provides a good example of such a difference in industry-specific cloud offerings and the needs of different customers.
While some financial services providers are somewhat narrowly focused, providing basic banking services, such as loans, checking, savings, online payments and maybe a couple of other products, others are designed to be "one-stop" financial services providers, with insurance, wealth management, robust investment services, and a host of other offerings.
Many organizations may find that an industry-specific cloud provides just what they need in terms of features. It may serve their needs much better than anything they could develop in house. It could enable them to provide their customers with cloud-based services.
However, for some of the smaller, more specialized financial services providers, an industry-specific cloud may be oversized — and therefore, overpriced — for their needs.
Still others may be concerned that their cloud-based data may not be insulated sufficiently enough from competitors using the same cloud provider. Such firms may still rely on an industry-specific cloud for some uses - but will elect to keep much of their data in house.
Another challenge is that the industries themselves keep changing, offering new products and services that previously weren't considered part of their business. The iPhone is only 15 years old, but who doesn't have at least one of those (or one or more of its competitors) today? So, an industry-specific cloud offering may be too restrictive to serve a company's needs as it expands.
Companies in the financial services, telecom, energy and other industries continue to evolve. Truist Financial Services, for example, the result of the 2019 BB&T acquisition of SunTrust Banks, has a wider customer base and selection of offerings than either bank by itself pre-merger. As a result, it is working with not one, but three different cloud providers — AWS, Google and Microsoft — to meet all of its needs.
That means the added complexity of managing different cloud providers. While such a situation may be workable for Truist, at least for now, other financial services providers wouldn't want to have the complexity of overseeing different cloud services providers.
So expect the cloud services providers to continue to continue to further refine and expand their vertical industry offerings in an attempt to capture more of these lucrative markets, but also realize that there will be a significant percentage in those industries that the cloud services providers may not be able to satisfy. The general-purpose cloud providers will co-exist with horizontal function-driven SaaS providers and the emerging vertical industry cloud platforms as part of an enterprise business value chain.