Private IaaS in Canada: Modest but growing

Canadian organizations are still only dipping their toes when it comes to taking advantage of infrastructure as a service offerings by service providers.

According to a new report from IDC Canada on the private IaaS market, last year spending by enterprises on public and private IaaS amounted to less than $224 million. And while public IaaS services by providers like Amazon get much of the headlines, in Canada the bulk of the spending last year –$170 million — was spent on private cloud services.

The private IaaS market will grow by 34.4 per cent over the next four years, reaching an estimated value of C$554 million by 2017, the report said.

In an interview report author Mark Schrutt, director of IDC Canada’s services and enterprise applications research unit, said that private IaaS providers offer the same services as public providers — scalable and on demand virtual servers and storage with flexible conditions (pay by day/month).

And they want either public or private for the same reasons: Testing applications, scaling up server capacity for busy parts of the year or running Web-facing applications.

However, in private IaaS many of the components are dedicated to the customer — in other words, no sharing of servers or storage.

Those who want private IaaS often pick it because providers can offer assurances that the data never leaves Canada, Shrutt added, and they may want tougher service level agreements than they can get from a public IaaS offering.

But he said the biggest driver of private cloud is fear of public cloud – what does the organization do if it there’s a service problem? Netflix, for example, went down last December. There is still risk with a private IaaS, he said, but not to the same level.

Note that many private IaaS providers also offer public IaaS services.

IBM Canada is the biggest private IaaS provider by revenue, followed by CGI and HP Canada, with Capgemini Canada and ATOS (headquartered in France, with a data centre in Mississauga, Ont.) roughly tied for fourth. Others in the report included Telus Corp., Rogers Communications, Cogeco Data Services, CenturyLink Canada, OVH (headquartered in France but with a data centre in Quebec), OnX and SunGuard.

IDC Canada also rated the companies according to their capabilities and future direction. IBM, Telus, CGI, CenturyLink were the leaders.

However, Schrutt noted that all 12 companies scored high and offer similar sever/storage/networking capabilities.

“It is challenging for them to differentiate offerings, but (they) do it though breadth of services, thought leadership etc., and as a customer, those are important things. If you already know where you’re heading and you already have your architectural design down, yon may look at the lowest priced provider, you might look at private or public cloud.

“But if you’re a firm who is just venturing into the cloud environ and trying to understand how to optimize it you’re going to need to be held by the hand,” in which case consulting services would be important.

He also noted that some of the providers lead because their current private IaaS customers are ones they used to do outsouced managed hosting for, and have been migrated to the new offering.

“The keys to the dedicated private IaaS market will be breadth and depth of infrastructure solutions as well as scale of datacentre assets,” the report says in part.

IBM Canada, Rogers, Cogeco and CenturyLink (formerly Savvis) have made data centre openings or acquisitions in the last year.

In looking for an IaaS provider organizations should ask these questions, Shrutt said:

–Do you already buy services from a provider? If so, that will lower project effort and cost;

–How easy will it be to migrate to and off the cloud? Tools are improving, the ability to tie into back end systems is getting better but its not all there yet – some vendors have better capabilities than others;

–Do you need a provider that offers more than compute power? Some don’t have professional services;

–Do you need the cloud at all? If you have a stable IT environment it may cost you more to put services in the cloud, or have them hosted. Do a cost-benefit analysis;

–What other cloud services does the provider offer? As firms move into the cloud they often have multiple providers. Fewer is better.

Schrutt also noted that public IaaS provider revenues are growing faster than private cloud and over time will match it.

in future the dominant model will be what he calls the virtual private cloud, somewhere between the present public and private clouds with some dedicated security and communications elements. “But,” he added, “companies are going to have to get comfortable with that, and its going to take some time.”

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Howard Solomon
Howard Solomon
Currently a freelance writer, I'm the former editor of and Computing Canada. An IT journalist since 1997, I've written for several of ITWC's sister publications including and Computer Dealer News. Before that I was a staff reporter at the Calgary Herald and the Brampton (Ont.) Daily Times. I can be reached at hsolomon [@]

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